Retirement assets may be taken to pay child support

 Posted on July 12, 2022 in Uncategorized

Maryland law requires a parent to financially support a child regardless of that person’s relationship with the minor’s other parent. A family law judge will evaluate a variety of factors when determining how much you should pay each month. If you fail to abide by a judge’s order, assets such as a home, car or the funds inside of an individual retirement account might be garnished.

IRA funds are not protected by state or federal law

Maryland law generally makes pensions and other employer retirement plans exempt from garnishment. However, this is not the case with an IRA because it is not a qualified account. In fact, your retirement savings may not be safe from being garnished even if you file for bankruptcy.

What happens if you file for bankruptcy?

If you do decide to file for bankruptcy, up to $1,362,800 in IRA funds may be deemed off-limits to creditors per the federal Bankruptcy Abuse Prevention and Consumer Protection Act. However, since child support payments are considered a priority debt, this legislation may not apply in your case. It is important to consider that filing for protection from creditors may result in other debts being discharged. This might free up enough money to get current on your child support obligations without losing any property.

Missing a child support payment might result in a variety of negative consequences. These may include the loss of property, the loss of professional licenses or interest being added to the balance owed. If you are struggling to stay current on your child support obligations, it may be possible to ask a judge to reduce your future monthly payments.