No. of Recommendations: 0
Not for me!!!

My next door neighbors have gotten themselves into a bad financial situation, due to the fact that they need the latest and greatest on everything electronic, automotive and household.

They have a mortgage that they recently refinanced to take in their 2nd mortgage and pay off their 2nd auto. They also have about $30,000 in cc debt and a payment on the 1st auto. The husband (2/3 of their combined salary) lost his job and severance is up. She has a 401k valued at roughly $25,000.

If they declare bankruptcy, will the $25,000 be protected? Or will they have to cash it out to cover their debts?

Since he has been laid off, she has increased her 401K contribution because they figure they will declare bankrupcty anyway, so she's trying to keep as much of "her money" as possible.

I'm not really trying to get into whether or not it is ethical, but whether or not the laws are actually written this way.

Thanks for your help.

~Dora~
(Who does everything she can to honor her debts.)
Print the post  

Announcements

UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement