QUESTION
Can I take a withdrawal from my 401(k) during a Chapter 13 bankruptcy?
Asked on May 10th, 2012 on Bankruptcy - Michigan
More details to this question:
Can I take a withdrawal from my 401(k) during a chapter 13 bankruptcy? I am over 60. If I can, what kind of a motion would I need to file?
10 ANSWERS
Bankruptcy & Debt Attorney serving Syracuse, NY
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Theodore Lyons Araujo
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Yes, but it is treated as income.
Answered on May 30th, 2013 at 12:54 AM
Bankruptcy Law Attorney serving Madison Heights, MI
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Able Legal Services, PLC
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You can take loans out in chapter 13 without court approval, so long as it is under $1,000. If the loan is over $1,000, then you need to file a motion with the Bankruptcy Court for an approval order.
Answered on May 14th, 2012 at 9:34 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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These are things you need to ask the attorney who represents you in the bankruptcy. It would be best not to take a withdrawal from your 401K until after the bankruptcy case is over. The approximate 38% of taxes and early withdrawal fees should be prohibitive enough until you reach retirement age. The monies in the 401K are exempt from the claims of creditors, and in a chapter 7 case I would strongly advise that there should be no withdrawal at all. A chapter 13 is different because you are paying a portion of the debts you owe, over the course of 3 to 5 years, and it can probably be done, but you should consult with the attorney.
Answered on May 11th, 2012 at 12:20 PM
Burton J. Green
Your 401 money is an exempt asset. The bankruptcy court generally has no control over it. I do not see why you would not be able to withdraw that money. If you have an attorney, then discuss it with the attorney. If you do not have an attorney, contact your chapter 13 trustee and ask. Trustees are usually quite helpful.
Answered on May 11th, 2012 at 12:05 PM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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You need to obtain written permission from the chapter 13 trustee. This ordinarily does not require a motion to be filed.
Answered on May 10th, 2012 at 4:25 PM
Bankruptcy Attorney serving Kalamazoo, MI
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Debt Relief Law Center
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Yes, but you have to be careful. It is possible your 13 Trustee may say now you have extra disposable income to pay into your 13 at that point, thus increasing your Plan payments. So with any withdrawals, probably you should ask if the Trustee will Stipulate to you doing that if being used for a particular purpose first.
Answered on May 10th, 2012 at 1:42 PM
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This is a tricky question that can vary by jurisdiction and what your local Trustee's policies are. Some trustees will allow you to take a withdrawal if the funds are used for reasonable and necessary expenses. However, you should consult your attorney to discuss the specific details that would be involved according to your local standards to take the withdrawal. If you do not have an attorney you will want to contact an experienced chapter 13 attorney in your area.
Answered on May 10th, 2012 at 1:38 PM
Daniel James Wilson
In Colorado debtor's property revests in debtor upon confirmation of the plan. You should be able to make withdrawals without court approval. Ask the lawyer who handled your case.
Answered on May 10th, 2012 at 1:03 PM
Immigration Attorney serving Arlington, TX
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Law Office of Pho Ethan Tran, PLLC
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401K's, if ERISA qualified, are not part of the bankruptcy estate. Thus, unless the court issued an order restricting your use of the 401k, you do not need a motion to make a withdrawal.
Answered on May 10th, 2012 at 12:29 PM
There is not enough information here to make a recommendation. You should review this issue with the attorney who filed your Chapter 13 case. Your Chapter 13 Plan may have provisions that are triggered in you withdraw money from your 104(k) plan.
Answered on May 10th, 2012 at 12:28 PM