QUESTION
Can I take an early withdrawal from a 401(K) claimed as exempt before Chapter 7 discharge?
Asked on Jul 14th, 2014 on Bankruptcy - Florida
More details to this question:
I am in Chapter 7, and awaiting discharge. May I cash out of a 401(k) that I have claimed as exempt before discharge or the case closing, or is this a really bad idea?
7 ANSWERS
Although the chapter 7 trustee may have filed an abandonment of your assets, other events may occur that may cause your bankruptcy discharge to be delayed or denied. You should wait until your case is closed.
Answered on Jul 23rd, 2014 at 3:09 PM
It is not a good idea, but if more than 30 days have elapsed from the completion of your 341 meeting, and you disclosed this asset on Schedule B & exempted it on Schedule C, you are legally entitled to do this.
Answered on Jul 16th, 2014 at 8:39 AM
Family Law Attorney serving Indianapolis, IN
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Arany & Associates
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Assuming you wait 30 days from the date of the First Meeting Of Creditors, you are good to go. Good luck!
Answered on Jul 16th, 2014 at 8:19 AM
Bankruptcy Chapter 7 Attorney serving Los Angeles, CA
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The Law Offices of Peter M. Lively
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Yes. Once the period for objections to your exemption expires, the exempt assets pass from the estate to the debtor. It is a bad idea unless absolutely necessary because those funds are supposed to be used for retirement purposes and when you withdraw early you are penalized and taxed.
Answered on Jul 15th, 2014 at 12:47 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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I would advise you to wait until your case is closed.
Answered on Jul 15th, 2014 at 10:16 AM
Bankruptcy & Debt Attorney serving St. Augustine, FL
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St. Johns Law Group
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Generally in a Chapter 7 case, the bankruptcy estate consists of the assets on the day of filing and any assets acquired after the date of filing (except for inheritances and a few other instances) or converted from exempt to non-exempt would not be part of the estate.
Answered on Jul 15th, 2014 at 10:15 AM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Really Bad idea..At least wait until the time after the 341 Meeting when the time to Obj to Exemptions passes. I would state that you should NEVER do early withdrawal from 401(K)..
Answered on Jul 15th, 2014 at 10:15 AM