Protecting Investments in
Advice on the options
available for protecting investments during bankruptcy
The process of filing for bankruptcy as a means of relieving debt is stressful for
most people, particularly those who concerned with protecting their investments. You have a number of options
available if you`re in this position. Depending on where you live, how your investments are distributed and how you
go about seeking professional assistance, you can take steps to protect your assets during bankruptcy.
Seek Professional Assistance
Consider asking for professional advice so you`re informed during the
entire bankruptcy process. An
experienced attorney or tax professional can answer any questions you may have and guide you through the methods
available for protecting your investments.
|Steps can be taken to protect one's assets and
investments during bankruptcy proceedings
Evaluate Federal and State Exemptions
Every state in the US has its own bankruptcy exemption tables in place, alongside
the federal ones. While most states require you to follow their individual exemption system, 19 states currently
allow you to choose between their individual system and the federal system. If you reside in one of these states,
then you have the advantage of choosing the table that provides the greater advantage when exempting your
investments from bankruptcy.
Consider Options for Protecting Assets
Once you have determined whether you will be following the guidelines for federal
or state exemptions, you can evaluate how best to divide your investments so that you can protect as many as
possible. Below are some general guidelines on how common types of investments are regarded under federal law
during the bankruptcy process.
Individual Retirement Accounts are protected from bankruptcy filings up to the amount of $1,245,475 as of 2013.
Examples of IRA plans include Roth IRAs, 401k plans, 403b plans, Keogh plans, money purchase plans,
defined-benefit plans and profit sharing plans.
If you invested money into a child`s or grandchild`s 529 plan or
Coverdell Education Savings Account more than two years prior to a bankruptcy filing, the entire amount is protected from
creditors. Education plans that have been active for at least one year but less than two years have a $5,000
limit per beneficiary.
Life Insurance Policies
With the exception of credit life insurance, all policies of this nature that have
not matured are protected from bankruptcy proceedings. You can also keep up to $12,250 of a life insurance policy`s
Home and Car Equity
Investments that accrue equity, such as your
home and car, are up to a certain limit in the event of a bankruptcy filing. Home equity of $22,975 or less and
car equity of $3,675 or less is protected under federal guidelines.
Jewelry and Other Assets
You can protect your best pieces of jewelry from bankruptcy provided that you
adhere to the $1,550 exemption limit. Other assets that are protected under the federal system include household
items with a combined value of less than $12,250 and work tools with a value of $2,300 or less.
If you are in a financial crisis and are worried about protecting your
investments, then you may want to evaluate alternatives to filing bankruptcy as well. These options include debt
settlement and debt consolidation. Websites such as nationaldebtrelief.com can guide you in the process of determining the best course of action for relieving your
debts while keeping your assets intact.