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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17223
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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My mother in INDIANA is about to retire (Nov 30) She would

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My mother in INDIANA is about to retire (Nov 30) She would like to use her 401k to pay down the mortgage on my house so that we can sell the home and buy a larger home for her to live with me and my family during her retirement in a Virginia.

She has several debts that she would like to discharge using bankruptcy. I know the 401k funds are protected during a bankruptcy. However after she retires is she safe to withdraw the funds, give them to me and then declare bankruptcy? Would the bankruptcy judge cast this move in a negative light? Regardless after the bankruptcy she would be transferring the money to me... But would it be wise to postpone that until the bankruptcy discharges the debts?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

If your mother uses the 401k money after her discharge it would be fine, the trustee would not stop her as the money is exempt, she should wait till after discharge to make any transfers.

Customer:

Ok, any attempt to transfer the funds before a bankruptcy would be a risk then?


 

Customer:

Even if technically used "after retirement"


 

WALLSTREETESQ :

Yes a transfer before filing may convert the money to non exempt status and she could risk losing it.

Customer:

Excellent, that is what I wanted to check. That is what I suspected. Thanks so much.

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