Are Annuities Exempt in Bankruptcy?

Whether annuities are exempt in bankruptcy depends on
1. when was the annuity purchased?;
2. how was the annuity funded?;
3. what are the annuity’s payment terms?;
4. what exemptions does your state provide?; and
5. how you and your attorney apply your exemptions to protect your assets.

It’s advisable to consult a bankruptcy attorney about the details of your situation.

What is Bankruptcy?

Bankruptcy is a legal process that allows people to wipe out their debt or make payments on their debt based on what they can afford.

Are annuities safe from creditors?

It depends.

Can an Annuities be Garnished?


Are annuities protected from creditors in Colorado?

Annuities can be protected from creditors in Chapter 7 bankruptcy in Colorado if

C.R.S. § 10-7-106 exempts annuities in bankruptcy to the extent that the debtor has no control over the policy. In other words, if the debtor has no rights to the money paid into the annuity and can not cash it out or sell the annuity, and the policy restricts creditors from rights to the proceeds, then it is protected. However, if the debtor can cash out the policy, sell it, assign it, or has any control whatsoever, then it is fair game for the bankruptcy trustee in a Chapter 7 case.”

In re May, Case No. 11-26492 EEB (Bankr.D.Colo. 2012).

Attorney William A. Morris
Denver, Colorado
Staggs | Morris, P.C.