Is it legal--Can you cash an IRA for legal expenses during a chapter 7?

[ahall]

Can you cash in an IRA to pay for legal fees to fight motion to dismiss? We have already filed the Chapter 7 and recieved the motion to dismiss -so we have to pay $500 to the attorney to continue to fight the motion. I just didn't knowif you can do that after you have filed?

[catleg]

Sure, why not? It's your property, not part of the estate.

[ahall]

thanks

I just wan't sure we need $500 of it to fight the motion to dismiss--Cause you know we have all this spare money!!!

[AngelinaCatHub]

It is traditionally here a concept that to give up an exempt asset particularly retirement, is not wise. If you have no choice, beware, the IRA funds do become part of your estate. However, being under the $600 flag, and for exempted uses, you would have no real problem and "Catleg" is right. Who is asking for dismissal, and seems a bit high for your lawyer to hit you on this account. 'Hub

[catleg]

He's talking about a chapter 7. The estate was a snapshot in time on the date the case was filed. The IRA is exempt, therefore not part of the estate.

Just curious, why did the trustee file for a dismissal?

[ahall]

Motion to dismiss details

In the letter we recieved the paper states:

1.) Male debtor will continue o decrease because of lack of construction start ups but BA feels that debtor has "weathered" the storm from 07-09.

2.) On line 22A the debtor deducts $600 for travel expenses and this deduction should be adjudted downward to $402. in order to comply with Internal Revnue Manual. On 22b, the debtor duducts $173 for public transportation. This amount should be redused to 0. The BA doubts that the debtors use piblic transportation as their primary source of travel.

3.) the debtors should also reduce line 31 to 0 as the debtors's already allotted a fixed amount in line 19B of $166.68 in to a health savings account whochis deducted on line 34c. Schedule J or the debtor's bank account statements support the additional medical expenses. Line 32 should be reduced to $60

4). Line 39 should be reduced to $42 as the debtor's may only deduct the actual amount they pay in addition to basic telephone and cellular services. The BA does not believe the addtional amount claimed to be reasonable and necessary, especially when it appears that the debtors are grasping at mythical deductions in previous area's of their mean's test in an attempt to "pass" the test.

With these adjustments the BA BELIEVE'S DEBTOR'S HAVE $905.10 OF DISPOABLE MONTHLY INCOME. The debtors's schedule J appears to be excessive and some expenses are not necessary.

The debtor's further decut $120 for personal groomimg and $125 for lawn care $200 for home maitanence.-All seem excessive.

Lastly, the debtor's deduct $517 per month for student loan. A student loan is an unsecured debt.

Also we had reaffirmed 2 cars and now we have been given notice of a hearing regarding one of the cars in front of a judge- now we had to have the financial institute fix the numbers as they had originally put wrong numbers and they fixed and we resigned--so I don't know why we have to have a hearing---Any help

[catleg]

Yeah this is some analyst trying to make you substantiate your expenses.

Has your lawyer reviewed this with you? You should be able to defend these items or come up with some other budgetary items.

Some of this is real crap. Esp the home maintenance stuff. Duh, homes require maintenance.

The student loans are a problem. As is the travel thing. Only your lawyer can really tell what's up with that.

I'm curious how folks have dealt with student loan expense in a chapter 7. It's non dischargeable, and unlike a ch13 it doesn't get deferred for a long period. So can you take the payments as an expense? I imagine not, judging by the objection posted here.

One other point, when you do have the details to back up an expense, bury them with it. Makes them think twice about challenging you further. If they think you're lying they'll nitpick everything, it's human nature.