Debtor/Creditor relationship and 401k loan

[BROKEDED]

Hi,

At the start of '09 I took out a sizeable 401k loan and set it aside in a brokerage account. The rest of my 401k dropped but I made some money on the loaned money for most of the year that supplemented my dwindling income.

At the end of '09 my income dropped even more and I was not making enough from the loaned money to live on so at the end of December, I repaid the loan to my employer (managed by Wachovia/WF).

I asked my personal attorney (not BK) if there would be a problem with a preferential payment essentially to myself. I was told that four things had to be met:

1. If it occurs within the previous 6 months before filing.
If I have to file Ch. 7 before the end of June then this will be true.

2. If there is a transfer of property. There was in the amount of the money.

3. The property was unsecured. It was.

4. There is a Debtor/Creditor relationship. My attorney said that he did not see it as such. I called a CSR in the 401k department at Wachovia/WF and asked specifically if there was a Debtor/Creditor relationship and was told, "No." I also found case law regarding this in the lawsuit of Scott Lee Egebjerg which has been upheld in other cases as well.

So I'm pretty sure there is not a Debtor/Creditor relationship but can the Trustee dismiss the Chapter 7 filing for other legal reasons or at his discretion?

Is there a legal time period I should wait before filing because of this?

I'm hoping to make it at least until April due to CC purchases but longer if possible.

Thanks!

[BROKEDED]

Anybody?

[newbie2]

Brokeded, you seem to have the answers within your own questions from your attorney. He (or she) has I'm sure run in to this before and that is why they were giving you the information that they did.

Have another sit down with the attorney and bring your question (as to the case law you found) with you.

[BROKEDED]

I'm not sure it's the WHOLE answer though. The two BK attorneys I've had consultations with said, "I THINK you should be okay." with the emphasis on "THINK". The first attorney's partner serves as a trustee on occassion so you would think I could get a definitive answer.

I've learned, however, that it's ultimately your own responsibility to get the right answers. It's nothing to an attorney if my case gets dismissed. It would be very bad for me.

[creditguy]

I repaid a loan to my non-filing wife's 401K just 2 months before filing. $45K. I was worried about it too. I got my discharge in Dec. and as of today am still shown as "no asset". Nothing was said at the 341 meeting about it. The trustees interim report just issued days ago does not mention it as a issue for closing my case.

Don't worry about it.

[BROKEDED]

I repaid a loan to my non-filing wife's 401K just 2 months before filing. $45K. I was worried about it too. I got my discharge in Dec. and as of today am still shown as "no asset". Nothing was said at the 341 meeting about it. The trustees interim report just issued days ago does not mention it as a issue for closing my case.

Don't worry about it.

That's good to know and your repayment is a good bit more than what I repaid. I just don't want a Trustee to say, "I can't touch your 401k but I can deny your case."

Just want to have my bases covered.