Announcement

Collapse

Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

Welcome to the Bankruptcy Forum. Bankruptcy (BK) Forum is known as BKForum.com and will be referred to as BKF hereinafter. In order to ensure a long term success of our vibrant community, we have established certain rules and guidelines to which everyone must adhere to. Please take your time to carefully read our rules, before you start to participate in the community.

Things you agree to do:
BKFORUM.com (BKF) users agree to use the search function before starting a new thread. This prevents duplicate discussions and allows for better organized topics.

All BKF users agree to read the sticky posts which may be available at the top of a forum page. These Sticky posts often contain valuable information. They may also outline more rules and guidelines specific for that particular forum, stickies are put in place by that forums moderator(s) or admin(s).

Things you agree not to do:

All BKF users agree not to call people names or write a post simply to make a personal attack, or get a negative reaction; this behavior is not allowed on our forum. The use of derogatory language aimed at anyone will be severely dealt with. There is no need to agree with each other, or to even like each other. However, by signing onto BKForum.com you agree to treat each member and guest with the respect they deserve. No threats or personal attacks will be allowed.

All BKF users agree not to discuss, engage, or encourage any behavior or activity which violates the law. Discussion of drugs, violence, murder, theft, vandalism, fraud or any other issue which could be used to help individuals break the law is strictly forbidden.

All BKF users agree not to "bump" old threads, unless there is a specific benefit to the community by doing so. But in most cases, please don't post in very old threads, instead start new threads.

All BKF users agree not to attempt/use another members account. It is against BKF rules to use any account other than your own. Impersonating another member will result in an immediate ban. It is also against the rules to open more than one account in your own name without permission from a moderator or administrator. If you have been banned for any reason, it is against the rules to open another account. If you were banned temporarily and you are caught using another account you will be banned permanently. Choosing a moniker which is similar in either sound or spelling as a moderator or administrator is strictly forbidden.

All BKF users agree not to private message any moderator, admin, or other member with questions related to their personal circumstances (Questions about the forum or issues with the forum are ok). This forum only works when members share their experience and insights with everyone.

Things you agree not to post:
All BKF users agree not to post any derogatory/racist/or sexist remarks. This includes attachments, links and all information contained within posts, signatures, and avatars, failure to comply with this rule will result in a permanent ban.

All BKF users agree not to post any copyrighted or trademarked information without the express written permission of the owner(s) / proper citation of source.

All BKF users agree not to post any real names, addresses, telephone numbers, email addresses, social security numbers, or any other personal details (their own or other people's).

All BKF users agree not to post links, pictures, attachments, videos, or the like of pornographic content, objectionable material or extreme violence, whether cartoon or real.

All BKF users agree not to use BKF for advertising purposes without a written contract between yourself/company/agent and the administration of BKF. Blatant advertising will result in a ban.

All BKF users agree not to spam the forums. Spam includes but is not limited to posting erroneous, non-relevant-useless, off-topic, or meaningless posts. Spam may also include posts which contain no text, or large areas of blank space between lines. Simply posting emoticons without text is considered spam. BKF is the largest bankruptcy message board and all the content is intended to help other users. Please help us improve the quality of our forum by making sure that your posts are well-worded, spell checked, grammatically correct and syntaxed.

Regarding actions of moderators and administrators:

The forum is no place to air out your opinion or be judgmental of our staff and its capabilities.

All BKF users agree not to abuse or mistreat moderators or administrators. It is against BKF rules to post any information regarding bans or any other action taken by a member of the moderating or administrative team. If you wish to discuss bans or warnings please do so via PM. To place a complaint against a moderator, send a PM to a super moderator. All Moderators are equal, any decision made by a moderator must be adhered to. If a moderator tells you something you do not like, do not go to another moderator looking for a different answer. If you are caught doing this you will be banned. The moderators work as a team and respect the decisions made by their peers and will help enforce them unless an administrator tells them differently.
If you have an issue with how the forum is run, then notify one of our administrator and we will look into the situation. We have in the past and still do appreciate any input that you offer this forum. But critical input and/or judgmental postings towards the staff will result in you getting banned.


