Legal Question in Bankruptcy in Massachusetts

I just took over as durable power of attorney for my parents. They have just been evicted from their home and have an incredible amount of debt. If I have them claim bankruptcy will they still be able to use their money in the 401K or do they lose that too?


Asked on 1/10/11, 9:01 am

3 Answers from Attorneys
John Harmon The Law Office of John W. Harmon

It depends on a lot of factors. Dependig on if it is a chapter 7 or 13. Bankruptcy in some instances is the best way to protect the little assets a person has left. Feel free to contact me for more information.

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Answered on 1/15/11, 9:32 am
Dmitry Lev The Lev Law Firm

401k accounts are exempt in bankruptcy, meaning your parents get to keep the account. About the only entities who can invade those accounts are tax authorities.

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Answered on 1/15/11, 12:59 pm
L. Jed Berliner Berliner Law Firm

Attorney Lev is correct. 401(k) funds are 100% protected from non-IRS creditors (so long as the contributions did not exceed IRS maximums). Your durable power of attorney needs to specially state "bankruptcy" for you to file the bankruptcy.

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Answered on 1/15/11, 2:57 pm


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