No emergency fund and no resources.

[tm0101]

I was talking to a friend about what it's like not to be able to have access to $1000 in case of an emergency with the house or a car repair etc.
It is not a "good" idea to tap into a 401k in order to take car of a cash flow issue, However, for someone who's in a Chapter 13 plan with just enough to pay utilities, an important decision must be made because we can't predict the future, but only prepare to the best of our ability.
I have seen this topic visited in recent post, whether to to get a 401k loan while in a 13 or try to find other resources?
There are a few variables that must be considered, but there was one question that I wanted to ask, and that is, Can a trustee find out if you've made a new 401k loan if you don't tell them? I've never heard a trustee periodically audit your check stub.

[justbroke]

I have seen this topic visited in recent post, whether to to get a 401k loan while in a 13 or try to find other resources? There are a few variables that must be considered, but there was one question that I wanted to ask, and that is, Can a trustee find out if you've made a new 401k loan if you don't tell them? I've never heard a trustee periodically audit your check stub.

The Trustee would not find out and the Trustee would not even care because you're borrowing from yourself. The real problem is whether the 401(k) repayment affects your ability to maintain your plan!

The bottom line is to avoid taking a 401(k) distribution at any cost. Then, only take a 401(k) loan if it's both absolutely necessary and the payments are not going to put your plan in jeopardy. I would also say that making sure your plan has the cushion that allows you to save $100-$200 a month is vital. Some of us simply can't budget and some of us simply refuse to budget. When you're in a Chapter 13 Plan and have extra cash at the end of the month, you need to have the ability to save and not decide to splurge with that extra $100. I've been there; I've done that. I have learned that saving that little money a month allowed me to pay for an emergency sewer line break that was totally unanticipated.

I can honestly say this, although it's a bit harsh. Those who cannot or refuse to budget, will fail in a Chapter 13. Those who cannot create an emergency fund by saving may likewise fail in a Chapter 13. The problem is that life happens when we're too busy making plans (or not saving). Most Chapter 13s fail and this is the reason that they fail.

Maybe some other successful Chapter 13 members will share about the ups and downs and how saving helped them through the rough patches.

[tm0101]

The Trustee would not find out and the Trustee would not even care because you're borrowing from yourself. The real problem is whether the 401(k) repayment affects your ability to maintain your plan!

The bottom line is to avoid taking a 401(k) distribution at any cost. Then, only take a 401(k) loan if it's both absolutely necessary and the payments are not going to put your plan in jeopardy. I would also say that making sure your plan has the cushion that allows you to save $100-$200 a month is vital. Some of us simply can't budget and some of us simply refuse to budget. When you're in a Chapter 13 Plan and have extra cash at the end of the month, you need to have the ability to save and not decide to splurge with that extra $100. I've been there; I've done that. I have learned that saving that little money a month allowed me to pay for an emergency sewer line break that was totally unanticipated.

I can honestly say this, although it's a bit harsh. Those who cannot or refuse to budget, will fail in a Chapter 13. Those who cannot create an emergency fund by saving may likewise fail in a Chapter 13. The problem is that life happens when we're too busy making plans (or not saving). Most Chapter 13s fail and this is the reason that they fail.

Maybe some other successful Chapter 13 members will share about the ups and downs and how saving helped them through the rough patches.

Great response, budgeting is very important in this plan and in life, but especially in a chapter 13. Your reasons why these plan fail are the absolute truth. My plan payments are high and increase as my 401k loans are paid off. So finding ways to save money for an emergency fund and maintain my home is not very easy.

[justbroke]

Great response, budgeting is very important in this plan and in life, but especially in a chapter 13. Your reasons why these plan fail are the absolute truth. My plan payments are high and increase as my 401k loans are paid off. So finding ways to save money for an emergency fund and maintain my home is not very easy.

If any of your expenses changed, and it's worth it from an attorney fee perspective, actually have your plan amended to reflect the current reality. Some Chapter 13s fail because the debtor simply kept trying to pay the existing plan payment, without taking into account that things actually changed (lower income, increased expenses, etc.) and that they could have filed a plan amendment. We had a BKforum member that had a new baby and was still trying to make their plan payments when the baby wasn't factored into that plan payment. Always seek your attorney when anything materially changes, especially income.

