QUESTION
Can I borrow from my 401k to pay for attorney fees?
Asked on Oct 21st, 2013 on Bankruptcy - Idaho
More details to this question:
We are currently being garnished and unable to come up with fees. We are living pay check to pay check.
10 ANSWERS
William Rhymer
It would be better to just withdraw it, if possible. However you can borrow the money from your 401 K but you would still owe it when you finished your Chapter 7. (There are special rules about 401Ks.)
Answered on Oct 23rd, 2013 at 9:25 AM
Possibly depending on your 401ks rules - may be better options for you though.
Answered on Oct 23rd, 2013 at 1:17 AM
2 Awards
Yes you can. Check with your 401k administrator.
Answered on Oct 22nd, 2013 at 1:30 PM
Yes, if that is your only resource, you certainly may tap into it to pay your attorney for the fees and costs of filing bankruptcy. However, sometimes there can be other resources that an experienced attorney can find that might be a better choice.
Answered on Oct 22nd, 2013 at 1:30 PM
Yes, you can borrow money from your 401k to pay attorney fees or anything else. It is important that you repay that money according to the payment schedule so you won't have to pay taxes and penalties.
Answered on Oct 22nd, 2013 at 1:29 PM
2 Awards
Yes you can borrow from yourself to cover fees. You are using an exempt asset. It is often not the best choice but it can be the only one.
Answered on Oct 22nd, 2013 at 11:59 AM
You can borrow from your 491k to pay attorney fees. It is your money and basically you are borrowing from yourself. Your attorney, in the height of caution should exempt the funds if filing a chapter 7. But, that being said,only take out enough to pay your attorney retainer. Taking funds from your protected 401k, may make those funds unprotected unless the wildcard exemption is available.
Answered on Oct 22nd, 2013 at 11:24 AM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Are you in a Bankruptcy case currently? If not yes.
Answered on Oct 22nd, 2013 at 11:12 AM
Bankruptcy Attorney serving Dallas, TX
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Polk & Associates
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Yes. The 401k is a type of savings account and the money in your 401k is mostly money that you put there yourself. So if you'd like to take some out, you are allowed to do that. Taking it out early will cause you to pay more income taxes later, however, and that is why people often prefer to "borrow" it from themselves rather than calling it a straight up "withdrawal."
Answered on Oct 22nd, 2013 at 11:11 AM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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You may borrow from your 401K to pay attorney fees. Be aware that a cash-out will count as income against you. A loan against your 401K is fine, just be sure you can repay it.
Answered on Oct 22nd, 2013 at 11:08 AM