Bankruptcy: 401k protected in Texas?

Edwards Finance > Loans

Q. I probably will file bankruptcy in Texas after my divorce is finalized, probably mid year 2000. Right now, I have zero 401k or any other type of savings or pension. I am 41 years old, have no kids and no assets, earn $35k a year, and have $100,000 plus in credit card, car loans, and one or two judgements, each judgement over $10,000. I have an opportunity to enroll in my employer's 401k plan by the end of this week, and can contribute 0 to 16% of my pay. My employer will match 3%. So we're talking up to 18% of $35k this year = $6300. Will any portion (either my contribution or my employer's matching) of my 401k be protected after I file bancrupcy?

A. 401(k)'s are fully exempt in all states that I am familiar with. I assume that the same is true in Texas, but would strongly recommend that you discuss this and other bankruptcy planning issues with a local bankruptcy attorney. Most offer free initial consultations and he or she should be able to review your specific situation and let you know what you can and can't do. I have written a Bankruptcy FAQ which should answer many of your questions about what is involved--it may be found at http://users.erols.com/lawyer/FAQ/br_faq.htm.

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