Can you use retirement funds post filing?

[concerned]

If we want to liquidate funds from our retirement accounts or take out a loan post filing, but before the 341. Is this allowed? Should we wait until after the 341? Some of it will be used for payment towards our vehicles which will be taken the Ch. 7 filing. The rest we planned to use to help get us through the winter. Do they look at what you spend your money on (checking accounts, etc.) post filing, or is just before. Are the concerned with your spending after you file, but prior to the 341?

[StaciMM]

You would not be able to take a loan after filing while still in the BK process.

[concerned]

Thanks Staci!

My husband can get money wired into our mortgage co. account today from his retirement pre-filing. Should we do this, OR, should we wait until after we file and transfer the funds then? We may have to pay a late fee. This would be like Monday or Tuesday next week. My husband can just liquidate his retirement and get cash. Mine is a 403B so I have to take out a loan. How does the attorney propose we come up with funds for our vehicles if we can't take out a loan during the BK process? Do you think he meant for us to use this account that we can liquidate?

[StaciMM]

I'm not sure what you mean about getting funds for your vehicles. Do you own them outright and your attorney say you were over your exemption, or are they financed? If they're financed & you don't owe significantly less than they're worth, you can just keep making monthly payments.

If they're both financed, but you owe alot more than they're worth, you could use the retirement $$ to redeem them for what they're worth. (Your attorney would have to work out the agreement.) Not having the payments, though, how would that impact your bottom line?

[Lightning]

Cashing out your retirement savings to cover car payments is a very bad financial move. Cars are a depreciating asset. A retirement account will appreciate over time with compound interest.

Depending what type of account you're cashing out and your age, you'll pay a significant penalty plus taxes on that money leaving you with only 50-70% of the balance.

[concerned]

Hi All:

We own our vehicles outright, but we are slightly over the exemption for NY. We will have to come up with approx. $5,000 to give to our trustee. This is what we were told by our attorney.

We were considering liquidating my husband's retirement (small portion anyway) to pay our mortgage payment as our attorney told us to keep it up to date and we were wondering if we should have the funds transferred now or after we file, or after 341??

[StaciMM]

If you transfer now, the funds become part of the BK estate and you could lose them unless there is an exemption to cover them.

Your attorney is likely correct in that you'll owe the trustee the nonexempt value for your vehicles, you may be able to work out an arrangement to pay it monthly over a year or so.

[concerned]

Staci-He specifically advised us to use our retirement funds for this purpose. Do you mean we won't be able to do that after we file? Why would he suggest it?

[concerned]

$$ from family?

Are we required to report all cash received from family to help us with bills? Even if it's just to pay our mortgage? Above what amount are we required to report? How far back do they want you to report?

[StaciMM]

I'm not saying you couldn't use your retirement $$, just that there may be another option.

About the cash from family, I would guess no need to list it. I know giving money to family is an issue, I've never heard receiving $$ to be one.