Pension cash out and Chpt 7

[arsenafan]

OK, here is my dilemma..I'm about $1500 upside down each month on expenses, so Ch 7 is going to be friend.

Before I file I'm trying to plan this right so I don't get shafted any more than I already am. I am unemployed and have about 3k in the bank that will last a month or 2 maybe.

I could, if I chose to, get about 11k from cashing in my pension. Obviosuly, I don't want the trustee to get the lions share of this if I file, but I need to cash to tide me over right now. I do have an option with it to roll some of it over to my 401k and take some. I also have a live in girlfriend who helps with the bills a little where she can.

2 questions are this: Could I just deposit the check they send me into her account that I am not on? I'm thinking maybe this is shady and don't like it but.....

or if I rolled some of the $$ I don't immediately need into my 401k is it safe there or would they say that you just put in say 7k into it when you should have paid your bills ?

And the reason why I'm thinking of filing is that Yes, I could pay some of the bills with my pension money, but the big issue will always be there..I am short every month by a HUGE amt and I would just be delaying the inevitable !

[AngelinaCatHub]

OK, here is my dilemma..I'm about $1500 upside down each month on expenses, so Ch 7 is going to be friend.

Before I file I'm trying to plan this right so I don't get shafted any more than I already am. I am unemployed and have about 3k in the bank that will last a month or 2 maybe.

I could, if I chose to, get about 11k from cashing in my pension. Obviosuly, I don't want the trustee to get the lions share of this if I file, but I need to cash to tide me over right now. I do have an option with it to roll some of it over to my 401k and take some. I also have a live in girlfriend who helps with the bills a little where she can. DON'T DO IT! It is protected, once out, it is usable currency and is a target.

2 questions are this: Could I just deposit the check they send me into her account that I am not on? I'm thinking maybe this is shady and don't like it but..... THAT is FRAUD. You will get a big tax hit on redeeming a pension. 10% penalties and regular taxes.

or if I rolled some of the $$ I don't immediately need into my 401k is it safe there or would they say that you just put in say 7k into it when you should have paid your bills ? Filter it in and use all you can for exempt stuff, like food utilities, etc..

And the reason why I'm thinking of filing is that Yes, I could pay some of the bills with my pension money, but the big issue will always be there..I am short every month by a HUGE amt and I would just be delaying the inevitable ! If you screw over your retirement, you will never make it back. Leave it alone. It is protected.

'Hub

[HHM]

What's the rush to file. If you don't have job or a reliable way to pay your expenses, it is premature to file BK. There is little risk that your creditors could do anything to you, so you should wait to file until you have steady income.

As to your question. You can do whatever you want with exempt assets "after" the case is filed. Whatever you do, do not cash out the Pension and deposit it in your girlfriends accounts.

[arsenafan]

I guess I'm rushing to think about filing as I don't want to be sued, kicked out of my home or have the car that I'm using to find a job repossessed. Are you saying if I just stop paying my bills then its not like my wages could be garnished anyway ?

OK, another question, are IRA's also protected as well as 401(k) loans as I could just roll over the pension into an IRA if it is so I don't have to fool with my 401k. I seem to have read that some judges are saying IRAs can be used as assets for trustee to seize.


Also I was thinking that it would look better to have CCC then stop reporting and then have the bk discharge instead on 4444 then BK. AM I incorrect in that thought

[CH33 Paralegal]

IRA's are assets, but 401(k)s are protected. Any recent movement, especially movement that may have been made in preparation for bankruptcy could potentially be reviewed.

Pension income is income. Any money you've received in lump sum form recently needs to be discussed with your attorney so he can give you the best advice possible.

[LuciluS]

http://www.************************/...ira-exemption/

[arsenafan]

OK, so basically to keep my retirement safe, I need to leave my 401(k) alone and not even do anything with my pension right now, just leave it as is with my former company and draw on it when I retire.

[AngelinaCatHub]

OK, so basically to keep my retirement safe, I need to leave my 401(k) alone and not even do anything with my pension right now, just leave it as is with my former company and draw on it when I retire.

YES! I disagree with 'paralegal' as IRA's annuities, and their payouts, Social Security and all retirement instruments including life insurance payouts due to a loss of a loved one, cannot be garnished or levied (except IRS).

Your 401K is not owned by your ex-boss. It is in some kiind of fund such as Fidelity or the likes. Pensions though could vary as some of them (like most union pensions are controlled and can be lost, but not confiscated.

Now proceeds of a retirement could be considered as income as far as the means test, but in no way can it be attached or garnished. (except for taxes). 'Hub

[AngelinaCatHub]

Additionally, if you do take your 401k to transfer, DO NOT take it as a check and do not touch it as a check, but do a direct rollover to another company as the minute you have any of it in your hand, it is a taxable event. 'Hub

[keepmine]

Stop paying all debt you wish to discharge and use that money to support yourself.

[LuciluS]

Additionally, if you do take your 401k to transfer, DO NOT take it as a check and do not touch it as a check, but do a direct rollover to another company as the minute you have any of it in your hand, it is a taxable event. 'Hub

In Addition to what Hub said, some companies may not allow a 'transfer' from a 401k to an IRA. My husband's employer in IN absolutely refused to transfer his 401k money when we moved to Arkansas.

I had him request the check be made payable to BOTH him and the Investment Company where is placed it in an IRA. Upon receipt of the check, he personally took it to his Investment Counselor, signed the back of it & they opened his IRA account. This was in late 2005.

Our Bankruptcy Attorney told hubby his IRA is Exempted from Bankruptcy. Monies cannot be touched by Trustee or Creditors.

Luci