401K Withdrawl @ 341

[backtoschool]

true, but if you moved the money around after you filing date, and they discovered it came from your 401k, its not an issue, because its after your filing date. i asked my attorney specifically that question, and that is what he told me. Also once your past your 341 and the trustee files his report of no distribution, he's done with you.

I am more concerned about the OP having 20k in available exemptions to cover the cars. Trustees regularly run asset checks and the date for the trustee to object to exemptions is way after the 341.

[albacore44]

The trustees regularly run asset reports as part of their discovery. If two cars suddenly show up in an asset report, then the trustee will go after them. Cars have to be licensed, registered, etc and trustee's run reports to find such assets. My trustee checked the balances of all my retirement accounts to see if I withdrew anything. If I had withdrawn anything, then that money would have been attachable by him.

To convert exempt assets to non-exempt assets before discharge is very risky. You may get away with it, but if the trustee runs a report and finds assets not listed or exempt, that will be a red flag and could end up costing you money and even a discharge.

true, but if you moved the money around after you filing date, and they discovered it came from your 401k, its not an issue, because its after your filing date. i asked my attorney specifically that question, and that is what he told me. Also once your past your 341 and the trustee files his report of no distribution, he's done with you.

[LALADY]

I am sure someone will correct me if I am wrong, but:

1) I think it is important to note that the trustee is not concerned about you or your welfare before, after or during a Chapter 7. They are ONLY concerned with the creditors you owe.

2) While in BK, everything you own (including that which you think may be exempt) and everything you owe is part of the BK estate and under the control of the trustee until the BK has been discharged.

[keepmine]

What I don't understand from this discussion is why would the TT even care what you did with your 401 or IRA once the 341 is over and you are already bankrupt. Those funds couldn't be used prior to filing as they would for many have put them over the median, now you are past the 6 month look back and poor as dirt while this game is being played out and you have to wait? I think in the end if it comes down to a roof over your head and food , you have to do what ever it takes to survive. I was told the only thing they are interested in after the filing is inheritances and life insurance up to 6 months.

Not sure why this is so hard.
You are taking assets that are exempt {4o1K} and turning it into cash that is not exempt. Plus, the value of the cars the OP wants to buy may be beyond what there state exempts. Again, you've taken assets that were exempt and placed them in assets that are not exempy. Until your bk is discharged and closed, you are still under the trustees control
Nobody is saying you can't do it. Just, if you get caught the downside is signficant.

[dakota112]

What I don't understand from this discussion is why would the TT even care what you did with your 401 or IRA once the 341 is over and you are already bankrupt. Those funds couldn't be used prior to filing as they would for many have put them over the median, now you are past the 6 month look back and poor as dirt while this game is being played out and you have to wait? I think in the end if it comes down to a roof over your head and food , you have to do what ever it takes to survive. I was told the only thing they are interested in after the filing is inheritances and life insurance up to 6 months.

[backtoschool]

The trustees regularly run asset reports as part of their discovery. If two cars suddenly show up in an asset report, then the trustee will go after them. Cars have to be licensed, registered, etc and trustee's run reports to find such assets. My trustee checked the balances of all my retirement accounts to see if I withdrew anything. If I had withdrawn anything, then that money would have been attachable by him.

To convert exempt assets to non-exempt assets before discharge is very risky. You may get away with it, but if the trustee runs a report and finds assets not listed or exempt, that will be a red flag and could end up costing you money and even a discharge.

[dakota112]

So if you have had your 341, and in the 60 day club how does the TT no you made withdrawals from an IRA or 401 before the closing or for that matter after the closing? And what happens if they were to find out because you told them but by than you had spent this money to survive? Many folks are in severe shape financially by the time they get to this 341 and it really comes down to do you use this retirement fund now or go into the streets while it sits there for 30 more years. Not everyone has family to help them through this.

[backtoschool]

If you can't use this money after a 341 meeting the same argument could be made that you can't use any money you come into such as earnings from a job or wages post 341. I can understand the life ins, inheritance issues for 6 months post filing.

The trustee can still object to exemptions after the 341 meeting. If 20k of assets are going from exempt to non-exempt, that could cause the trustee to object to the OP's exemptions and end up costing them money.

[blessed]

I don't think it's a question of can you use that money for cars, it's yours to use. I think the question is the timing. Ask your attorney.

[dakota112]

If you can't use this money after a 341 meeting the same argument could be made that you can't use any money you come into such as earnings from a job or wages post 341. I can understand the life ins, inheritance issues for 6 months post filing.

[backtoschool]

You are moving exempt assets (401k) into potentially non-exempt assets (cars). This could cause the trustee to object to your exemptions. Do you have exemptions to the tune of $20k to cover the cars?

[waldo22]

We are a No Asset Case, just waiting in the 60 day club. Right now we are borrowing a car from my parents but desperately will need two vehicles to get too & from work very soon.

[albacore44]

I would think that after you filed this money is yours to do with as you please. It is preotected by the BK so I can't see what using it after filing has to do with a 341 or closing or discharge. It is money needed to live on. Other choice is to leave it there and join the homeless on the street.

Correct. after filing is ok.

[dakota112]

I would think that after you filed this money is yours to do with as you please. It is preotected by the BK so I can't see what using it after filing has to do with a 341 or closing or discharge. It is money needed to live on. Other choice is to leave it there and join the homeless on the street.

[blessed]

I would wait until discharge/closing to do this. Otherwise I think the trustee could consider it part of your estate and give it to your creditors.

This makes the most sense. Being IN the 401k it is protected. Once it comes out it's just cash, or in your case an asset in the form of 2 cars.