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  • Beaconmember1
    started a topic Cashing 401k to pay off Trustee Florida

    Cashing 401k to pay off Trustee Florida

    I had to file a chapter 13 bankruptcy to try to strip a lien from my condo. I also have unsecured debt I've been making payments on in order to keep my belongings. I currently now owe $5,680. The motion to strip a lien hearing did not go in my favor so my attorney said I can go back to a chapter 7 in order to pay off my debt earlier. My condo is now in foreclosure and the credit union can take my condo at any time so I need to get out of dept and re-establish my credit asap so I can purchase another home. My question is, once I convert back to a chapter 7 can I cash out my 401k so I can use that money to pay off my trustee the remaining money that I owe without the trustee charging me more, since once I cash out my 401k it no longer is an exemption. Or will the trustee just accept the remaining pay off amount and call it all paid in full?
    Last edited by Beaconmember1; 04-16-2016, 05:23 AM.

  • Betty3
    replied
    "Generally" it is not a good option/idea to cash it out if at all possible not to. However, you will have to decide what is best for you at this time. I really would talk to a/your bankruptcy attorney. Do not keep anything you do from the trustee - definitely not before talking to an attorney.

    Leave a comment:


  • cbg
    replied
    That was why I was asking. If you were still employed there, it would be a moot point since you would not be able to cash it out anyway. Since you're not, it is an option; the question is whether it's a good option.

    Leave a comment:


  • Betty3
    replied
    You really need to talk to a bankruptcy attorney. You really don't want to keep anything you do from the trustee. The bk attorney and/or the trustee should be able answer your question.

    Leave a comment:


  • Beaconmember1
    replied
    Originally posted by Betty3 View Post
    http://budgeting.thenest.com/can-cas...yed-26009.html

    http://money.usnews.com/money/blogs/...ter-retirement

    Here are a couple of links for your review - cashing out 401k before & after retirement. You can also ask your bankruptcy attorney additional questions you might have regarding the bankruptcy.
    I know I can cash out my 401k. I just need to know if I can pay my trustee off in one lump sum from my 401k. In other words, would my trustee know I took out the money from my 401k to pay him off?

    Leave a comment:


  • Beaconmember1
    replied
    Originally posted by hr for me View Post
    If your 401k plan offers hardship withdrawals, they will have the qualifying reasons, but usually foreclosure of your primary residence. Bankruptcy is not usually one of the standard qualifying reasons. You might try getting the hardship for the foreclosure rather than to pay the trustee so that you could keep that residence. But it might already be too late depending on where in the foreclosure process you are. If you have a bankruptcy/foreclosure on record, it is going to take time to re-establish your credit.

    BUT I don't normally suggest cashing in retirement funds....and if they are untouchable right now, you need to consider if you use them and then return to the bankruptcy situation in the future, you will have lost that if you use it now.
    I've already spoken to Fidelity. I asked if I could take the money out and they said yes, absolutely. I don't even have to give a reason. Foreclosure has already been decided by the judge. I just need to know if the trustee is going to penalize me or ask for more money if I pay him in full the remaining balance. Thank you.

    Leave a comment:


  • Beaconmember1
    replied
    Originally posted by hr for me View Post
    If your 401k plan offers hardship withdrawals, they will have the qualifying reasons, but usually foreclosure of your primary residence. Bankruptcy is not usually one of the standard qualifying reasons. You might try getting the hardship for the foreclosure rather than to pay the trustee so that you could keep that residence. But it might already be too late depending on where in the foreclosure process you are. If you have a bankruptcy/foreclosure on record, it is going to take time to re-establish your credit.

    BUT I don't normally suggest cashing in retirement funds....and if they are untouchable right now, you need to consider if you use them and then return to the bankruptcy situation in the future, you will have lost that if you use it now.

    I've already spoken to Fidelity. I asked if I could take the money out and they said yes, absolutely. I don't even have to give a reason. Foreclosure has already been decided by the judge. I just need to know if the trustee is going to penalize me or ask for more money if I pay him in full the remaining balance. Thank you.

    Leave a comment:


  • Beaconmember1
    replied
    Originally posted by Betty3 View Post
    http://budgeting.thenest.com/can-cas...yed-26009.html

    http://money.usnews.com/money/blogs/...ter-retirement

    Here are a couple of links for your review - cashing out 401k before & after retirement. You can also ask your bankruptcy attorney additional questions you might have regarding the bankruptcy.

    My Bankruptcy attorney sucks. He said I could, but I don't trust him. He already caused me to lose my home.

    Leave a comment:


  • Beaconmember1
    replied
    Originally posted by cbg View Post
    Are you still employed by the employer who sponsors the 401(k)?

    No, I am not employed with that company anymore, but I still have the 401k. I am currently self employed.

    Leave a comment:


  • hr for me
    replied
    If your 401k plan offers hardship withdrawals, they will have the qualifying reasons, but usually foreclosure of your primary residence. Bankruptcy is not usually one of the standard qualifying reasons. You might try getting the hardship for the foreclosure rather than to pay the trustee so that you could keep that residence. But it might already be too late depending on where in the foreclosure process you are. If you have a bankruptcy/foreclosure on record, it is going to take time to re-establish your credit.

    BUT I don't normally suggest cashing in retirement funds....and if they are untouchable right now, you need to consider if you use them and then return to the bankruptcy situation in the future, you will have lost that if you use it now.

    Leave a comment:


  • Betty3
    replied
    http://budgeting.thenest.com/can-cas...yed-26009.html

    http://money.usnews.com/money/blogs/...ter-retirement

    Here are a couple of links for your review - cashing out 401k before & after retirement. You can also ask your bankruptcy attorney additional questions you might have regarding the bankruptcy.

    Leave a comment:


  • cbg
    replied
    Are you still employed by the employer who sponsors the 401(k)?

    Leave a comment:

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