I know it's never okay to take out a loan while in BK but...

[MajorMike]

I would do it....

[Flamingo]

The reason there is an issue as to your 401(k) is that the money was exempt from your filing but is still part of your BK estate. It belongs to your Trustee as part of your financial estate during your Plan from the day you file to the day you are discharged. With your emergency situation, you need to contact your attorney (keep trying, you'll get him). Tell his assistant or paralegal or the office receptionist you are facing a utility cutoff and need permission from the trustee to touch your 401(k) account while you are in Chapter 13. If you do it without consulting your attorney or trustee, you may run into a problem even if you are facing an emergency.

Call your utility company, give them the $400 you have (pay immediately) and tell them you have to get a loan for the rest but it will take a few days but you will have it.

Many of us run into big problems during our Plan years; If they are continual, talk to your attorney about plan modification or converting to Chapter 7. You really do need to do some planning to avoid things like this occurring again cause it is hard without any credit to rely on or family or friends who can come to the rescue.

If you are really bad off, see if your attorney can ask your trustee for you to skip a month on your Plan payments and make up for it at the end. I has been done.

[Cali]

Wow, I know I'm fortunate. I said that before.

I'm not in dreamland. I didn't realize how good I had it I guess.

We are blessed as well when it comes to medical and dental. I don't see how people make it in the real world when it comes to that.

[MajorMike]

So true Cali.

As far as a 401K loan, I doubt they will have a problem with it since you are paying yourself back, but Flamingo is right. Better to be safe then sorry.

[Flamingo]

So true Cali.

As far as a 401K loan, I doubt they will have a problem with it since you are paying yourself back, but Flamingo is right. Better to be safe then sorry.

A 401(k) should be a last resort for anything; you are borrowing your own money that you probably saved pretax and paying it back with taxed funds and losing interest on the amount withdrawn. Good Morning America about a month or so ago had an excellent commentary on 401(k) loans and how it is never good to take one out and how you lose money doing so. Even though the funds are exempt from being taken in bankruptcy, they are still a part of the Chapter 13 and if they were not exempt, they are funds that could have been used to pay creditors. So if you start taking out 401(k)I money to pay for things, you can see why the Trustee will have an issue. Also, you are adding a loan payment in addition to your Chapter 13 payment which is another problem. I am not trying to burst anyone's bubble, just stating the truth/facts. While there is a true emergency here, you still need permission to touch that money during the Plan years. Nothing is worth risking having a Chapter 13 dismissed.

[MajorMike]

When you desperately need the money, the last thing we worry about is money lost. The money gets deducted from your pay anyway, and I never miss that when it happens. This is why I have an auto increase of my 401K percentage of 1 percent every 6 months. I never notice it. If I need the loan, I wouldn't notice the withdrawel either. This is different with everyone though. Because I'm in sales, I can make sure I sell something to cover that payment every month.

[MajorMike]

They also say 90 percent of all chapter 13 dismissals are due to non-payment.

[Flamingo]

When you desperately need the money, the last thing we worry about is money lost. The money gets deducted from your pay anyway, and I never miss that when it happens. This is why I have an auto increase of my 401K percentage of 1 percent every 6 months. I never notice it. If I need the loan, I wouldn't notice the withdrawel either. This is different with everyone though. Because I'm in sales, I can make sure I sell something to cover that payment every month.

Your Plan alloiws you to contribute 1% more increases of your salary to your 401(k) every six months? Where did you find your attorney and trustee? Are they aware of that? I had to get permission after being in our Plan two years to restart 1% withdrawals from my salary and was told if it affects paying any of my bills that I have to stop. Not allowed to go any higher than that!

[Flamingo]

They also say 90 percent of all chapter 13 dismissals are due to non-payment.

You are correct and the problem that the OP is having leads to all that and needs to get corrected/adjusted before they drain the retirement (what would they do if the 401Ik) was not there?) and sell everything to get through their Plan.

[MajorMike]

Your Plan alloiws you to contribute 1% more increases of your salary to your 401(k) every six months? Where did you find your attorney and trustee? Are they aware of that? I had to get permission after being in our Plan two years to restart 1% withdrawals from my salary and was told if it affects paying any of my bills that I have to stop. Not allowed to go any higher than that!

My paycheck fluctuates as I'm in sales. They don't check my paycheck to see how much I'm sending to the 401K. My attorney even said to go ahead and pay on our student loans with our extra funds outside the plan. He said the trustee doesn't care what we do, as long as the check comes every month to him. We have a very easy going trustee. He doesn't ask for tax forms, bank statements or paystubs. I am already contributing to our 401K substantially. I'm on an auto increase and have been for over a year ( before I filed ). If anything were to happen, I could say I forgot I had it set at auto increase, but I'm really not worried.