IfIhave filed bankruptcy and it should be discharged in a few days, can I cash in my 401K?
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IfIhave filed bankruptcy and it should be discharged in a few days, can I cash in my 401K?
We are in desperate need of about $5000 and I need to cash in my 401K? I know that I shouldn’t but have no way to get the money. Can the court come after that money?
Asked on October 5, 2010 under Bankruptcy Law, Arizona
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Bankruptcy is a complex situation; before doing anything, speak with a bankruptcy lawyer about your specific situation if at all possible. If you can't, then at least wait, ifthere is any way to do so, for the discharges--that will eliminate these current debts and prevent any further action on them.
At the end of the day, you obviously have to eat, pay certain bills, etc. If you truly can't wait, do what you have to (though again; consult first with a bankruptcy attorney if at all possible, for how best to do this), though recognize that you are taking a risk both by acting before the debts are fuull discharged and by withdrawing 401k money (the money enjoys protection while in your account--but not after it's been distributed).
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