When it rains...

[southernmama]

So we just got confirmed and it pours. I am at my wits end. My car (which is in our plan) is in the shop and found out it will be about $2400 to repair and our plumbing is having issues but don't know how much it will be yet. We don't have that but my mother gave me an option but I don't know if we can. I had a 401k loan prior to filing that comes out of my checks biweekly and she said she'd give us the money to pay it off and reborrow or we could pay her back but that would make for 2 payments. I'm at a loss of what to do. If I go the 401k route, will the trustee find out since I had one previously?

[justbroke]

The Trustee would not find out. For emergencies, where you actually have DMI, you can petition the Trustee to abate payments. It is also a long shot, but what if you petition the court to incur new debt and get a "newer" car? There are options.

I would sit down and figure out financially what either a replacement car or a new loan would do to your expenses.

[southernmama]

Okay. Good. When we filed, we already had the existing 401k loan and currently have about 4 years left on it but in our paperwork it just says "Direct Pay" so I didn't know if his office would receive anything if we paid off and reborrowed. I'm trying to stay out of this Trustees crosshairs and just keep my head down.

[southernmama]

Okay. So we paid it off and reborrowed and now I am filled with worry and relief. (Weird) Since we had the existing 401k loan at the time of filing, does Fidelity send anything to the Trustee that shows we paid them off?

[justbroke]

Fidelity would not send anything to the Trustee. The Trustee doesn't even know (have a relationship with) the Trustee.

The only question really is whether you were in a step plan for your Chapter 13. Did your payment schedule have a step-up (increase) in payments once your original 401(k) loan was paid off, or did the 401(k) loan payback period extend beyond the life of the Chapter 13? I only mention that because in some plans, this payoff is baked into the plan and the plan usually increases the payments by the amount of the 401(k) loan payment.

[sophieanne]

Hi southernmost..no they don't. Are you in a 100% payment plan? If not, was there anything when you were confirmed to say the 401 payment would go to the plan once the loan was repaid?
If not, I believe you should be fine.

[southernmama]

Thanks for the responses. No the payment would not go higher once the loan was paid off.