When is it sensible to liquidate my IRA rather than lose it to a creditor?

If your IRA can be imminently seized and bankruptcy isn’t a good alternative, your most practical solution may be to terminate your IRA, and pay the tax and early withdrawal penalty. You can then protect the proceeds as you’d shelter cash or other liquid investments. Dissolution is certainly the most economical option for the small IRA which can’t cost-justify more complex or costly protection. And you might avoid the early withdrawal penalty if you use the withdrawal or IRA borrowing exception rules to remove the money from your retirement account.