Borrowing from IRA instead of car loan. CAN THIS BE DONE???????

[deepinit]

Has anyone just taken an early partial payout from an IRA to buy a car outright during a Chapter 13? I would think that that would be a better situation than getting an high interest loan. I am hoping to do this without affecting my plan. We are almost 30 months into our 60 month plan and I need a car. My current car has over 250000 miles and is close to costing me a lot of money in repairs. Instead of looking for a loan, I would rather take the hit on my retirement and pay cash outright for a car and be done with it.
Does this make any sense at all? All I see on here are people getting high interest loans.
Do you think the trustee would go for something like that?
I have an email in to my attorney to discuss this. My biggest concern is going to the trustee for a loan and rocking the boat in any way. we are almost half way done and I can't wait for it to be over.

Any idea if this will work???

[AngelinaCat]

You are not going to get any Kudos from me!

Stay away from any of your Exempt funds, especially a Retirement fund.

You will not want to believe me, but you WILL regret this move later on. 'Hub and I foolishly cashed in his 401K trying to avoid filing BK, 'because it was the honorable thing to do'. Hogwash, and horse road apples!!!

We are now a senior couple of 60 and 68, and we are living on Social Security, what little pittance I bring in with my PT job, and whatever we can bring with picking up cans on the side of the road.

I am NOT kidding with that last sentence; I am dead serious!!!

[LadyInTheRed]

Besides the fact that you should save your IRA for retirement as intended, taking an early withdrawal will probably cost more money than a car loan. You'll have to pay income tax and a 10% early withdrawal penalty. The there's the growth you won't get on what you withdrawal.

[deepinit]

I completely understand the reason for not taking this money out, however my concern is that I don't have any extra money to make a car payment in my plan. How could I get another car with no extra money to pay for it? Would they let me reduce my plan payments just to get a car?
I know I would lose money and I hate the thought of that and not saving enough but I truly don't have one extra cent in my budget to get a car that I have to pay on. My thought is that I would take out maybe $5k to buy a reliable used car that will last me for a while.
I hoped that mine would last through the BK but unfortunately it is now 15 years old and 270000 miles and will not make it another 2 years so I am at a loss of what to do. This isn't an emergency today but if my luck holds true, it will break down right before Christmas.
I guess I'll just keep my fingers crossed and hope for the best.

[LadyInTheRed]

Would they let me reduce my plan payments just to get a car?

That depends on whether your plan would still be feasible with a reduced payment. If you have minimum amounts that must be paid to cover attorney fees, non-exempt assets and any other things that must be made in your plan, your new payment still needs to be enough to pay those amounts.

[pamkev]

Don't do it


Very Bad idea