Chapter 7, If I move before discharged, but after meeting with trustee, can I cash out my 401?

I want to move to be closer to my elderly parent, can I cash out my 401? Will the courts be able to take any portion of it if I do?

Nixa, MO -

Attorney Answers (2)

Craig Dennison Robins

Craig Dennison Robins

Chapter 7 Bankruptcy Attorney - Woodbury, NY
Answered

401-K retirement funds are exempt assets. If you take money out of your 401-K fund AFTER filing for bankruptcy, then you should be OK.

However, the preferred course of action is to make sure that the trustee is not pursuing any of your assets. Since you didn't indicate that the trustee had any issues with your case, it is probably safe to do so.

If you do move, and your bankruptcy case is still open, you are required to notifiy the court and the trustee of your new address.

Good luck!

For more info about bankruptcy, please feel free to see the hundreds of articles on my bankruptcy blog:
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Mitchell Paul Goldstein

Mitchell Paul Goldstein

Bankruptcy Attorney - Glen Allen, VA
Answered

Your 401K is not an asset of your estate (so says the Supreme Court and ERISA). However, I would suggest that you wait until the trustee has decided not to administer any assets. Also, be prepared for the tax liability and 10 percent penalty if you are under 59 and a half.

Good Luck and talk with your attorney for specifics about your case.

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