A deficiency judgment occurs when a foreclosed home sells for less than the balance owed on the mortgage loan; in the state of Florida, your lender has the legal right to file suit against you in order to garnish your financial assets and recover the difference. If you are facing foreclosure, you may be wondering whether your retirement assets are in jeopardy of being swallowed up by a deficiency judgment. But breathe easy because under Florida law, retirement accounts are out of reach from creditors.
Pension plans and retirement accounts are protected from creditors in the state of Florida and as such cannot be attached to a deficiency after a foreclosure sale. All monies or assets in a retirement or profit sharing plans are exempt from all claims from creditors, including foreclosure and/or bankruptcy proceedings. All IRA accounts, including rollover and inherited IRAs, are protected under Florida Statute 222.21(2)(a) and will not be claimed by your lender; however, the statute does require the account be maintained with a Florida financial institution or branch in order to qualify for exempt status under Florida law. The state of Florida applies the statute broadly, adding emphasis to county and state employee pensions, such as teachers, police officers and firefighters. The rationale behind Florida’s retirement exemption is to ensure that Florida residents are able to support themselves in retirement and are not instead forced to depend on the state as a result of a default.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.