When you have filed for bankruptcy, when you’re able to take a laon out from your own 401k your retirement investment varies according to whether you filed for Chapter 7 or Chapter 13 bankruptcy.
When you have filed for bankruptcy, when you can take down a laon from your own 401k your retirement investment is dependent on whether you filed for Chapter 7 or Chapter 13 bankruptcy. Keep reading to find out more about whether you are able to sign up for a 401k loan after bankruptcy.
To learn more about what are the results after bankruptcy, see our Life After Bankruptcy subject area.
Chapter 7 Bankruptcy
You can technically take out a 401k loan anytime after filing your case if you filed for Chapter 7 bankruptcy. ERISA qualified 401k plans are maybe maybe not considered home of this bankruptcy estate. Which means that the Chapter 7 bankruptcy trustee can’t go after that cash to cover your financial situation.
Nevertheless, the cash is just safe you filed your case if it is in your 401k account when. Invest the down a 401k loan prior to filing for bankruptcy and put that cash within the bank or make use of it to buy another asset (such as for example a automobile), the trustee usually takes it unless it really is exempt. As a whole, it really is a good clear idea to hold back until you get your release as well as your case is closed before you take down a 401k loan. This protects you against any unexpected problems (such as for example dismissal) that may arise.
For more information on how exactly to make use of exemptions to guard your home in bankruptcy, see our Bankruptcy Exemptions topic. (more…)