Are 403b plans exempt in Chapter 7 bankruptcy?

Those who file Chapter 7 bankruptcy are subject to the liquidation of their personal assets, in the process of the court settling their debts and giving them a chance at a clean start. As such, any people worry about what exactly they might lose during a Chapter 7 filing, and it's important to note that retirement funds – both 401k and 403b plans – are universally exempt from Chapter 7 bankruptcies. The purpose of the bankruptcy, after all, is to assist you in starting over, and taking away your retirement funds is hardly going to be helpful to your future.

A 403b plan is a savings account designed to assist in saving for retirement; somewhat similar to a 401K, 403b plans are meant for use by those who work for educational facilities and specific non-profit organizations.

A retirement fund, like a 403B plan, does count as a personal asset in chapter 7 bankruptcy; however, it is still important to disclose it to the bankruptcy trustee and your bankruptcy lawyer; don't avoid mentioning it on your filing paperwork simply because you know it is going to be considered exempt. The court may wish to monitor the account (ensuring you aren't making large deposits into it to keep your cash assets from bankruptcy, for example). If nothing else, disclosing the account's existence shows your good faith effort. Failure to do so can result in serious repercussions for you, from criminal charges to the dismissal of your bankruptcy, along with fines and fees.

You should speak with your attorney about this or any other concerns you may have regarding your bankruptcy to ensure you protect your legal rights.