If I cash out my 401k, can the court take it since we have filed bankruptcy this year? 14 Answers as of November 09, 2012

Now, my employer is closing our company. My husband is also laid off and we need this money to pay bills.

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Law Office of Norman Moore
Law Office of Norman Moore | Norman P Moore Jr
Call your attorney and ask him what the cut-off date is in your case. "Found money" (like an inheritance, a tax refund, or cash you take from your 401K) can be taken (I didn't say would be) prior to that date.
Answer Applies to: Wisconsin
Replied: 11/9/2012
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
You should ask your attorney if you have filed a chapter 13, as some districts handle this issue differently. If you filed a chapter 7 and received your discharge already, then it is fine to cash out 401k.
Answer Applies to: New York
Replied: 11/9/2012
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
If you take it out the 401k it could be available for creditors. Check with local counsel to see what exemptions you are entitled to. This is critical, do nothing until you see a lawyer.
Answer Applies to: California
Replied: 11/8/2012
Diefer Law Group, P.C.
Diefer Law Group, P.C. | Abel Fernandez
If you remove money from your retirement account, it can lose it protected (exempt status). Thus, I would be very carefully if you plan to file a bankruptcy. I would not file it unless you have met with attorney that can review your case.
Answer Applies to: California
Replied: 11/8/2012
Law Offices of Terrell Monks
Law Offices of Terrell Monks | Terrell Monks
If you have already filed your bankruptcy petition, such income is generally not subject to your chapter 7 bankruptcy.
Answer Applies to: Oklahoma
Replied: 11/8/2012
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    If you have spent the money after withdrawing it, the bankruptcy court can't take it. But it can be considered as income for the purpose of calculating your income during the previous 6 months on the Means Test. As long as it stays where it is, it is completely protected as long as you disclose it & claim the exemption.
    Answer Applies to: Nevada
    Replied: 11/8/2012
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    A. Depends if you filed a 7 or a 13 B. Also depends on what exemption was used to protect it.
    Answer Applies to: New Jersey
    Replied: 11/8/2012
    Pitt, Hay, and Hugenschmidt
    Pitt, Hay, and Hugenschmidt | Edward C Hay
    Did you file Chapter 7 or 13? If Chapter 7, you are free to do anything after the case is filed. If Chapter 13, you will need permission from the Court.
    Answer Applies to: North Carolina
    Replied: 11/8/2012
    Law Office of D.L. Drain, P.A.
    Law Office of D.L. Drain, P.A. | Diane L. Drain
    It depends on the type of bankruptcy.
    Answer Applies to: Arizona
    Replied: 11/8/2012
    Attorney At Law | Harry D. Roth
    If you have already filed bankruptcy and the money was in the 401(k) at the time of the filing, then after waiting for your discharge, you may do as you wish with the money. It belongs to you. It may make more sense to wait until January to withdraw the money, so the taxes will be paid in 2013 rather than this year. Regardless, try hard to avoid the withdrawal if you possibly can. There are other jobs out there. If you must withdraw money, you do not need to withdraw it all at once.
    Answer Applies to: California
    Replied: 11/8/2012
    Weber & Phillips, P.A.
    Weber & Phillips, P.A. | John G. Phillips
    Please speak with your bankruptcy attorney before you do anything in regards to cashing in the retirement. They can advise you when it would be safe to do so based on the case status.
    Answer Applies to: Arkansas
    Replied: 11/8/2012
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    If it was claimed as exempt in your bankruptcy, then tit remains exempt. HOWEVER, unless you are over 59 1/2 years old, there will be significant tax liabilities if you take the 401k distribution and spend it (10% penalty for starters) and even if your are 59 1/2 can still have tax liabilities if you spend it too quickly.
    Answer Applies to: California
    Replied: 11/8/2012
    R. Jason de Groot, P.A
    R. Jason de Groot, P.A | R. Jason de Groot
    More facts are needed to advise appropriately.
    Answer Applies to: Florida
    Replied: 11/8/2012
    LAW OFFICE OF MARGARET L. EVANS, PC
    LAW OFFICE OF MARGARET L. EVANS, PC | Margaret L. Evans
    Question: If I cash out my 401k, can the court take it since we have filed bankruptcy this year? *- Yes, because it will be converted to a non-exempt asset*
    Answer Applies to: South Carolina
    Replied: 11/8/2012
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