401k

[lmg]

Has anyone ever thought about liquidating their 401K to avoid filing for bankruptcy?

[rrockinggramma]

well IMO, I think that is a dumb idea. Why give up your retirement? You might not have your debt but you put yourself in a position to work until you are 70 cause you gave away your retirement. Look at your credit scores. If they are high etc, then maybe that would be better than filing. But in my case, BK made my credit scores go up! LOLOL I would never again trade unsecured debt for secured nor would I sell myself short in retirement. 401K is exempt in BK.

[keepmine]

401K's and other ERISA qualified accounts are exempt property in bk.
Noway in hell would I touch the 401K.
How much debt are you seeking to discharge?

[yoyoma51]

lmg-

Bad idea. Save your 401k.

My wife has a nice 401k balance, and they can't touch it.

[lrprn]

As everyone has already said, liquidating your 401K is a terrible idea. Chances are if your finances are that bad, all you'll do is delay filing, not prevent it. And you will have converted a protected asset to one that isn't protected - cash. Bad, bad idea. Don't do it.

Instead make appointments for initial free or low-cost consultations with 3-4 bankruptcy lawyers in your area. Discuss your options and find out what's the best thing to do right now in your situation. Ignorance is not bliss when you are circling the financial drain for whatever reason.

[Minnymouth]

Why would you want to give up your retirement fund to pay a creditor???

Law allows your retirement funds to be exempt.......

Bankruptcy allows your to discharge your creditors debts........

Bankruptcy is a business decision...... not a disgrace...........

After filing bankruptcy you will see your credit score start to improve within 2-6 months with ontime payments..... Within 2-3 years you can buy a new home again with a decent interest rate.

REALLY, filing bankruptcy "sounds" like it hurts you bad.........BUT it really doesn't..... it helps make you debt free and gives you a chance to "start over" in life......

NEVER, NEVER turn your 401K into cash to pay a debt....... would be different if bankruptcy laws said you had to use it to pay creditors, BUT THEY DON'T...... THEY PROTECT IT.... and you should too!!!

You feel guilty about not paying your creditors, BELIEVE ME they have made more than enough off you in interest to pay your debt PLUS.............

[lorine]

Trustee is objecting to exemption of 401k and is requiring that we provide current statute in Missouri or Federal that exempts retirement funds

[keepmine]

Your lawyer should be dealing with this. BK reform exempted ERISA qualified retirement accounts.

[hendry70]

Trustee is objecting to exemption of 401k and is requiring that we provide current statute in Missouri or Federal that exempts retirement funds

That's completely bizarre. Under BAPCA, all retirement funds exempt from taxation under Sections 401, 403, 408, 408A, 414, 457 and 501 of the federal tax code are now protected from the reach of creditors.

[Flamingo]

The best thing to do about a 401(k) is forget you have it as savings when you run into bad times. Never touch it - only in cases of extreme emergency. That advice was stated by a financial expert on Good Morning America several weeks ago and believe it or not, it's also stated in our employee handbook.

[Phillymanhere]

Time flies--keep your 401K

I want to loudly agree with others. Time flies. I'm 46; retirement 20 years off will be here in a flash! ... These past 20 years have gone by fast. I KNOW the next 20 will zoom by.

Taking money out of a 401K to pay off a creditor (who has already calculated the risks of loaning you money and who is still coming out ahead despite your individual default) seems utterly foolish.


Maybe you're getting spooked by the "stigma" around bankruptcy. Don't be. I see Bk as a smart financial decision and business move. It's also completely honest as it reflects where I am financially right now. And it's completely legal. And your creditors, if they hit equivalent hard times, would file for BK in a hot second!

In fact, I've concluded that this type of thinking (worrying too much about how others see us, not facing up to financial reality) is what partly got me in this position in the first place! ....

We don't know how much Social Security will be around when we get old and prescriptions are expensive as hell. My dad has a great pension from the federal government. I have only a 401K and it's not nearly as well funded as it needs to be.
Don't touch it!!!!