Q: If you receive a lump sum from pension before filing Chapter 7, are you allowed to keep any of it to live off of?
I am receiving a pension lump sum in a week due to leaving employer to take care of children. Hoping to be able to use the pension to help with loss of income and save some to pay the taxes on it.
A: You can claim either a Federal or state exemption for your pension and likely be able to keep it. It probably needs to temporarily be rolled into an IRA or other qualifying savings plan to protect it. If you have not received the money yet, it would be best to file your bankruptcy, yes your exemption, and then draw it out after the bankruptcy is final.
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