401 A Defined Benefit Plan (Retirement)

[doni49]

My parents are considering BK7. Their health issues caused them to quit their jobs and sign up for SS. My mom collects benefits from a 401A Defined Benefit retirement plan. (http://www.psrs-peers.org)

Their benefits (PEERS & SS both) are direct deposited into their checking account. I've read that SS benefits and specific retirement plan benefits are exempt. Are draws from a 401A account exempt?

[LadyInTheRed]

Maybe. From what I understand from the following link, teacher's retirement plans are exempt, except that there is some conflicting case law in Missouri about exemptions. Scroll down to the section on "Missouri Pensions & Retirement Savings Exemptions".

http://www.legalconsumer.com/bankruptcy/bankruptcy-law.php?ST=MO#exemptions

Actually, if you are asking if they are excempt from collection if your parents don't file BK, I think they are. The conflicting case law is about whether those exemptions apply to BK. Either way, your parents should consult with 2 or 3 BK attorneys to have the issue explained to them. If they are considering not filing BK if the 401A is exempt from collection, I'd look for attorneys who specialize in the broad area of debtor/creditor law and not only bankruptcy.

[doni49]

Hi LITR and thanks for the response/link. She isn't/wasn't a teacher. She was a custodian for the school district. I've been trying to get her to talk with an attorney. But she's extremely nervous about the whole idea. After they stop paying the CCs, money from their SS deposits and the money from her retirement draws will be accumulating in their checking account. That's the one concern she has--will the CC companies be able to take that money.

But I just realized something -- since SS benefits ARE exempt, I'll advise them to open a checking account and have their SS benefits deposited in that account. Use the account containing her 401A money for their monthly bills & expenses. That should work.