Can I appy for credit, CC, 401k loans in a 13?

[lukesky]

Hi, I am 4 months after my approved confirmation hearing. I am doing okay but I have no savings and the IRS tax refund that I was told I can keep by my attorney that I was going to use for emergencies (like moving if I have too) went to fix my car. My Chapter 13 is a 10% to Unsecured Creditors (what ever that means) for 36 months. I am scared that something will happen and I have no savings, are any help to get out of it. I can get a 401k loan and I am even getting offers for unsecured credit cards. I do not want to loose my Chapter 13 and at the same time I feel like I am floating on a life raft at sea and I can see a storm coming. Not sure what to do, your advise is priceless. Thank you.

[underh20]

In my district at least, court permission is needed to incur new debts while in the middle of a chap 13.

I'm not too sure about 401k loans in the middle of Chap 13, maybe someone can chime in.

[switch625]

There have been a few recent (2017) threads on obtaining 401K loans while in Chapter 13, you should be able to find them if you search.

[lillymarlene]

t

• lukesky, I think it depends upon the district where you are from. Near the end of my Chapter 13 2014, I desperately needed a car. I asked my attorney and he said: Absolutely no way. Then after my bk discharge, after straightening out my credit report and 2 "junkers" later, I was able to purchase a "normal" used car.

[lukesky]

t

• lukesky, I think it depends upon the district where you are from. Near the end of my Chapter 13 2014, I desperately needed a car. I asked my attorney and he said: Absolutely no way. Then after my bk discharge, after straightening out my credit report and 2 "junkers" later, I was able to purchase a "normal" used car.

Thank you lillymarlene. I asked mostly because I was curious. I am doing, at the moment, okay. By by the grace of God!. I just like to look ahead just incase I need to. I thought it would be a bad thing, and I agree with you.

[tm0101]

401K isn't consumer debt, it's your money. The only thing to really consider, is the payment amount because it will be coming out of your payroll check, which may affect your ability to make Chapter 13 payments. I know some will say taken money out of your 401k isn't a good idea. However, when you are going through this and life is happening, no one who's saying "it isn't a good idea" is going to give you money when you need to fix your car or something else comes up.

[justbroke]

I am echoing the information which everyone else has already provided.

First, you'll need to refer to your Order Confirming Chapter 13 Plan and may need to consult with your attorney. Most Chapter 13 Plans contain a provision prohibiting the debtor from incurring any debt without court and/or trustee permission. In some jurisdictions, that prohibition may be tempered (e.g. you may not incur more than $X,XXX in debt without court/trustee permission; I have seen that amount at $5,000). It really depends on your order confirming a plan, so I can't make any conclusion on whether you can incur new debt.

As for a 401(k) loan, those are fine so long as they don't jeopardize your Chapter 13 Plan. This is why you must be careful in choosing a 401(k) loan over just seeking permission from the Court to incur debt.

[lukesky]

I am echoing the information which everyone else has already provided.

First, you'll need to refer to your Order Confirming Chapter 13 Plan and may need to consult with your attorney. Most Chapter 13 Plans contain a provision prohibiting the debtor from incurring any debt without court and/or trustee permission. In some jurisdictions, that prohibition may be tempered (e.g. you may not incur more than $X,XXX in debt without court/trustee permission; I have seen that amount at $5,000). It really depends on your order confirming a plan, so I can't make any conclusion on whether you can incur new debt.

As for a 401(k) loan, those are fine so long as they don't jeopardize your Chapter 13 Plan. This is why you must be careful in choosing a 401(k) loan over just seeking permission from the Court to incur debt.

Thank you justbroke, I understand now. Your advise is very much appreciated.