They may be talking about medical debt. Most places won't send money to collections if it is paid to a hospital or clinic, though this isn't always the case. Though they can always

General
1

Help, please! I’m struggling to manage my debt. I’m a teacher making $45K a year and recently received $130K from my ex’s 401K in a divorce settlement, which I plan to roll into a new retirement account. I currently owe $40K in personal loans from my divorce lawyer and moving expenses, as I had to leave an abusive relationship. The minimum payment on the loan is about 25% of my monthly take-home pay, making it hard to afford groceries and pay utility bills on time.
Should I consider using the 401K money to pay off the debt (I still have my own untouched retirement savings), or look into bankruptcy? I own a home (without equity), have a paid-off 2018 Kia, and $2K in an emergency fund. Any advice on what would be the best financial move?

2

Do the funds from the 401(k) go into a retirement account? It won’t be protected in BK otherwise.

3

Yes, indeed! It rolls right into a new retirement account for me, which is something I should have mentioned before.

5

Depending on whose entity the ex-spouse’s 401(k) is through, some let the recipient “open” an account under the 401(k). Usually, the ex-spouse’s date of birth is tied to it, but the account should state that it is a QDRO from a divorce.

However!

Find out if you can rollover the funds into your qualifying retirement account by contacting your 403b provider. This is entirely acceptable. You can open and roll over a 401(k) or 403b if you don’t already have one open with your institution.
Taxes are zero right now, and BK protection is 100%

6

Before providing legal advice, one should probably be completely certain about Chapters 7 and 13 in each state.

I promise you absolutely that retirement funds, things you own outright, and personal belongings

are not necessarily immune from filing for bankruptcy in all states
If your holdings have a sizable amount of equity or you have a sizable 401(k) account, the banks can and will fight against a full discharge.

7

How come you feel the need to call him abusive? Perhaps it was you that made him reach his breaking point.

8

Insolvency! The retirement funds will be safeguarded. With a sizeable retirement savings, you can pay off your debt and start again. It sounds like a simple decision, but you should consult with an attorney first.

9

I’m sorry for the man you’re robbing of his money. For males, marriage is such a losing proposition.