401k loans

[tm0101]

Has anyone taken a 401k loan while on a 13 plan? if you don't disclose it, can the trustee find out?

[southernmama]

Following.

[sophieanne]

We did...and because the 401K plan was exempted, it wasn't an issue. You might want to check with your attorney. There was no issue when we did it. As long as our trustee
payment was made there was not a concern.

[justbroke]

Following.

southernmama just so that you know, there's a "SUBSCRIBE" button (in caps like that) located near the upper to right part of the page which will "subscribe" you to this threads for updates.

[justbroke]

Has anyone taken a 401k loan while on a 13 plan? if you don't disclose it, can the trustee find out?

First, let me say that you should never borrow from your future to pay for today. Don't do what I did and lost a lot of value from my 401(k) due to loss of earning potential.

Having wrote that, it's usually not an issue because you're borrowing from yourself. The key is whether you can handle this payment. My concern is that you actually need this loan which leads me to ask whether you are currently able to handle the plan payments and life "little" challenges.

[southernmama]

I'm sorry. Still trying to figure my way around and wasn't paying attention. Thank you.

[tm0101]

I have taken a loan in the past and still have a year left before I'm eligible for another. I was just concerned if something should arise where I needed to tap into it. My plan payment goes up when that 401k loan is paid next February. I don't want to have to borrow anymore from that account, and if I did my check would be even less than what it is now. My plan payments are deducted from my payroll.
However, "life happens". I'm getting a divorce, so I'm not sure how the that will affect my payment, my household will go from 4 to 1 and the trustee might raise my payment since I'll only have myself to take care of. I make a little extra money sub contracting computer services, even though it's not consistent it helps.

[justbroke]

This is exactly the issue with taking out a 401(k) loan while in a Chapter 13. This is especially difficult when you have your plan payment being deducted through a wage order.

A good exercise may be to take the means test and see just where you'll be. Will you be responsible for alimony or child support? That could make a major impact on what your plan payment will be... unless you are paying solely mandatory items (mortgage, taxes, etc).

[tm0101]

No child support or alimony, but I'm still paying on a vehicle that she drives, which is in my name and being paid through the plan.

[justbroke]

Well, paying on the vehicle may be "in the nature of support" but I won't go down that path since it's already in plan. In any event, you'll need a new Means Test to help obtain a vision as to what the future holds for your payments.

[tm0101]

That's what my lawyer might advise as well. I'll see what happens once everything is final. Separation comes first in North Carolina, gotta wait a until December to file the divorce.

[justbroke]

Uggg... the dreaded "one year" divorce. I guess it is a period so that you can reconcile. I hope all works well for you.

[tm0101]

Yep. It will....one way or the other!!