about to file, but considering 401k withdrawal to pay fees

[ja181]

I'm about to file chapter 7 for the income period nov-april (will file first week in may)

but I'm $300 short on paying for my bankruptcy filing fees, and I also owe my apartment leasing company $466 for carpet replacement on my old apartment (moved to a different apartment in the same complex recently).

I have $2,500 in an old 401k, and fidelity will *only* allow a monthly dispersement (of whatever amount I set, but I can't lower it later) or a full dispersement. I will not have enough to pay the remaining fees until late may (am on unemployment). The carpet replacement cost is due by may 26th.

Anyone have any advice?

If I take a full dispersement in May, that won't show up on my 6-month lookback, but it will have to be reported on my schedule I, right?

[Majakat]

I wouldnt liquidate it, I just wouldnt - what happens if you are late on the carpet replacement ?

you will end up being taxed 10% on the 2500 next year and lose it as retirement, seems like it is alot to lose for the $300

[LALADY]

Is the bill for the carpet replacement going to be included on your BK petition?

[ja181]

If I don't pay the $466 by 5/26, they begin eviction. It was included as an addendum to my lease.

I guess I could try including it in the BK, but I don't really have anywhere to go if they evict.

The leasing company has been really nice to me, and I really don't want them to have any problems with me, I want to be current on my lease when I file...

[momofthree]

Can you go to the landlord and ask to make payments on the $466 until it's paid? If you explain that you're on unemployment, and you've always had a good rental history with them, they may very well work with you....

[ja181]

hmmm. Great idea. I will give them a ring tomorrow and ask =)

[helpmeout]

As long as you file by 5/31, the income lookback will still be Nov-Apr.

[ja181]

Yeah, I'm just more wondering what it will do to my schedule I

[albacore44]

As much as i hate to admit it, I pulled out $3K from my 401K to pay the attorney. Had too,no other choice. i know about the tax consequences, I'll deal with it. don't woor about it being counted as income, it doesn't, so said my attorney, and he did not include it in my filing.

[ja181]

As much as i hate to admit it, I pulled out $3K from my 401K to pay the attorney. Had too,no other choice. i know about the tax consequences, I'll deal with it. don't woor about it being counted as income, it doesn't, so said my attorney, and he did not include it in my filing.

Did your withdrawl occur during your 6 month lookback period? Or just after?

And it wasn't included in your Schedule I?

[albacore44]

Did your withdrawl occur during your 6 month lookback period? Or just after?

And it wasn't included in your Schedule I?

1 week before i filed. no not included. attorney said in Ca. districts, a 401K withdrawl is not considered income, only wages count

[ja181]

Hmmm... Ok, so what I'm understanding is:

1. 401k withdrawals count as income for the means test if they are taken during the 6 month lookback
2. 401k withdrawals do not count as income if they are taken right before filing but outside (just after) the 6 month lookback
3. 401k withdrawals do not count as projected income on schedule I in chapter 7 cases

Does that sound right?

[BCA2009]

Hmmm... Ok, so what I'm understanding is:

1. 401k withdrawals count as income for the means test if they are taken during the 6 month lookback
2. 401k withdrawals do not count as income if they are taken right before filing but outside (just after) the 6 month lookback
3. 401k withdrawals do not count as projected income on schedule I in chapter 7 cases

Does that sound right?

In our district 401/IRA withdrawals were not counted as income for means test.

They should not be counted on schedule I becuse you won't be take that withdrawal again in the future.


As far as the tax consequences go. If you take the total amount out, can roll what you don't need into an IRA. Then you will only pay the penaly ind income tax on the amount you need right now. And the remaining amount will be there for a real emergency (or Retirement).

[LadyInTheRed]

I wouldnt liquidate it, I just wouldnt - what happens if you are late on the carpet replacement ?

you will end up being taxed 10% on the 2500 next year and lose it as retirement, seems like it is alot to lose for the $300

It's more than 10%, unless your income is low enough to avoid paying income tax. There's a 10% penalty, plus regular income tax. Depending on your tax bracket, the total tax plus penalty will be between 10% and 45% of the withdrawal. Being unemployed, the OP is likely to be in a low tax bracket, but I wanted to point out the possible extent of the tax for anyone else contemplating a 401k withdrawal.

[ja181]

just talked to my attorney, he said I was correct, that I can take this small 401k withdrawal after 4/30 so that would not be used on my means test, then use it to pay my fees and such, and then file in May. Also, it would not affect my schedule I.

I know the tax consequences... I was also looking at paying my attorney to file for an adversary hearing to value my tax lien, which will be extra.