Job Loss and 401k Withdrawal

[Dealer36]

I no longer have my job at the casino as of last Saturday. I think if I try hard enough that I will be able to get a job at another casino but I'm really fighting doing that even though it pays really good money and pays the bills. The reason why I really don't want to do that is because my gambling problem is the whole reason (the WHOLE reason) why I found myself filing my chapter 13 plan and I feel like being in the business does not help that at ALL.
However, I do have 12 years experience and that is where the money is at. I do have an accounting degree but have yet to use it.
My main question is 401k withdrawal. I spoke to my lawyer's office the other day and their comment to me was "by law the 401k is protected while it is active but when it is withdrawn there is a chance the creditors will go after it IF THEY KNOW ABOUT IT". She said by law if they know about it then they have to modify my plan. I am confused. Even if I get a job within the next couple of weeks I'm still going to be behind on my bills. I am having a really hard time with this. I need something to live on. Don't they take that into consideration and since my 401k will only give me a little over 10,000 I may need that to pay my bills until I find another job. Any advice would be greatly appreciated.

[HHM]

If you lost your job, why not convert to a chapter 7 and be done with it.

[arkienurse]

I no longer have my job at the casino as of last Saturday. I think if I try hard enough that I will be able to get a job at another casino but I'm really fighting doing that even though it pays really good money and pays the bills. The reason why I really don't want to do that is because my gambling problem is the whole reason (the WHOLE reason) why I found myself filing my chapter 13 plan and I feel like being in the business does not help that at ALL.
However, I do have 12 years experience and that is where the money is at. I do have an accounting degree but have yet to use it.
My main question is 401k withdrawal. I spoke to my lawyer's office the other day and their comment to me was "by law the 401k is protected while it is active but when it is withdrawn there is a chance the creditors will go after it IF THEY KNOW ABOUT IT". She said by law if they know about it then they have to modify my plan. I am confused. Even if I get a job within the next couple of weeks I'm still going to be behind on my bills. I am having a really hard time with this. I need something to live on. Don't they take that into consideration and since my 401k will only give me a little over 10,000 I may need that to pay my bills until I find another job. Any advice would be greatly appreciated.

Sorry to hear about your job loss. But you may be right in that another line of work may be best for your addiction problem. I could not imagine having to work daily in a place that held my greatest temptation. When I quit smoking, which isn't nearly as serious a problem as yours, I had to quit hanging around my smoking friends for quite a while to get rid of that urge. I feel for you. After all you have to take care of your family and if dealing is all you know......
Unfortunately, your lawyer is probably right about them coming after your 401k if you dip into it. And also, you do know you will have to pay penalty taxes at the end of the year? Probably the furthest thing on you mind right now, but still something to keep in mind.

Good luck with whatever you decide.

[danaf]

DON'T TOUCH YOUR 401K! And File for a 7 like HHM said.

[Dealer36]

I can't file for a 7 because I am currently paying my creditors 0%. If I filed a 7 I would lose my house and my car and I need both of those. My only step is to give up my house and my car and I have enough experience in the casino business that I feel confident that even in these rough times that my experience would get me on somewhere. I have been praying to God for quite a while now that he put me on my right path and I believe he wants me out of the casino business.
Like I said, I do have an Accounting degree that I haven't used. I'm thinking about starting an errand/personal assistant service but need some funds to pay my bills since it's hard to replace a nearly 60,000 a year job.
I have to do what I have to do now. And I am aware of the penalties that are to be paid from 401k. Thanks for all of your responses, they are greatly appreciated.

[HHM]

Ok, let's get a few more facts.

Why exactly did you file chap 13, what are you paying in your chapter 13. As for the house, do you have negative equity, if so, how much, etc.

However, regardless of the answer, (and this has been asked before), taking a 401k loan or liquidating a 401k during a chapter 13 is almost always a bad idea, or at least its very risky. If you liquidated your 401K, how long could you last (i.e. paying your living expenses with that money and your chapter payment).

[Dealer36]

Thanks for the response. My chapter 13 payment is $262 a month. Basically all I am paying in that payment is house arrears, car payment, trustee and lawyer. That's why I'm saying my only other step is a 7 and I would lose all of my secure assets. No, I don't have negative equity in the house. I owe 115,000 on it and they are selling for about 128,000(condo). As far as the 401k is concerned. The lawyers office told me that my creditors could take my 401k from me if they found out that I cashed it in-it would be about 10,000 after penalties- enough for me to pay my bills until I got back on my feet. Is that really enough for the creditors to go after? I mean each one wouldn't even receive what they would receive if they wrote my loans off as bed debts,huh? I don't know but the lawyer told me the trustee has so many cases to deal with that they don't pay much attention to that stuff but that by law if I let them know I did that they would have to amend my plan. Thanks for any input.

[MOMof3]

Ask your lawyer about working w/your mortgage company to modify your loan and add arrears to it---or a payment plan for arrears. Mortgage companies are hard pressed right now. Then you can file the chapter 7 and be done. Were you in arrears on your car---you might lose that.