Cashing Out a 403b prior to filling Ch. 7

[deedee642]

I understand that funds in a 403b are exempt until I withraw them. I am leaving one job and taking a lower paying job, which is going to actually help me qualify for the means test for a CH. 7 as opposed to 100% payback in a Ch. 13. I want to close out my 403b when I leave, there is only $4,000 left. I would use this money to pay my attorney and also pay on back fees I owe my Home Owners Association. My attorney notified me that the H.O.A. could put a lock on my condo if I don't pay up. I am going through a foreclosure; however, I have about another 6 months here.
1. Will the $4,000 count as "income". Even though it was a "one time kind of thing"?
2. I will still be below the means amount even with the $4,000, so would it not mess everything up.

I am hoping to file in 3 more months.

Thanks for the advice.
Dee

[AngelinaCatHub]

Yes it is totally protected until withdrawal, but once pulled out, you pay a hefty tax and penalty. As long as you use the monies for exempt things, I believe the lawyer and H.O.A. are going to be fine. No luxury big spending. The "look back" is 90 days so time it for 90+ days. It should not matter. Best to check into your net amount after tax. I never approve those who want to pull their retirement. That is my personal feeling as I did it and paid bills that I would and did discharge in bk. We sure could use the income now since I am retired. 'Hub

[ksgirl38]

I don't know, but I sold some stock (less than $500 worth) and a couple of CDs (about $1400 worth) and it counted towards my income so you might want to check with your attorney on that one.

I would have to agree, I wouldn't pull the money out either. If you have to move it then roll it over into another plan through somewhere like Fidelity or Sharebuilder.

[facinglife]

I had to take money out to pay the attorney and my lawyer is counting that towards year to date income

[AngelinaCatHub]

I had to take money out to pay the attorney and my lawyer is counting that towards year to date income

OOOH that hurt. Sorry about that but it is better to be up front with everything. In bk, honesty will get you by many mistakes. 'Hub