Ask DrewDevil your legal questions

[DwightSchrute]

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If you declare bankruptcy what happens to your 401k?

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I don't know much about bankruptcy, but in general, your creditors are made to back off while you offer a reorganization plan to pay them off at a discount. My hunch is that the bk court would resist forcing you to disgorge your retirement funds, given the high taxes and penalties, but I honestly don't know.

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I believe that's under chapter 11 (or 13 I forget). Under chapter 7 you don't have to pay anything back. But if you have a house with large enough equity they can put your house up for sale. Then if they sell it they have to give YOU the first $7500. Then the rest goes to your creditors.

As far as 401k's go I believe if you have one and you're fully vested they can take some of it from you.

Keep in mind I'm not a lawyer but I have known people who have gone bankrupt. This is also in Tn so I don't know how much of it varies by state, if any.