401k

[jlasky]

I just had my 341 meeting last week. I was wondering if there would be any issue if I take some of my 401K to pay for my secured debts and a dental bill? Would the court have any issues with this? I am in need of money and taking this money from my 401k would be justified. Any feedback is appreciated.

[HHM]

Advice: Don't do it?

People really need to approach their 401K as a "retirement" account, which it is. A 401K should not be treated as a "cash on hand" account.

Also, if you can't pay your secured debts without dipping into your 401K, what they heck are you doing filing BK at this point. I suppose this advice is a little too late at this point, but you DO NOT FILE BK until you can pay your "necessary" expenses with your current income.

[freshstart06]

To be honest, if you had your 341 meeting and have to pay dental then do what you have to do. I understand the high dental bill. around the time of our 341 meeting we just got a dental bill well over $3000. I had to have three root canals. There will not be an issue.

No matter what anyone says, sometimes you have to do what you have to do. In regards to the secure debts if it is like mortgage, car things that you want to keep and remain current then pay them.

Once this mess is over and all the other debts are gone then you can then rebuild but right now you still have current bills. Filing bk is not an instant fix, it takes time to catch up. I know, it took us a while to finally be current. Not all of us "planned" pur bk, some of us just keep paying until we just could not pay any more then within weeks we filed. Results... still broke. Yeah, is is easy to say stop paying on CC debt but some people did not even have major CC debt, it could have been medical, garnishements, etc.. things that put you so deep in the hole that it takes time to get out of.

Things will improve, so if you need to use your 401k, use it that is what is there for. I am sure you are aware of the penalty because most people that has 401k knows all the rules.

Keep your head up, you don't have to explain why things are hard, just do what you have to do and soon things will get better.

take care.

[jlasky]

Instead of my 401K will the courts go after me if I sell an item through my ebay account (paypal)? I already had my 341 but would that cause an alarm with the courts?

[familyof7]

It depends is it something you bought after filing? Is it a normal course of business? Do you do this as a way of making a living? Was it ( the item you plan on selling ) listed as an asset in your bk? If it was NO DO NOT SALE.

[jlasky]

I bought it before filing, its a way of making a living. I did not include it as an asset.

[keepmine]

I'd sell the asset before touching the 401k>
HHM makes a great point. I don't understand why raising the issue of supporting yourself post bk causes a bellyache . It's reality. If you can pay for secured items post bk, it may be time to try and rescind that reaffirmation agreement and let 'em go. That's not being judgmental. It's offering practial advice about life post bk. Who wants to struggle to pay bills after filing bk?

[familyof7]

I bought it before filing, its a way of making a living. I did not include it as an asset.

If it is a normal course of busines then go for it. If the issue comes up just prove that it is a normal couse of business not a personal hobby or something.

[HHM]

Things will improve, so if you need to use your 401k, use it that is what is there for. I am sure you are aware of the penalty because most people that has 401k knows all the rules.

I have to strongly disagree. This situation is the exact type of financial decision making that got most people to BK in the first place.

The DENTAL BILL I can understand, but before dipping into the 401k, see if the Dr. will accept a payment plan; but having to pay routine secured debts out of the 401K, that is just poor planning. Now is the time to make the necessary changes so you DONT have to dip into 401K, or other credit to make ends meet. Now is the time to make the DIFFICULT decisions.

I am not saying DO NOT DO IT under any circumstances, but really weigh the cost benefit. Keep in mind, even though your company may allow you to make a withdraw (a "no look" policy on 401k Withdrawals), doesn't mean that the withdraw for these reasons is a non-taxable event. If the withdrawal is a ONE time event to make-up for a temporary shortfall because of unplanned 1 time expenses, dental bill, attorney fee etc; that is one thing...but if you are making a large withdrawal to live on that money over the next few+ months, you need to reconsider your expenses and start dumping assets.