Borrow $1k from 401k to pay attorney?

[JasonK94Z]

If it comes down to it, is it ok to borrow a grand from my 401k to pay my lawyer so I can get this filing thing over with?

I've got two months to save up the money to pay her so we can file. Seems almost like its going to be impossible since we got off to a bad start with saving. (things came up). Anyways, if it comes down to it and we are short, is it ok to just borrow it from 401k? The minimum amount to borrow from my plan happens to be $1000.

[keepmine]

It would be my last option but if it comes down to it, there is nothing illegal about using funds from a retirement account for legal fees.

[JasonK94Z]

Does the payment get figured into the means test? I don't want to do anything that would mess that up. I'm thinking about just pulling the trigger on this idea so I can just file next month and get this thing over with. The waiting is killing me!

[Bandit]

I don't know the right answer but I do know that when my mom filed a couple of years ago, she had to drain her 401K completely before filing. She of course retired just before filing in order to be able to file.

I do not know the reason why but that is what the attorney had them do and the 401K is part of what she used to pay the attorney.

This is not advice or anything, just what I know happened.

[JollyGG]

I don't know the right answer but I do know that when my mom filed a couple of years ago, she had to drain her 401K completely before filing. She of course retired just before filing in order to be able to file.

I do not know the reason why but that is what the attorney had them do and the 401K is part of what she used to pay the attorney.

This is not advice or anything, just what I know happened.

I am guessing that your mom filed before the 2005 bankruptcy changes. One of the few good things that came out of the bankruptcy reform is that retirment accounts are now protected in bankrutpcy.

[JasonK94Z]

So are the payments for a loan allowed on the means test?

[Bandit]

I am guessing that your mom filed before the 2005 bankruptcy changes. One of the few good things that came out of the bankruptcy reform is that retirment accounts are now protected in bankrutpcy.

Yes it was before 2005 and that must be what happened then because she HAD to empty the retirement account. There was no choice in it like just taking a little & leaving the rest. There was not that much saved anyway.

[JollyGG]

So are the payments for a loan allowed on the means test?

That is a question for your lawyer. That is an area under some debate at the current time and will depend on how much your regular contributions are, your local customs, and your trustee.

[DisneyGirl]

I am guessing that your mom filed before the 2005 bankruptcy changes. One of the few good things that came out of the bankruptcy reform is that retirment accounts are now protected in bankrutpcy.

Really? We filed in 2004 and they didn't touch our 401K at all.

[Bandit]

Really? We filed in 2004 and they didn't touch our 401K at all.

I wonder why your was different. Did they know about it and all? Maybe it was in the means & exemptions or something? Were you retiring or about to retire?


Maybe it is state by state thing then because my mom most definately had to do something with her 401K, like make it disappear. She was just above in her income to file & was told to retire & quit working if she really wanted forgiveness of the debt. They viewed it as a savings account not just a retirement account.
Maybe her retirement had something to do with it.
Who knows. I sure don't.

[DisneyGirl]

I wonder why your was different. Did they know about it and all? Maybe it was in the means & exemptions or something? Were you retiring or about to retire?


Maybe it is state by state thing then because my mom most definately had to do something with her 401K, like make it disappear. She was just above in her income to file & was told to retire & quit working if she really wanted forgiveness of the debt. They viewed it as a savings account not just a retirement account.
Maybe her retirement had something to do with it.
Who knows. I sure don't.

Yes they knew about it and I'd have to pull the papers to see if it was exempt. We are no where near retirement age though.

[JasonK94Z]

So I called the law office this morning to try and get an answer. The paralegal said that she would ask my lawyer and get back to me later, "but more than likely she would not be able to advise me to take on more debt." So I'm still waiting on an answer I guess.