Can I take an early withdrawal from a 401(K) claimed as exempt before Chapter 7 discharge? 11 Answers as of July 23, 2014

I am in Chapter 7, and awaiting discharge. May I cash out of a 401(k) that I have claimed as exempt before discharge or the case closing, or is this a really bad idea?

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Barnhart Law Office
Barnhart Law Office | Bruce C Barnhart
Although the chapter 7 trustee may have filed an abandonment of your assets, other events may occur that may cause your bankruptcy discharge to be delayed or denied. You should wait until your case is closed.
Answer Applies to: Nebraska
Replied: 7/23/2014
Retirement funds such as a 401 k are not property of the bankruptcy estate but if you convert that asset into other property then the trustee may insist that that converted asset is part of the bankruptcy estate. You could amend the schedules to protect the asset if you have room to protect it. It certainly would be best to wait until the case is closed before taking monies from a retirement account.
Answer Applies to: Minnesota
Replied: 7/16/2014
Arany & Associates
Arany & Associates | Lawrence C. Arany
Assuming you wait 30 days from the date of the First Meeting Of Creditors, you are good to go. Good luck!
Answer Applies to: Indiana
Replied: 7/16/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
It is not a good idea, but if more than 30 days have elapsed from the completion of your 341 meeting, and you disclosed this asset on Schedule B & exempted it on Schedule C, you are legally entitled to do this.
Answer Applies to: Nevada
Replied: 7/16/2014
Law Office of Peter M. Lively
Law Office of Peter M. Lively | Peter M. Lively
Yes. Once the period for objections to your exemption expires, the exempt assets pass from the estate to the debtor. It is a bad idea unless absolutely necessary because those funds are supposed to be used for retirement purposes and when you withdraw early you are penalized and taxed.
Answer Applies to: California
Replied: 7/15/2014
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