Will my certificate of deposit be protected if I file for chapter 7 bankruptcy?

The answer is probably not. While there are a number of exemptions in the federal bankruptcy law, or many different kinds of property which do not have to be liquidated (at least up to a certain value) for creditors’ benefit, certificates of deposit or CDs are not one of them.

There are two caveats or qualifications though, that may help you:

• First, if the CD is part of a 401(k) or IRA or similar retirement savings account, it may be exempt. Under federal law, retirement funds are exempt to the extent they are in a tax-exempt account.
• Second, in some cases, state law sets more generous exemptions than federal law. You need to consider the law of your state as well. That’s an area where a bankruptcy attorney can be very valuable—in making sure that you take advantage of every exemption to which you are entitled.

Talk to a Bankruptcy Lawyer to find out how to protect your CD in a bankruptcy case.