Ask a Bankruptcy Lawyer August 2006

If you have a general question about filing bankruptcy, you can submit your questions here. Please note that all questions received are answered by a real bankruptcy attorney, however, the answers given are only meant to be general in nature and are not meant to replace legal advice.

If you are outside of California and need an attorney, click here to find an attorney. Again, none of the information found on this site is meant to replace the advice you can obtain through a qualified legal professional, in your own state (as certain things differ by state in bankruptcy), who has taken the time to look at the specifics of your case before answering.

Do I Have to Declare a 401K Withdrawl as Income?

Q: "I am considering filing for chapter 7 bankruptcy. My employment income is under the median, but I changed jobs and had to cash out my 401k. It wasn't a lot of money, but it was just enough to put me over the top if I am required to report it on the B22A. Am I required to report it on there or just on the statement of financial affairs? I have gotten some differing opinions on this. Thank you."

Signed: To claim or not to claim, Colorado

A: Great question. I wish I had a great answer. The most persuasive opinion I've gotten on this issue is that, unfortunately, the 401k IS income when you cash it out (versus just borrowing against it), so I would say "yes" you have to include that income in the 6 month calculation on Form B22.


Can I Sign Over a Car to My Daughter Before Filing?

Q: "I want to file Chapter 7 but I have a paid for car in my name that is my daughters. She will be 18 in one month. I will sign it over to her at that time. Is that going to be a problem when I begin filing? I have never driven the car, I bought it for her 2 years ago but she was too young to have it only in her name. I don’t want my daughter to have to pay for my financial situation."

Signed: Stressed over debt, Oregon

A: Well, you definitely do NOT want to sign it over to her until AFTER you complete your bankruptcy case, because doing so could be considered a fraudulent transfer. You don't say what the vehicle is worth and I don't know what State's exemption laws will apply to your case (probably Oregon's, but possibly not), but I assume the value of your car will be protected by your exemptions unless it is very expensive. But that is an issue you would need to discuss with an attorney in the location where you are filing. Transfering it to her before filing will not protect her though unless you can prove that she paid for the car with her money, etc.

Ask a Lawyer Archives:

+   Is your median income the only factor in deciding if chapter seven is allowed?
+   Can the IRS come after back taxes of a discharged debt years later?
+   Do I list original debtors, collection agencies or both on my bankruptcy filing?
+   Is bankruptcy an alternative to home buying investments gone bad?
+   How is income determined when deciding if you are eligible for bankruptcy?
+   Can filing bankruptcy wipe away student loan debts?
+   Two houses and backed up credit card payments; Is bankruptcy best?
+   What counts as legitimate living expenses when filing bankruptcy?
+   Questions about using a bankruptcy lawyer vs. filing Pro Se
+   Is a back child support payment considered income when filing bankruptcy?
+   Will claiming bankruptcy affect the co-signer on my car?
+   Does one spouse filing bankruptcy affect the couple's joint tax return?
+   I can't pay an accident judgement, can bankruptcy get rid of it?
+   How are joint marital assets affected by a wife's bankruptcy filing?
+   Do I have to claim my 401K withdrawl as income?
+   Can I sign over a car to my daughter prior to filing?
+   Chapter 13 in danger of being dropped but would like to save the house
+   Debt collector calls may force us into bankruptcy
+   Husband claiming bankruptcy, but the wife has good credit
+   Need tips to find a credit counseling agency