Legal Question in Bankruptcy in Ohio

Bankruptcy and 401k

I am over loaded with bills from my divorce that my X will

not pay. If I file backruptcy what will happen to my 401k?

I already have a loan against it and cannot touch it. Will

it be taken?


Asked on 10/15/03, 8:06 am

1 Answer from Attorneys
David Weilbacher, Esq. Attorney at Law

Re: Bankruptcy and 401k

Retirement accounts are exempt, and therefore protected when person files for bankruptcy, so, the 401k is safe. You indicated that you took a loan from your 401k. You should never do that. I know it's like lending money to yourself, and you pay yourself interest. The thing is, 401k money is tax deferred, meaning it is taxed when you take it out. When you repay the loan, you do so with after tax dollars. You then pay again when you take the money out during retirement. You end up paying tax on the same money twice.

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Answered on 10/15/03, 3:09 pm


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