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    atc0007's Avatar
    atc0007 Posts: 1, Reputation: 1
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    #1

    Jun 21, 2007, 12:51 PM
    401k Bankruptcy
    I'm still trying to avoid bankruptcy, though I have about 17 situations such as credit card issues to work through. I have two court lawsuits paperwork submitted to me for two of my smaller accounts owed. I would like a way to settle, but I don't have a lump sum of money currently. Unfortunately, I have already taken a couple of loans off my 401-K, so I would have little or none loan money available. I have approximately $4500 in my 401-K and the two lawsuits are asking for $1244 and 1759 respectfully. Is there any way to grab the amount needed to settle both of these accounts through the $4500 still in my 401-K?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Jun 21, 2007, 12:57 PM
    Even if you qualify for a hardship withdrawal (which I don't think you do) Your total debt is just of $3K. Assume 20% withheld and you actually get $3600. Take off the 10% penalty and you are left with $3150. However, depending on your tax bracket your actually tax liability might be more than $900 So its cutting it rather close. Not to mention losing over $1300.
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