Should you find a thread offensive or out of line, then notify a Mod in a PM so they can evaluate the situation and do the action deemed necessary.

All moderators do have active "other" lives outside of the forum and help moderate this forum in their spare time throughout the days and weeks.

If you have a problem with a member or Mod follow the proper channels of reporting it.

BKF reserves the right to delete any posts which contain anti-BKF comments or discussion. Any bashing of moderators or administrators, or any of their discussion or actions will also be deleted, and the responsible posting party(s) will be banned. Any public anti-BKF advertising, communication, or posts on another forum will result in permanent bans as well.

All warnings and bans are decided by individual moderators and administrators. Warnings are preferable to bans however, for serious offenses and repeat abusers bans will go into effect. The length of the bans can vary from several hours to permanent.

All messages posted or sent including through PM are the property of BKforum.com.

All BKF users agree not to advertiser on the forum (Niether by posting, private messaging or using your signature). If you are a company/attorney/legal adviser wishing to advertise on the site or sell a product, you must contact the head administrator and inquire about our advertising packages.

All bankruptcy related opinions expressed on BKForum.com are those of their authors and not necessarily of BKF, its staff or representatives.

You agree not to copy any material/post/content from BKF without written permission from our head administrator .

By posting on this forum you agree to these terms and conditions, including any punishment deemed appropriate by moderators or administrators in the event of an offense.

Administrators/Moderators can change these rules at any time without prior notice.
See more
See less

Can I tap into my 401k ...

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Can I tap into my 401k ...

    ... after discharge, but while the case is still open? I want to buy a house with a loan from my 401k.
    Do I have to tell the trustee ? My case is an Asset case .

    Thank you.
    Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

  • #2
    NO WAY!!! Leave everything alone until your case is CLOSED. Depending on your case, closure may take up to a year or more.

    Then after that, you are going to have endure the derision from all of us here that sacrificed our 401s to stave off bankruptcy, THEN found out what a huge, *S*T*U*P*I*D* mistake we made.

    Now, with that said, if you are close to retirement, or already in that mode, then what you propose makes perfect sense--after all, this is what you have been saving for. But if you are not close to retirement, etc, etc, then you may be setting yourself up for a huge tax liability and penalty.

    Please think this through, and discuss with your attorney, and CPA.

    Good wishes to you!
    "To go bravely forward is to invite a miracle."

    "Worry is the darkroom where negatives are formed."

    Comment


    • #3
      Thanks for the quick answer. The amount I want to borrow is 50k for 5 years. The rate of return for my 401k was 1.28% for the last 2 years. If I borrow I pay myself back with 4.29%. Hooray stock market. The rent I pay is $1,450/mo. The rate if I borrow from 401k will be $950. Just sayin'.

      The legality of the issue is what worries me. I sent e-mails to my attorney and CPA. Now I wait, but I'll keep you posted.
      Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

      Comment


      • #4
        Oh that's really a great interest rate. (sarcasm) You will be penalized 10% as well as income taxes to the tune of about 40% in all. Real smart to rob your future. I see you back in bk in about eight years. Purchase a smaller home and with the amount of stock of empty houses you could buy contract for Deed. Just to take over someones house he is about to lose. There are other ways, but you picked the worst of them. You are shooting your own foot and you will never pay it all back, loan or not. You will never realize compound interest on the money that is not in that account. You will lose all the way round. Please do a search on 401K on this forum to see the multitude of those who are still mourning over this decision including us. 'Hub
        If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

        Comment


        • #5
          To add, 401K is exempt. Once you pull that money, it is part of the estate and is fair game as an asset. You need Court permission to incur new debt while in bk. The money will be seized, and you will still owe the loan that you will end up not paying and the IRS will want your taxes and penalty. I cannot stress more about not even thinking of that move. 'Hub
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

