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Roger
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Category: Bankruptcy Law
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My wife and I are considering a Chapter 7 filing in Illinois. We

Resolved Question:

My wife and I are considering a Chapter 7 filing in Illinois.

We currently bank with "big bank" which will be named as a creditor if we file as we have some outstanding debt, business and personal with them.

We know to pull any funds from our checking/savings account prior to filing to avoid set-off.

My wife is currently in the process of doing a direct rollover of an old 401K (let's say it's from ABC to pick a name) into a new account (we'll call it XYZ). She is being assisted in this process by someone in the investment dept of "big bank" however the rollover check is coming directly to her from ABC and is made out to XYZ.

I have the same 401K already in place and "big bank" shows it as a house account. Not sure exactly what that means for the sake of this discussion other than they helped me set up my 401K years ago with XYZ and they can view the account. All transactions related to this account are done through XYZ.

My question is....do you think we could be in any danger of a "set-off" scenario? Does "big bank" have any avenue or legal right to touch any funds related to an exempt 401K, whether it's a "house account" or not? Or whether it's a rollover transaction in process?

I hope that description made sense?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Roger replied 1 year ago.

Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.

If your savings are in a 401(k) account, they should be protected from all forms of creditor judgments, including bankruptcy.

Thus, your creditors should not be able to access those accounts and use the money to pay other debts. Also, the money in your 401(k) accounts should not be liquidated or subject to the claims of any creditors - - even if the creditor is also the administrator of your 401(k) - - in bankruptcy.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26693
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
Roger and other Bankruptcy Law Specialists are ready to help you
Expert:  Roger replied 1 year ago.
Hi

Please let me know if you have any additional questions related to this issue. Also, please positively rate our conversation so that I may receive credit for my research and response.

Thanks,

Kirk

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