[Exemptions] Liane is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and Liane lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.
-What is the status of the exemption Liane claimed for individual retirement account funds?
A) She will not be able to claim that exemption.
B) The status of the exemption is unclear without further information regarding beneficiaries of the IRA.
C) She will be able to claim that exemption.
D) She will be able to claim that exemption but only up to $50,000.
E) She will be able to claim that exemption but only up to $25,000.

Question

Quizplus · Accepted Answer

Individual retirement accounts (IRAs) are generally protected in bankruptcy under federal law, allowing debtors to exempt their retirement funds from the bankruptcy estate. This protection is designed to secure a debtor's retirement savings from creditors, ensuring that individuals have the means to support themselves in retirement despite undergoing bankruptcy.

[Exemptions] Liane Is Injured in an Automobile Accident and Cannot