Lawsuits and 401ks

[Pam Jacobson]

undefinedWhat is the name of your state? California. I had a business in Ca. I signed a personal note to a vendor. Since then I have turned the business back over to the pervious owners and moved back to FL. The vendor I signed the note on is filing a lawsuit against me. 2 questions: When taking over the business we filed under a S corp. Since we disolved the business can the vendors still come after us in a lawsuit? Also I have a 401k. Can they touch that? Ok 1 more question. Since I live in Fl. and own a home that is homesteaded can they touch that? Thank you

[cbg]

I can only answer the part about the 401k.

Because of their tax-deferred status, 401k's can only be accessed without penalty under very strictly limited circumstances. No one can attach your 401k. And if you are still employed by the employer who provided the 401k, no one, not even you, can access the money in the fund. (You can make a hardship withdrawal to pay medical expenses, to pay college tuition, to avoid eviction, or to purchase your primary residence - NO OTHER REASON. IF your plan permits, you can take a loan against the 401k which you WOULD have to pay back, but you can use the money for any reason. There are NO other circumstances in which even you can access the money in your 401k if you are still employed by the employer that provided it.)

I can come up with one possibility in which you would have to use the money in the 401k to make payments, but that possibility involves a lot of "only if A and B both exist at the same time that X,Y and Z all happen on a Thursday when the moon is full and you're wearing purple sneakers with yellow laces" type situations, so I really wouldn't worry about it.

I can't answer your other questions - they are outside my area of expertise.

[Veronica1228]

Originally Posted by Pam Jacobson

undefinedWhat is the name of your state? California. I had a business in Ca. I signed a personal note to a vendor. Since then I have turned the business back over to the pervious owners and moved back to FL. The vendor I signed the note on is filing a lawsuit against me. 2 questions: When taking over the business we filed under a S corp. Since we disolved the business can the vendors still come after us in a lawsuit? Also I have a 401k. Can they touch that? Ok 1 more question. Since I live in Fl. and own a home that is homesteaded can they touch that? Thank you

Yes, the vendor can come after you since you signed a personal note. You are liable. Also, if they are awarded a judgement against you they can attach a lien to your home. It would depend on the award.

However, I'm pretty sure that they have to file a law suit against you in Florida. If they are doing this in California, it won't effect you in Florida.