What should she do?

[sinister]

Well...I think my mom made a BIG mistake but not sure....
She goes for her 341 meeting 12/14 but she withdrew from her 401k because she had too; she is going through chemo and has big bills that she cant claim on bankruptcy or they wont treat her plus a deposit on her electric bill due to bankruptcy that she couldnt pay, her roof on her home is caving in in one place and wont make it through the winter without collapsing, her hot water heater just went today and she has to replace that as well. She withdrew 5,000 and all of it will be used to fix things or pay deposits on utilities. The lawyer said not a good idea but she had no choice, we couldnt give her the money as we were just discharged 2 months ago. What should she do?????
Life just gets tougher and tougher and my poor mom has cancer and doesnt need this nightmare!!!! Thanks....

[SinkingFast]

Has Mom physically gotten the cash in her hands yet??!!

Or has she just completed the paperwork to do the withdrawal??!!

With the 341 so close, waiting until after 12/14 probably woulda been better.

[sinister]

she has the cash and has used it to pay the contractor and roofer...as well as deposits...

[FoolAndHisMoney]

Sorry to hear about your mom. Not sure what she should do. She converted an exempt asset into a non exempt asset. I guess time will tell. Good luck to your mom. Whatever happens I think getting cured is more important to her right now.

[CATCHMEIFYOUCAN]

Just my opinion

Hmmm, the Trustee already has a "snapshot," of her financial picture at the time she filed, I wouldn't mention doing the withdrawal at the 341, since she disclosed the info to her lawyer. I'm sorry to hear your mom is sick, but maybe that will work to her benefit if she used some of the money towards her illness. You are allowed to keep a certain amount of funds in your account. (I had told my lawyer I came into some money $1600 bucks and told him what I did with it (paid necessary expenses/kept receipts - it was never mentioned at the 341 meeting).

I wish your mom the best of luck! When she goes to the 341 meeting, play the sympathy card (looking sicker than usual) not trying to sound insensitive.

Best wishes, Catchmeifyoucan

[Spartan]

Those expenditure all appear to be necessity. As long as she can document them, I think she has sufficient defence. Any attempt to retrieve such fund would 'shook the conscience of the court'. What is the trustee going to do? Take her roof? Deny her chemo treatment? Deny her utility? I would like to see how the judge of any court would feel about that.

[sinister]

Thanks everyone....you have been a great help AS USUAL!!!!!!!!!!!

[tradewiz50]

T What is the trustee going to do? Take her roof? Deny her chemo treatment? Deny her utility?

Dismiss her bankruptcy.

[9877donna]

That was a bad idea...

Well...I think my mom made a BIG mistake but not sure....
She goes for her 341 meeting 12/14 but she withdrew from her 401k because she had too; she is going through chemo and has big bills that she cant claim on bankruptcy or they wont treat her plus a deposit on her electric bill due to bankruptcy that she couldnt pay, her roof on her home is caving in in one place and wont make it through the winter without collapsing, her hot water heater just went today and she has to replace that as well. She withdrew 5,000 and all of it will be used to fix things or pay deposits on utilities. The lawyer said not a good idea but she had no choice, we couldnt give her the money as we were just discharged 2 months ago. What should she do?????
Life just gets tougher and tougher and my poor mom has cancer and doesnt need this nightmare!!!! Thanks....

I'll be suprised if the Trustee does not require her to hand the money over to him.If she does not comply he might dismiss her case.It'll even be worse if your mom tries to hide the money from the BK Court or Trustee.She needs to be upfront and honest about the funds she acquired from her 401K.
Good Luck to your mom.I hope all goes well.
Donna

[HHM]

What specifically pushed her into bankruptcy...generally, for persons in your mother's predicament, unless some immediate action is about to be taken (i.e. foreclosure, etc)...they typically tend to be judgment proof, don't really need "good" credit, and will be accruing many more medical bills, I recommend they wait as long as possible so that all the medical bills can be thrown into the BK.

If there was nothing drastic immediately pending, it may not be such a bad thing to dismiss the BK. Wait for the treatment to run its course, and then file BK.

and has big bills that she cant claim on bankruptcy or they wont treat her

. This may be more of scare tactic than reality. The truth is, your Mother is required to "list" all debts on her bankruptcy petition, she can't just leave some off. Also, Hospitals and Doctors all have "loss" insurance to cover this very scenario. Granted, they don't want to make a claim if they don't have to, but most medical facilities are insured against bankruptcy related losses.

As for the 401K withdraw (was it a true withdrawal, or a loan, if a withdraw, was there any penalties associated with it). In any event, I really don't know what happened. 401K's are typically exempt, and generally, anything that happens after the date of filing is not part of the BK. So I am not convinced that there will be a problem. However, this is one of those grey areas. Section 541(a) of the BK code defines what is property of the estate, however, short of seeing any case law on the subject, the code does not specifically mention your scenario.

[SinkingFast]

Dismiss her bankruptcy.

You can't say that's the certain outcome.

The BK had already been filed. The BK Estate had already been set.

Granted, cashing out the 401K funds that were Exempted by BK Code after filing was not the best move, but there was no intent to defraud.

Mom has a medical condition where the doctors and facility will not continue to treat her if she discharges her debts to them. The other expenditures were necessities.

If, and that's a big 2 letter word,........ IF this all gets brought up, Mom is dealing with a human being who has the ability to over look the situation. This could easily fall into "Totality of Circumstances".

Be sure Mom keeps all receipts and documentation of the expenses. Account for every penny.

It may be a non issue tho. The Trustee may not ask any sort of question that would even remotely cause Mom to have to tell about the withdrawal.

Tell Mom to keep her answers short, sweet, and to the point at the 341. Don't sit there and blab on and on.

[tradewiz50]

You can't say that's the certain outcome.

Your opinion is welcome just as much as mine. I never said it was a certain outcome.