If I am being garnished and cash out my 401k will they take my money?

I am being garnished for over $15,000 on a repossed vehicle. If I cash in my 401k can they take the money I owe them directly from the check I get for cashing in my 401k. Basically can they take the money that would be paid to me after the tax penalty.

If I am being garnished and cash out my 401k will they take my money?
I didn't think they could touch your 401k -- you might want to check on that first.
Reply:they can't garnish the distribution...but they can file a lein against you which basically attaches all of your assets. And, if you cash it and put it in your cookie jar instead of a bank account and they get wind of the fact you took a distribution...they can pull you into court and ask for that money.





Better to leave it where it is (untouchable) and deal with the debt without that.
Reply:Do not cash out your 401K. You will lose a lot of your money to taxes and penalties. The people that hold the 401K will deduct the penalties before you ever get a check - and you will still owe the IRS, the money you withdraw will be counted as income.
Reply:You're best bet is to talk to an attorney. The smart idea would be to leave the money in there unless it's an emergency though.





If it would be considered earned income after you cash it out, then yes they could possibly garnish that money.
Reply:Even better, you can leave your money in your 401K, and they can't touch it.





You can file for Bankruptcy Protection, and get the $15,000 discharged, and keep your 401K, and that will stop your garnishment.
Reply:don't forget -you lose a big chunk (20-35%) of your 401k to taxes and penalty if you cash out and you can only do that if you no longer work there
Reply:If you cash out your 401-k it is fair game! If you leave it alone, it is protected.

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