Posted on: 05th Aug, 2009 09:10 pm
I'm behind on my mortgage and bankruptcy payments. My wife has 15k in her 401k. My idea is to have her quit her job, use the 15k to pay off our car, and then convert a Chapter 13 to a Chapter 7. We could then catch up with our mortgage by saving money on the conversion and not paying $500 a month. Her take home is $250 a week. So between daycare, Chapter 13, and car payment, we would be saving $1250 a month. Would this be a good idea? How long does it take to do a conversion to Chapter 7? PLEASE HELP ME. I don't know how else to catch up.
Leon
Leon
Leon
One thing. If you take money out of 401K you will pay taxes on it and also prewithdrawal penaly of extra 10% if you are not 59 and 1/2 years old
Good luck and feel free to ask
One thing. If you take money out of 401K you will pay taxes on it and also prewithdrawal penaly of extra 10% if you are not 59 and 1/2 years old
Good luck and feel free to ask
I agree with Realgeni. Your wife will have to pay a penalty of 10% if she is withdrawing money from 401k prior to 59 and 1/2 years of age. Moreover, I don't think it would be a good idea for her to quit her job as later on it may get difficult for her to get a job. It will take a few days to convert your Chapter 13 into Chapter 7 as you will have to file a petition in the court for the same. The court will decide whether or not your petition would be accepted.
desperate times and desperate people apparently call for desperate measures. leon, you've expressed desperation, clearly. i don't think anyone is going to agree with you that having your wife quit her job makes sense. i also don't think you'd want to use the 401k to pay off the car and fiddle around in bankruptcy. wouldn't the court have some say-so about her liquidating that account? and, of course, as niiccs pointed out, the bankruptcy court will decide whether you can convert from 13 to 7 anyway.
Thanks for the opinions.
Good luck