Question on forgotten retirement fund. My attorney is worthless so can't ask her

[kmccoleman]

So I receive these statement from time to time from a retirement account that was started by an old employer (and I mean YEARS old) that has money in it. I actually completely forgot about it and basically thought the statements were just them not updating their records. BUT it could maybe be a blessing in disguise because we have a ton of non-covered by our contract things still needing to be done to our house because of the flood and ongoing construction (we have our main bathroom that needs basically a new wall and sealing around our tub and toilet to avoid any leaks in the new drywall being done) so my question is can I cash it out without court approval? I can't roll it over because I don't do retirement at this job (I don't make enough to contribute and now I make even less with the wage order they just tacked onto my wages) without getting into trouble? There's nothing in my order confirming the plan about this so I thought I'd ask the experts who have basically been my fail safe because my attorney is worthless and doesn't answer calls or emails. She never did before confirmation so there's zero way she's going to now that I'm out of her hair..

Any information is appreciated because I'm basically doing all these things without counsel because my counsel is non existent now.

[flashoflight]

If you withdraw the retirement funds, they are no longer exempt from being seized by your creditors. The trustee will see the increase in disposable income when you turn in the taxes to the trustee and you will have to pay all of the proceeds after taxes and penalties to the unsecureds even if you already spent it on the house repairs.

Your useless lawyer needs to make a plan modification to increase your home maintenance budget. Home maintenance is a harder category to increase for above median because it's lumped into the fixed costs for your state and county housing expenses. A good lawyer can get it through though with your help on receipts and estimates.

[justbroke]

If you have major expenses, then you must go through your attorney to ask permission to purchase something using your retirement funds. It's nothing fancy and these are nearly always approved -- especially when it doesn't concern incurring actual debt.

Make a phone call to the attorney's office and make an appointment... if you really want to go down the path of depleting a retirement account to paid for non-cospectic repairs to your home.

[kmccoleman]

Thanks justbroke and flashoflight. I actually called the investment company and it looks like they were forfeited after 24 months and its been over 4 years since I worked at this place so no harm no foul. I don't plan to incur any new debt (I filed alone and my husband didn't) and I think my plan is 100% payback now to all my creditors so it wouldn't really affect my plan at all.

[flashoflight]

If you have major expenses, then you must go through your attorney to ask permission to purchase something using your retirement funds. It's nothing fancy and these are nearly always approved -- especially when it doesn't concern incurring actual debt.

I would not assume this is guaranteed unless your lawyer says so.

This is district dependent and even trustee dependent. It also matters if you're asking for the second time to retain the increased disposable income payment. And even if the motion is granted, there is a chance the trustee will make you pay it back via increased plan payments which may make your plan infeasible if the amount is large.

[justbroke]

This is district dependent and even trustee dependent. It also matters if you're asking for the second time to retain the increased disposable income payment. And even if the motion is granted, there is a chance the trustee will make you pay it back via increased plan payments which may make your plan infeasible if the amount is large.

I don't understand what you mean by "asking for the second time to retain the increased disposable income payment." If you mean that withdrawing the funds without permission "could" cause the Chapter 13 Trustee to ask for the funds as increased payment, I agree with that. That's why I wrote specifically to seek permission from the court first. In that way, this is not seen and can't be construed as additional income. This would be for a specific purpose where the debtor would otherwise be filing a Motion to Incur Debt... which are usually approved as well.

An attorney should be able to easily navigate these waters based on the district. My Chapter 13 Trustee already had specific forms for incurring debt or to withdraw money from retirement plans. This was specifically to make the process easy and to get their pre-approval so that the actual motion to the court could be filed as an "Agreed Motion for..."

The bottom line is that if this is for a necessity (leaking roof, new car to replace damaged car, or other life necessity), the debtor's attorney would follow the correct course (Motion to Incur) before the debtor withdrew any money.

I wouldn't assume it's guaranteed either, but for true needs and the debtor is not incurring debt, there is absolutely no reason that a Chapter 13 Trustee should stand in the way or put up obstacles to block the debtor from doing so. This is if you follow the rules and seek permission before incurring any debt or pulling money from your retirement account.

(While some Trustees would never know, because they don't require a copy of the annual filing of the tax return(s), the debtor should still follow the process. The process is either a Motion to Incur or Motion to Modify before taking action. In some emergency cases, I have read cases where debtors had exigent circumstances where they had to take immediate action to preserve or protect property and then file emergency motions later. Again the key issues are disclosure and following the correct process. For me, if a Chapter 13 didn't let you deal with life's unexpected twists and turns, I would have failed mine after 3 months when my sewer main broke. The code understands this and there are ways to modify a confirmed plan or get things done without the need for increased payments or a dismissal.)