Hardship available to rent apartment?

[BG5150]

Situation:

Man lives with his aunt. At the end of the month he must get out. Reason: unknown.

Can he take a hardship for a down payment & 1 month's rent?

Safe Harbor reasons.

[My 2 cents]

Even if he could, what would he do for an encore? The next month's rent comes due awfully quick (and the next, and the next...), and something about the question keeps me from feeling confident about his financial condition. This does not sound like a fix for a temporary problem.

[masteff]

"(4) Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence;"

I'm one of the more liberal on approving hardships but, based on the regs, no, because he's not purchasing a residence nor preventing eviction or foreclosure.

[david rigby]

That might depend on the application of "eviction". The aunt told him to get out; is that eviction?

[masteff]

Sure, it's an eviction. But this isn't to prevent said eviction. It's to get a different residence after being evicted. If you do a strict reading of the reg, it's pretty unforgiving: "Opps, sorry, you got evicted, can't help you now."

Unless anyone can find a more liberal way to interpret "prevent".

Edit: for the sake of agument.... it prevents the eviction, not because it remedies a current broken lease agreement but because it allows the employee to obtain different lodging prior to the eviction. This avoids eviction if one presumes the ultimate consequence of eviction is being without a residence whatsoever.

[My 2 cents]

Still wondering how the participant is going to cover the rent six months later. Is this truly just a temporary cash flow issue (i.e., one month at a time is doable, not a combination of rent and a deposit)? What percentage of the total account balance is being sought for the hardship withdrawal? 5%, 10%, 60%?

Any chance that the person can borrow a bit from the aunt instead to facilitate getting out on his own?

[Lou S.]

Moving in could require 1st, last and deposit. That might be a "hardship" for the participant who may be able to meet the monthly rent but doesn't have the upfront cash to get into the place. That's just a guess on my part and doesn't really help with the allowable question.

If the guy is going to be put on the street by his Aunt, I'd be willing to stretch the definition of "avoid eviction" if it was my own plan but I'm not sure I'd be comfortable giving that advice to someone elses plan.

[masteff]

Okay, I've talked myself into this. Just hadn't walked thru one where simply paying past due rent wouldn't cure the pending eviction.

If I was documenting this to put in my file, I would probably write it up as:

"Participant has been informed that he must vacate by 7/31/14 or he will be evicted. To prevent being evicted, he has located a new primary residence to rent but must have $X which is a hardship that he is unable to pay. See attached documentation." I would want a copy of the lease agreement as well as the normal hardship statement about not having it available from other resources, etc.

Oh, and I might like a letter from the aunt stating that she will evict if he doesn't move out. It has to be involuntary. Not just that he wants to get his own place.

[jpod]

Does the plan use the safe harbor definition of hardship? If not, why are we fixated on the "eviction" standard?

[BG5150]

Yes, SH reasons only. We are not going to amend the plan for F&C terms.

[Bird]

Sounds like getting the money will not prevent eviction, just let him get another place. No dice. I read the SH definitions very literally. As a side remark, I don't see how his ability to make payments 6 months from now has anything to do with it.