Can They Take Our Retirement Plans

[Denmarie]

My husband and I have a 401K and a "Thrift savings Plan". My monthly payment for my TSP is taken out of my government pay automatically. Can the courts touch this money? I have $8,000 in my TSP. My husband has $5.000 in his 401K.

[HHM]

It will depend on your states bankruptcy exemptions, but generally no, they cannot touch your 401K up to a certain amount. I beleive the TSP will be exempt as well since its at defined contribution retirement plan. But you will need to speak with a lawyer in your state to be sure.

There are usually caps as to how much you can exempt (but the caps are usually in the hundred's of thousands of dollars.

[hhou812hh]

Just a note (you may already know), retirement contributions are not allowed as expenses. When you list your expenses you can't list these as an expense.

Also if you plan on leaving your job during the bk process, don't rollover or withdraw any 401k money. It will then become disposable income and a bonus for the ch7 trustee.

Good luck!

[Denmarie]

When Our Bankruptcy Is Final...

How long will we have to wait after we get our discharge, to borrow a little money from my TSP?

[hhou812hh]

How long will we have to wait after we get our discharge, to borrow a little money from my TSP?

This subject comes up a lot here too. After bk filing if you want to stop the trend of what probably put you here in the first place the best thing would be to NOT borrow from any retirement savings. Maybe you can work longer hours or a 2nd job on a temp basis just to raise the cash you need. Unless you are unemployed or have a dire emergency you should probably not touch your retirement savings.

Good luck!

[MichelleLeigh]

I asked not too long ago about borrowing from our 401K in this forum. I could not get a straight answer, so I finally contacted our paralegal for our bankruptcy. She said that we can borrow from our 401K and it wouldn't affect our bankruptcy. I would definately ask your attorney or paralegal though before doing it. Every case is different and every state is different with their laws.

Like the previous post stated, don't get yourself in the same position that you were in before. Only use it if it is a EXTREME emergency!

Michelle

[Whittio]

You're lucky to have the 401k and TSP. Oh how I wish we did. (we aren't filing, I am here because I filed for my mom), but to have a "savings" is something wonderful, I would, as others have suggested, don't touch it. Once you start getting into it, it's only a matter of time before it's gone too.

[wannabedebtfree]

My husband has what is called a supplemental pension. It is unaccessable which is the greatest thing in the world. Over the past 6 years, it has grown to $40,000. Thank goodness, we have that so we don't feel like we are completely starting from scratch. Our attorney says that it won't be touched in our bankruptcy. I had checked into our states exemptions to be sure before talking with the lawyer also.

[Denmarie]

Had To Borrow Anyway...

We had to borrow from my husbands 401K to make our mortgage payment Our company was right in the process of changing our payroll system to New Orleans.The building got flooded where everything was, and they moved things to Philadelphia, but no one knows for sure if we're going to get paid or not, so we needed to make sure the mortgage was paid and the utilities were paid as well.The house and the car are the two items we want to keep in the bankruptcy without reafirming. Our lawyer gave us the go ahead as long as we have all the receipts if their should arise a question.