IRA Protected from Bankruptcy

In a unanimous decision, the US Supreme Court ruled Monday that Americans who file for bankruptcy protection can keep their Individual Retirement Accounts intact. Bankruptcy filings in the US almost doubled between 1994 and 2004, reaching 1.56 million. The decision overturned a 2003 ruling by the 8th U.S. Circuit Court of Appeals, in St. Louis, which sided with a bankruptcy judge. The Supreme Court determined that IRAs are more like pensions - which are shielded from seizure under Federal law -- than they are like savings accounts - which are not shielded.

The ruling affects 15 states and the District of Columbia.

Statistics suggest that two out of three people filing for personal bankruptcy have lost their job and half have experienced a serious health problem. "Fewer than 9% have not suffered a job loss, medical event or divorce." States with the highest rates of bankruptcy: Tennessee, Utah, Georgia, Alabama.

See AP (Seattle Times) , Houston Chronicle, US Supreme Court (decision - pdf)