Find the best financial services for you at: SMARTFINANCESOLUTIONS.NET - What happens to my 401(k) if I file bankruptcy? - We had a foreclosure on a piece of property we owned and the deficit is $98,000. Believe me, we tried to save it and were even trying to negotiate a short sale with someone for over 1 year. We don't have the money to pay the deficit, obviously, or the place would not have gone to foreclosure. We do have a fair amount of money in my husband's 401(k) we have been saving for 15 years. If the loan company comes after us for the deficit and we have to file bankruptcy, what will happen to our 401(k)? We can withdraw without taking huge penalties and incurring a huge tax expense. This is really the only asset we have. The house we live in now is worth less than what we owe and we have little or no cash savings. -