          Comment


          • #6
            Do you take a 10% penalty and pay the 20% taxes if you take a loan rather than just cashing out? Good points Hub but next time tell us how you really feel ;)
            Filed 11/17/11 Chapter 13, 341 meeting 12/21/11. Plan confirmed 1/19/12 - DISCHARGED 12/16/15

            Comment


            • #7
              Originally posted by mountanddo View Post
              Do you take a 10% penalty and pay the 20% taxes if you take a loan rather than just cashing out? Good points Hub but next time tell us how you really feel ;)
              No not on the loan itself. However, it is rare that they are paid back and if you tuck it back into a withdrawal then the hit. How do I feel about it? Let me count the thousands of ways. Oh about a quarter million at the time. All I can say is boo, hoo. 'Hub
              If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

              Comment


              • #8
                Is the 50K enough to pay for the house, or is that a down payment?

                In any event, to share the sentiments of others, doing the loan is generally a financial mistake no matter how you slice it.

                However, to answer the BK related question, NO, you cannot do the withdrawal while the case is open. All assets, even exempt assets, are part of the BK estate until either the case closes or the trustee affirmatively abandons the property.

                Comment


                • #9
                  Wow, I didn't take such a beating in a long time ! OK, so the money will stay in the plan. THANK YOU, again, for being here!

                  Now, regarding the "Just to take over someones house he is about to lose. " idea, 1st, it is a Fannie Mae property, so the guy already lost it, and 2nd, let me tell you all a story of what is happening now in the quiet, peaceful city of Phoenix, Arizona (just because it drives me nuts): houses are up for sale at auctions, investors come and buy in bulk, with cash, without even knowing what are they buying, for 35-40k per house. Some of the houses become rentals, some are re-sold for 5 - 10k more. Bang!, just like this! 90% of the ones re-sold are bought by smaller investors, who, with a little extra improvement, are re-selling them again, for 5-10k extra. So, in 2 steps, the price is up 20k. Let's say the house is now 55k, for sale in MLS - in 1 day there are multiple offers, from average Joes to, again, investors who want another flip. The house gets sold for 60k. My curiosity is: for how long can the market take this new artificial price increase?
                  Ch.7 filed: 2/23/2011 Discharged: 7/7/2011 Asset: Yes Case Closed: 7/30/2013

                  Comment


                  • #10
                    Regarding the taxes and early w/d penalties, I was previously told that if a person were to withdraw mone from a retirement account early AND used the money to buy a house as a FIRST TIME BUYER, he/she would not be penalized. The person has to close within a specified period of time (which I don't remember the time frame) but that's something to consider.
                    Don
                    Filed Pro Se on 8/4/11 (No Asset, Chapter 7)
                    Redeemed Automobile ProSe (722 Redemption),Discharged on 11/3/11

                    Comment


                    • #11
                      Originally posted by stanpendula View Post
                      Wow, I didn't take such a beating in a long time ! OK, so the money will stay in the plan. THANK YOU, again, for being here!

                      Now, regarding the "Just to take over someones house he is about to lose. " idea, 1st, it is a Fannie Mae property, so the guy already lost it, and 2nd, let me tell you all a story of what is happening now in the quiet, peaceful city of Phoenix, Arizona (just because it drives me nuts): houses are up for sale at auctions, investors come and buy in bulk, with cash, without even knowing what are they buying, for 35-40k per house. Some of the houses become rentals, some are re-sold for 5 - 10k more. Bang!, just like this! 90% of the ones re-sold are bought by smaller investors, who, with a little extra improvement, are re-selling them again, for 5-10k extra. So, in 2 steps, the price is up 20k. Let's say the house is now 55k, for sale in MLS - in 1 day there are multiple offers, from average Joes to, again, investors who want another flip. The house gets sold for 60k. My curiosity is: for how long can the market take this new artificial price increase?
                      Easy answer. There are more empty houses than buyers. Let's say, just for example, a 200k house falls in value to 100k. Someone buys it for 60K. Puts in 10K and sells it for 80K all fixed up. Have you lost anything or still picked up a bargain. IF you can swing a contract for deed, it is like renting to own. You can forfeit the place no big deal with a very small down payment. When you pay through you will get a clear Deed. Cheaper than rent and it belongs to you. You must keep up the payments though.

