401K dilema during bankruptcy

[Gerlitz801]

We have just retained an attorney for our bankruptcy. Prior to needing an attorney, my husband and I, were in the process of taking a 401K loan to pay what was in arrears to save our home. Unfortunately, the funds would not be available before the house went up for sale on the court house steps. Bankruptcy was our only option to stop the foreclosure. Since this time, we have retained the attorney, submitted paperwork, and the bankruptcy has been filed. We recently received the funds from the 401K, and are terrified! The funds were to catch up our arrears on the home, and to purchase a reliable vehicle(we are down to one), and to try to put a little something away so that we will stay on track, and also to provide much needed maintenance on the home. We did not mention this money to the attorney because we had not received the funds when filing. We really need to purchase a vehicle(cash of course), and make repairs to the home. If we cash this check, will the trustee take it?? Do we send this check back?? Do we come clean with the attorney, and add the loan payment into our budget?? I dont want to come across as shady, but if i go purchase my used vehicle, and make the repairs to my home before my next meeting, will they find out, and how can they come after me if the money is gone. Any advice???

[espo1357]

We have just retained an attorney for our bankruptcy. Prior to needing an attorney, my husband and I, were in the process of taking a 401K loan to pay what was in arrears to save our home. Unfortunately, the funds would not be available before the house went up for sale on the court house steps. Bankruptcy was our only option to stop the foreclosure. Since this time, we have retained the attorney, submitted paperwork, and the bankruptcy has been filed. We recently received the funds from the 401K, and are terrified! The funds were to catch up our arrears on the home, and to purchase a reliable vehicle(we are down to one), and to try to put a little something away so that we will stay on track, and also to provide much needed maintenance on the home. We did not mention this money to the attorney because we had not received the funds when filing. We really need to purchase a vehicle(cash of course), and make repairs to the home. If we cash this check, will the trustee take it?? Do we send this check back?? Do we come clean with the attorney, and add the loan payment into our budget?? I dont want to come across as shady, but if i go purchase my used vehicle, and make the repairs to my home before my next meeting, will they find out, and how can they come after me if the money is gone. Any advice???

Call the 401k and tell them you made a mistake.

You are sweating over nothing.

[AngelinaCatHub]

Yes they will find out. If you do not tell the Court, it is called perjury.

It is a consensus here that it is a terrible idea to take out funds from any savings instrument. You loose three ways, interest, taxes and you will never realize the increase for when you really need it. Retirement.

If you do not cash the check and return it back uncashed, you will be far ahead.

If you cash it, it becomes part of your estate. Yes you can use it for exempt things like food, and shelter, but depends upon the repairs. Throwing good money after bad is unwise. As far as your house is concerned, what do you owe, is it 'upsidedown', can you buy a 'beater' car until after your discharge? For heaven sake, do NOT keep this from your lawyer. You waste good money on advice you won't get due to not telling him stuff up front. So why not just fire him? Tell him everything.

Without a further amount of information, and just on the surface of what you have stated, you got my and other's opinion as this question is not new. Do a search on retirement, 401K, IRA, and read. Read the "stickies" on each forum. you are 7 sot a good place to start.

Hold that check for a while. Once cashed it is asset and can be looked back upon. 'Hub

[AngelinaCatHub]

Call the 401k and tell them you made a mistake.

You are sweating over nothing.

Without elaboration, "espo1357" has stated the consensus here. 'Hub