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Creditor seized ROTH IRA/ Need Advice

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    Question Creditor seized ROTH IRA/ Need Advice

    I recently retained a bankruptcy attorney and also comtemplating filing for chapter 7 bankruptcy. I have delayed filing since I want to explore settlement options before pulling the trigger.

    I am only three months behind on my credit cards bill and mortgage. I cancelled the bank accounts with the afformentioned bank (Wells Fargo) but decided to leave my roth IRA with the bank since I was advised by the BK Attorney that they would not touch it since it was a retirement account.

    Big mistake I just found out that they liquidated half of my roth IRA Brokerage account. How can they do this? Isnt this money protected?

    Any information on this would be appreciatiated.

    #2
    Get ahold of your lawyer as soon as you can. This has got to be illegal.

    Comment


      #3
      I agree. You need to be camping on your attorney's office doorstep by 8:00 AM Monday morning your time. This seizure is not right.

      Let us know how it goes.
      "To go bravely forward is to invite a miracle."

      "Worry is the darkroom where negatives are formed."

      Comment


        #4
        Originally posted by marrez View Post
        I recently retained a bankruptcy attorney and also comtemplating filing for chapter 7 bankruptcy. I have delayed filing since I want to explore settlement options before pulling the trigger.

        I am only three months behind on my credit cards bill and mortgage. I cancelled the bank accounts with the afformentioned bank (Wells Fargo) but decided to leave my roth IRA with the bank since I was advised by the BK Attorney that they would not touch it since it was a retirement account.

        Big mistake I just found out that they liquidated half of my roth IRA Brokerage account. How can they do this? Isnt this money protected?

        Any information on this would be appreciatiated.
        I call BS. Good try though!

        Comment


          #5
          Does anyone know if the banks can legally seized these funds if I have not filed for bankruptcy yet? To clarify can they do this only before bankruptcy since these funds might not be protected at this time? I am clueless and do not know at what point these funds are protected? Are they only protected at the time I file or once I retain a BK Attorney?

          This is going to be a long weekend... so any advice or unfortunate experience in this matter would be greatly appreciated.

          Comment


            #6
            It is my understanding that in any state your retirement fund is exempt from any attachment in or not in bk. I don't know Cal statutes but Federal are exempt.

            'Hub
            If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

            Comment


              #7
              Thanks for the info!

              Does anyone have any info specific to California?

              Comment


                #8
                Originally posted by marrez View Post
                Does anyone know if the banks can legally seized these funds if I have not filed for bankruptcy yet? To clarify can they do this only before bankruptcy since these funds might not be protected at this time? I am clueless and do not know at what point these funds are protected? Are they only protected at the time I file or once I retain a BK Attorney?

                This is going to be a long weekend... so any advice or unfortunate experience in this matter would be greatly appreciated.
                401k is absoutely protected (think that is up to 500,000k, not sure though).

                Not sure about the Roth.

                Comment


                  #9
                  How would a Roth IRA be different since it is also a retirement account?

                  Comment


                    #10
                    California's exemption for IRAs and Keogh plans is subject to the "reasonably necessary" standard. CCP §704.115(a)(3), (e). That standard allows an exemption from creditor claims (CCP §704.115(e)):
                    only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires and for the support of the… dependents of the judgment debtor, taking into account all resources that are likely to be available for the support of the judgment debtor when the judgment debtor retires. In determining the amount to be exempt under this subdivision, the court shall allow the judgment debtor such additional amount as is necessary to pay any federal and state income taxes payable as a result of [satisfying a judgment with IRA funds.]
                    This standard is generally interpreted to provide for only basic needs, unrelated to the former status in society or lifestyle to which the debtor may have been accustomed. However, the special needs of retired and elderly debtors are taken into account. The following factors are considered in determining the size of the debtor's exemption:
                    • A debtor's present and future living expenses;
                    • A debtor's present and future income;
                    • The age of the debtor and dependents;
                    • The health of the debtor;
                    • The debtor's ability to work and earn;
                    • The debtor's job skills, training, and education;
                    • The debtor's other assets available for support, including exempt assets;
                    • Liquidity of other available assets;
                    • The debtor's ability to save for retirement;
                    • Special needs of the debtor and dependents; and
                    • The debtor's other financial obligations.
                    More info is [URL removed, promotes specific firm]
                    Last edited by HHM; 02-19-2011, 07:58 PM.
                    ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
                    Not an attorney - just an opinionated woman.

                    Comment


                      #11
                      So does this mean they can take the funds without due process? I think it might be a little premature for the bank to take those measures? Any other thoughts of advice?

                      Comment


                        #12
                        Did the creditor have "right of offset" in any of the agreements you had with them?
                        ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
                        Not an attorney - just an opinionated woman.

                        Comment


                          #13
                          Here are three sites that came up when I googled 'Ira California', or 'roth ira california'. There were many more than these three, but these were the most pertinent. Please read the first two thoroughly, and then discuss with your attorney Monday morning.

                          Your retirement nest egg may be more vulnerable than you think.




                          The California bankruptcy exemptions offer protection to your property and assets. Learn how this exemption can help you keep assets when filing for Chapter 7 or C
                          "To go bravely forward is to invite a miracle."

                          "Worry is the darkroom where negatives are formed."

                          Comment


                            #14
                            I dont know but I believe all banks have a right to offset the question might be do they have a right to offset a ROTH IRA?

                            Comment


                              #15
                              You need to read the posts I sent, then discuss with your attorney.
                              "To go bravely forward is to invite a miracle."

                              "Worry is the darkroom where negatives are formed."

                              Comment

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