Removal of small amount from IRA before filing, okay?

[Just Lue]

Question for anyone who might be able to help. I am filing for Chapter 7 on July 23 or so. I received a recent paycut, and I am really feeling the heat, and need a few extra dollars to make it through the month. I am not using my CCs, or taking on new debt for the last 90 days. I am thinking about taking out about $500 from my individual IRA for expenses. Not to pay any preferential transfers, or more than $600 to any creditors, but for my son's return to school expenses, football equipment, and such things. If I receive a discharge in Chapter 7, I think I will be fine, but I have been making payments to my attorney, and it has taken all of my cash flow (which is negative anyways).

Do you think the trustee would jump all over this for such a little amount? Or do I have to spend it on exempt property such as my home? I just need this to get my son back to school, and got hit with the added expense of the attorney retainer.

Thanks.

Just Lue

[mothersvox]

I am thinking about taking out about $500 from my individual IRA for expenses. Not to pay any preferential transfers, or more than $600 to any creditors, but for my son's return to school expenses, football equipment, and such things. ).

Do you think the trustee would jump all over this for such a little amount?

Let's wait to hear from one of the forum gurus, but as far as I know in most states retirement funds are exempt, and so you should be allowed to use them for living expenses (though the withdrawal penalty is high). Expenses for children's clothing and so on are not typically problems. Kids have needs.

[Just Lue]

Thank you. My attorney, and with myself being an attorney, I should not be worried. I think the bottom line legally is that if the funds were pulled from an exempt account and used for exempt purposes-household improvements and expenses that is okay. But....expenses for a son's sport and such might be considered not an exempt expense as only $3000 is allowed in exempt personal household expenses, and I am not using it for house improvements. But at this point, it is probably not enough to worry about, and I have no other source of funds right now to use for expenses. Paying the attorney fees and household expenses has taken me down to the point of having about a $100 to have for gas and food. So I am going to use it, be honest with the court, try and keep receipts, and if they get upset, I will find a way to pay it back. I am filing 7/23/05, and it could not be too soon.