Hello, What are the ramifications of possibly taking a disbursment from my 401K and paying the penalty so I can pay off a Chapter 13 Bankruptcy. And if that is a possibility, what happens if I would owe 10k to chapter 13 and get a 30k disbursment and roll the 20k into an IRA. Is that even allowed or possible?

Yes, you CAN do this, but why?

The 401K is exempt from collection for the bankruptcy debts. Why voluntarily give up this money (paying normal state and federal income taxes PLUS a 10% Early Withdrawal Penalty)?

That defeats the purpose of filing for bankruptcy to begin with.