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Borrowing from 401K while in bankruptcy

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    #1

    Borrowing from 401K while in bankruptcy

    I filed for chapter 7 in late September. No date for 341 yet as I had to provide additional information.

    We are in dire need of money and am wondering if it is okay for me to borrow against my 401K? Any advice would be greatly appreciated.
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    #2
    I borrowed from my life insurance policy. Lawyer said it was okay to do. But you should check in your state as rules may differ. I know how that feels being so tight for money when you seize to use plastic. Good luck.

    Also, if you do borrow, make sure you keep track of how you spend it. Trustee might ask.

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      #3
      I think this is a pretty pertinent question

      I had to borrow from my retirement fund early in the year to take care of my IRS bill (for four years) and paid my rent up with it....can this be done without legal ramifications in the state of FLorida? I'm about dead broke...we've got a hurricane blowing up here this weekend and if we have to leave, I'll certainly be done.
      Filed Oct 2005discharged February 2007,Shapeless in the fire's glow, tell me if you think you know,
      Who it was we were below, where we've been and where we go

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        #4
        Borrowing is not a good idea, as you'll need to make a plan to pay it back. If you are taking funds from an exempt asset though, I don't know that the trustee can complain (you're borrowing from yourself, so it really isn't the same as creating new debt) though the prior advice of keeping documentation of where it goes seems like a good idea.
        Most of my information is from personal experience or HOURS and HOURS of online research. When you're searching online, keep in mind there is no guarantee that the info is completely up to date, and your situation is unique from anyone else's. Do your homework, and consult with an attorney so you can make an informed decision.

        Comment

          #5
          Mine is from my SEP...

          Originally posted by StaciMM
          Borrowing is not a good idea, as you'll need to make a plan to pay it back. If you are taking funds from an exempt asset though, I don't know that the trustee can complain (you're borrowing from yourself, so it really isn't the same as creating new debt) though the prior advice of keeping documentation of where it goes seems like a good idea.
          so I guess it is borrowing from myself, if I do it? It was the only way I could pay the IRS...and now, who nows if my house crumbles and goes down, I'll have nowhere to live as well.....ah, the joys of Florida hurricane season...I can't even leave as I work for a condo association and we have to take care of our property before the storm comes no way to evacuate for me.
          Filed Oct 2005discharged February 2007,Shapeless in the fire's glow, tell me if you think you know,
          Who it was we were below, where we've been and where we go

          Comment

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