401k loans and bk

[lilkim]

if you have a 401k loan that is being deducted from your check every week will that make a difference if you are filing for ch. 7 bk?

thanks for your feed back!! :o

[HHM]

It can depending on how much the deduction is and how aggressive the trustee is. These types of payments are NOT living expenses so if the amount is high enough, they will push you into a 13 because you have disposable income.

Also, 401K loans are not really loans under the BK code.

Sometimes what happens is that the court will force you to stop making the deduction from you paycheck, then you list the penalties as a debt.

Basically, 401K loans are messy in BK.

[lilkim]

they are small loans. i have one that i owe 1000.00 on and my husband has one he owes about 3000.00 on, do you think they will be an issue? they are taking out 32.00 a week on my loan and 14.00 a week on his loan.

[lilkim]

i have already retained my attorney and he has got several copies of recent check stubs and he has not said anything about that yet, so i was just curious about this. thanks so much for you input!! this is my first time doing BK and it all has me confused.

[HHM]

I think the deductions are small enough not to notice. But just be aware that they can become an issue, you should probably tell your attorney you have the loans so he can advise you.

[lilkim]

HHM thank you so much for your taking the time to help with the ?'s i had, i am so scared of this whole BK thing. i still have alot to learn in this topic. LOL