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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 111450
Experience:  Attorney At Law handling education matters.
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This is a bankruptcy question. We are about to file

Customer Question

this is a bankruptcy question. We are about to file bankruptcy. We live in Virginia. We have an opportunity to buy a house in Philadelphia. We have the money in 401k. Which we know is protected. Can we buy the house with full equity and have it protected against creditors. If not can the house be put in our child's name and be protected? Thank you, Lisa
Submitted: 8 months ago.
Category: Bankruptcy Law
Expert:  Law Educator, Esq. replied 8 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
Any transfer of assets from the 401K would mean that money would then be converted from protected assets to unprotected assets. If you are about to file bankruptcy right now, the house cannot be purchased with that money as the bankruptcy trustee will have to recover the asset, even if you give the money to your child to buy it in your child's name.
An irrevocable trust is one way to own property that is exempt from the bankruptcy, but if you are getting ready to file now, you would need to disclose transfers of any assets including those into an irrevocable trust, so that may not protect the house from the bankruptcy as the court could recover any assets transferred into the trust prior to filing bankruptcy.