341 completed, have two questions

[pitts48]

I filed a chapter 7 bk and had my 341 last week.Everthing seems to have went well with no problems but I have two questions.
1. I need to get a job to supplement my social security due to
loss of pension from bankrupt company. At what point could I
get a job without it having an negative effect on my bk case?

2. I may not be able to get a job right away and may need to
take some money from my 401K fund before receiving the
discharge. Would that safe? Could the trustee take the 401K
money?

Thanks for your help

[JollyGG]

I can only answer question 1. Mabey someone else here can take a stab at number 2.

Now that your 341 is over you are free to get a second job whenever. Your bankruptcy estate was established when you filed. You have made it past you trustee's chance to ask about any changes in income. Go ahead and get a job and get you finances in order.

[lrprn]

1. I need to get a job to supplement my social security due to loss of pension from bankrupt company. At what point could I get a job without it having an negative effect on my bk case?

JGG is right. Do it anytime you want now that your 341 is past.

Personal Rant - And why is it that companies that go bankrupt and utterly destroy up to many thousands of lives with lost wages, lost benefits, and lost retirement pensions never get tarred with the shame of the "scarlet B"???? For a company, "It's just business". We consumer filers need to wise up and learn to say, "It's just business" too!

2. I may not be able to get a job right away and may need to take some money from my 401K fund before receiving the discharge. Would that safe? Could the trustee take the 401K money?

There is a risk changing any portion of a protected asset like a 401K into an unprotected asset (cash) before your Ch 7 case is closed. The exception would be if you have unused state exemptions (or federal exemptions if you used those) that could protect the cash amount you intend to withdraw. Be sure to ask your lawyer about this before doing anything with your 401K.

Also remember that there are considerable early withdrawal tax penalties - typically 10% - if you don't pay the 401K "loan" back in time.

[Logan]

lrpn,

What about borrowing from your 401k. That's different than an early withdrawal....

[lrprn]

lrpn...What about borrowing from your 401k. That's different than an early withdrawal....

Very true, logan - I should have been more careful with my language.

When you take a loan from your 401K, there are specific rules that govern the payback within a specified time frame. If you don't repay the loan within that time frame, then the hefty tax penalties kick in - typically 10% of the remaining balance on the loan not to mention the loss of the remaining retirement funds as well. http://www.401khelpcenter.com/loans.html (I am intimately familiar with this one since hubby had six active loans against his retirement and defaulted on one just before we filed Ch 13...sigh...)

When you take an early hardship withdrawal from your 401K, you can't pay this back and must pay the tax penalty plus an early withdrawal fee. Worse, once you take the money out, you can't put it back in. http://www.401khelpcenter.com/mpower...re_121902.html

[Logan]

I just took a loan from my 401k after my 341 hearing and see no reason why I should report it. It's a small loan to float me until I get my 1st paycheck from a new job and plan on paying it back very quickly.

I believe you can do anything you want after the 341 hearing....Am I incorrect?

Logan