Can I Keep My Retirement Plan if I File for Chapter 7 Bankruptcy Protection in North Carolina


For many potential Greensboro or Durham Chapter 7 Bankruptcy debtors, one of their largest assets is the debtor’s retirement plan. Many individuals in North Carolina have worked at the same job for a number of years, contributed to their retirement, and now have been recently laid off from that job. Unfortunately, for some folks, the fact that they have lost their job and as a consequence, have incurred a substantial amount of debt has sent them down the path where he or she needs to file for Chapter 7 Bankruptcy Protection. This then raises the question, “Can I keep my retirement plan if I file a Chapter 7 Bankruptcy in North Carolina.”

The answer to this question is…probably. A Chapter 7 Bankruptcy is known as a liquidation bankruptcy, because the Bankruptcy Trustee will sell any of your non-exempt property in exchange for your debts being wiped out. Property is exempt, if the property’s full value is below the value set out in the North Carolina exemption laws.  For example, in North Carolina, you can exempt $3,500 in equity in an automobile.  This means if you car is worth $3,500 or less, you will get to keep your car and still have your debts discharged in a Chapter 7 Bankruptcy.

For Durham or Greensboro Chapter 7 Bankruptcy Debtors, the North Carolina exemption law regarding retirement plans allows you to keep the entire value of your retirement plan so long as it is an ERISA Qualified Retirement Plan. ERISA stands for the Employee Retirement Income Security Act. Most employer sponsored retirement plans are ERISA Qualified.  However, you need to make sure that you can prove that your retirement plan is ERISA Qualified to the Chapter 7 Bankruptcy Trustee.

There are two documents that you should request from either your employer’s human resources department or your retirement plan’s Plan Administrator (the company that performs the administrative work connected to your retirement plan). The first document is the plan summary or plan document. This document, which describes your retirement plan, will likely include a statement as to whether your plan is ERISA Qualified. But if it does not, then you need to request a copy a Favorable Determination Letter sent to your employer from the Internal Revenue Service (IRS). Your employer’s human resources department should have a copy of the Favorable Determination Letter. So long as you have one of these documents proving that your retirement plan is ERISA Qualified, then you will be able to keep the entire value of your retirement plan in a North Carolina Chapter 7 Bankruptcy.

If you have any questions about keeping your retirement plan in a Chapter 7 Bankruptcy, you can call one of our Greensboro Bankruptcy Attorneys or Durham Bankruptcy Attorneys at (888) 820-5885. You can also email our Durham NC Bankruptcy Attorneys and Greensboro NC Bankruptcy Attorneys at All phone calls and emails will be answered the same day, free of charge by a Durham Bankruptcy Attorney or Greensboro Bankruptcy Attorney.