                      You are not looking at all options available. Become an entrepreneur. Also if you are handy, and can swing a cash loan, look at your county's tax deed sales for junk homes and fix them up. 'Hub
                      If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                      Comment


                      • #12
                        Originally posted by AngelinaCatHub View Post
                        You are not looking at all options available. Become an entrepreneur. Also if you are handy, and can swing a cash loan, look at your county's tax deed sales for junk homes and fix them up. 'Hub
                        Agree 100% There are many different options available. Be creative!
                        8-07-09-filed Chapter 7
                        11-18-09-DISCHARGED!!

                        Life is not what challenges you face, but how you face those challenges.

                        Comment


                        • #13
                          Originally posted by stanpendula View Post
                          Wow, I didn't take such a beating in a long time ! OK, so the money will stay in the plan. THANK YOU, again, for being here! LOL. Not meaning to do that.

                          Now, regarding the "Just to take over someones house he is about to lose. " idea, 1st, it is a Fannie Mae property, so the guy already lost it, and 2nd, let me tell you all a story of what is happening now in the quiet, peaceful city of Phoenix, Arizona (just because it drives me nuts): houses are up for sale at auctions, investors come and buy in bulk, with cash, without even knowing what are they buying, for 35-40k per house. Some of the houses become rentals, some are re-sold for 5 - 10k more. Bang!, just like this! 90% of the ones re-sold are bought by smaller investors, who, with a little extra improvement, are re-selling them again, for 5-10k extra. So, in 2 steps, the price is up 20k. Let's say the house is now 55k, for sale in MLS - in 1 day there are multiple offers, from average Joes to, again, investors who want another flip. The house gets sold for 60k. My curiosity is: for how long can the market take this new artificial price increase?
                          As said, make a small hobby right now. Look at your tax assessors website and get the parcel number on some of the tax sales, look up Public Records for lis Pendins and you have time now to consider a fixer upper. Camp in the place while fixing it up. Turn it as you said those speculators do. Remember, those houses were vacant when they bought them what makes you think they can sell them easier than the guy who lost them? Give it a try. I'm in FL and we are averaging 25% empties and for sale sign litter the roads. 'Hub
                          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                          Comment


                          • #14
                            Here is a handy link. Try your State and County. Check out the priced here in FL. 'Hub

                            http://www.homepath.com/listingdetai...ingid=22108291

                            http://www.homepath.com/search.html?...bhi=&x=34&y=12
                            Last edited by AngelinaCatHub; 01-21-2012, 09:49 AM. Reason: Add second helpful link
                            If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                            Comment


                            • #15
                              You have to be very careful when you are contemplating buying a house with the intent to flip it. My BF bought a house for 90k 8 years ago. It isn't in a great neighborhood but it isn't considered the slums either. He put 15k into it. 3 years later he applied for a HELOC and the bank inflated the house value to 159k to support loaning 40k. He put it on the market about 1 year before the housing values tanked and he couldn't sell it then. It has steadily went down in value each year to where it is now worth 45k. He can't sell it as the block he lives in is now swarming with rental houses that take section 8. His neighbors have probably 10 different people that live with them and deal drugs out of the house amoung other things. The police are continually called to the house yet the landlord does nothing because he lives 200 miles away. The landlord collects the money section 8 gives him and doesn't collect what he is supposed to from them. Section 8 could care less. Numerous complaints have been filed and as long as there hasn't been a murder committed at the property it is pretty much ignored. His block, when he moved in, had people that were older and kept to themselves. Within 2 years the whole demographic changed.

                              So I'd just be careful about buying a house outright. Are you prepared to lose that 50k should you not be able to sell it?
                              Filed 11/17/11 Chapter 13, 341 meeting 12/21/11. Plan confirmed 1/19/12 - DISCHARGED 12/16/15

                              Comment

                              Unconfigured Ad Widget

                              Collapse
                              Working...
                              X