[LadyInTheRed]

I took a 401k loan out to by a truck after somebody ran into our parked truck and totaled it. I checked with my attorney first and he said no problem, as long as it didn't make me unable to make plan payments. I did not need to tell the trustee because, as JB pointed out, I was borrowing from myself. The trustee never had any reason to find out about it. But, I felt trapped by that loan every time I saw an advertisement for a job I might otherwise consider since I would have to pay off the loan to change jobs or page tax and early withdrawal penalties. Fortunately, my job is secure enough that I don't worry much about involuntary job loss. In November, I traded in the truck and got enough cash out to pay off the 401k loan. I recently saw a job advertised that I am perfect for that is closer to home. I decided not to bother interviewing because I don't want to give up my 5 weeks a year vacation time. But, it felt good to consider it without having to worry about the 401k loan.

If there are no options, taking a 401k loan during a Chap 13 may be necessary. But, avoid it if you have any other options. I should have just bought a truck that the insurance proceeds would cover.

[newlife13]

During a Chapter 13, are you even permitted to save? As long as you're making your agreed upon payment on time, will the Trustee ever ask to see your bank account balances? I'm hoping to have my plan payment approved and then try to save $100-200 each month for emergencies and also because I know I have a large $1K expense coming at the end of the year/beginning of next year.

I'm trying out a cash-based envelope system for budgeting right now, in anticipation of my plan being confirmed, so my bank account will look like a disaster anyway, with a bunch of ATM withdrawals. Is that a concern? I can't imagine I'm the first person to do do this. Do I need to keep receipts or anything?

Sorry to jump onto your thread but I'm also concerned about emergency fund savings.

[tm0101]

During a Chapter 13, are you even permitted to save? As long as you're making your agreed upon payment on time, will the Trustee ever ask to see your bank account balances? I'm hoping to have my plan payment approved and then try to save $100-200 each month for emergencies and also because I know I have a large $1K expense coming at the end of the year/beginning of next year.

I'm trying out a cash-based envelope system for budgeting right now, in anticipation of my plan being confirmed, so my bank account will look like a disaster anyway, with a bunch of ATM withdrawals. Is that a concern? I can't imagine I'm the first person to do do this. Do I need to keep receipts or anything?

Sorry to jump onto your thread but I'm also concerned about emergency fund savings.

Just try to keep a budget the best way you can. Everyone's situation and life is different, do what works for you. Until someone can look into your life on a day-to-day basis, they can only give generic advice, some good and some not, but use what you can and leave the other alone. The trustee will not be scrutinizing your bank account, don't be concerned with that. Concentrate on living.

[justbroke]

Concentrate on living.

There's the truth right there fellow debtors. You should take care of yourself and family first. The rest will fall into place. The Trustee doesn't worry nearly a tenth of what we think they do.

[newlife13]

There's the truth right there fellow debtors. You should take care of yourself and family first. The rest will fall into place. The Trustee doesn't worry nearly a tenth of what we think they do.

Right. I guess if/once I'm confirmed, as long as I make my plan payment on-time 60x, no one really cares.

[dmc-2008]

It takes time to find your feet in a bk13. Old habits die hard. Maybe you think you cant live without things, or you think you cant shop at the dollar tree or 99 cent store, but if you are serious, you can cut some more and you will see what you can afford. I have been able to keep my kid in sports, travel to look at colleges and provide. I dont buy anything for me that doesnt cone from thrift and I always check discount stores first.

you will see that you will be able to afford things if you let go of old habits. You will be fine!!!!

[newlife13]

It takes time to find your feet in a bk13. Old habits die hard. Maybe you think you cant live without things, or you think you cant shop at the dollar tree or 99 cent store, but if you are serious, you can cut some more and you will see what you can afford. I have been able to keep my kid in sports, travel to look at colleges and provide. I dont buy anything for me that doesnt cone from thrift and I always check discount stores first.

you will see that you will be able to afford things if you let go of old habits. You will be fine!!!!

I'm totally sure I can live 60 months under my Chap13. No problem. I also do think I'll be able to save. Just wondering if it's "allowed". We will be living on a very tight budget right and things are totally doable. I am just praying that my plan is approved.

[LadyInTheRed]

Saving in Chap 13 is essential! Remember that your monthly expenses are supposed to be the averages of your expected expenses over the life of your plan. Not all expenses are paid every month, so you have to save so that you have money to pay the once or twice a year expenses. Once you are confirmed, except in extraordinary circumstances, the trustee will pay no attention to your spending or account balances. S/he will only care that you make your plan payments and, maybe, depending on the trustee, that you send copies of your tax returns every year.

Save all you can. Don't worry about the trustee.