Annuities and Bankruptcy
People file for bankruptcy for protection from their creditors’ collection efforts, including phone calls from collection agencies, lawsuits, wage garnishments, and bank levies. Bankruptcy trustees are financially incentivized to make payments to creditors. Because the law requires that bankruptcy filers be open and honest about their belongings, those who have an annuity will need to protected it from creditors and the trustee. This is where bankruptcy exemptions come into play.
*It’s advisable to consult a bankruptcy attorney and tax professional about the details of your situation.
What are bankruptcy exemptions?
Bankruptcy exemptions are rules created by state and federal law that allow people who file for bankruptcy to keep their things. Exemptions are category-based and often have a maximum value.
Federal bankruptcy exemptions
Federal bankruptcy exemptions are exemptions created by Congress that states may opt into.
State bankruptcy exemptions
State exemptions are exemptions created by state legislatures that protect categories of belonging for people who file bankruptcy within individual states.
Can you choose between state and federal bankruptcy exemptions?
Some states allow people to choose between state and federal exemptions. People may select their preferred state exemptions and ideal federal exemptions. They allowed to work from one menu of exemptions or the other.
Are are Annuities Exempt in Bankruptcy?
Whether annuities are exempt in bankruptcy depends on the state and the available exemptions.
What if Exemption Do Not Protect Your Assets?
If your exemptions do not protect your assets then you may need to consider your options to avoiding bankruptcy. Is it possible to sell some of your assets and raise funds that can be used to settle your debt?