401k loan in active chapter 13

[eap82]

Hi everyone, I've been MIA for a while. Chugging along over here. With a cold snap we had here in Florida a few months ago I had a lot of tropical landscaping die. I live in a HOA community and have gotten a letter that it needs to be taken care of. I've gotten several quotes and it is going to be a pretty penny to replace what has died and address some of the issues from the builder that I want resolved while there are in there ripping it up. I have zero reserves with my newly confirmed chapter 13 and all. I have a question out to my attorney but they are notoriously slow to answer questions. I'm looking at doing a small 401k loan. The repayments would come from me stopping my 401k contribution until the loan is repaid. Not ideal by any means but I'm searching for options here. Has anyone taken out at 401k loan during chapter 13 and did you need trustee approval? I'm worried if I need approval with this terribly slow system that I'll start incurring fines. Either way I may appeal to my HOA and explain I'm in a chapter 13 and it may take a while to come up with the cash. We have a pretty reasonable HOA so I may get some relief from them. Hoping to hear everyone's experiences.

[Barbisi]

eap82 , I'm not sure if this will help you but we took out a large 401K loan (which we have since paid back from the home sale proceeds) late last year when our BK13 was about three months from completion. Our attorney said it was fine, but I'm not sure if that was because we were so close to the end or not.
I would think since you have a compelling reason (HOA violation and actual landscaping needs that can't wait) the trustee should allow it. What do you think justbroke?
Best of luck on making it through the rest of the BK13 trials and tribulations!

[justbroke]

If you have an emergency then your attorney is very likely going to say it's okay to take a 401(k) loan. Of course I'd run it by them first. When I had a landscaping emergency, in my HOA, I spent about $2,700 on re-sod and landscaping to come back into compliance. I used a portion of my tax refund and asked the court to excuse me from paying that portion into the plan. The Chapter 13 Trustee wasn't happy, but apparently this happens all the time in Florida with HOAs.

In my case, I used the money first, then asked for forgiveness later (via motion to keep portion of tax return). I had to provide receipts. I actually had two major issues regarding landscaping, and one regarding a sewer line.

[eap82]

If you have an emergency then your attorney is very likely going to say it's okay to take a 401(k) loan. Of course I'd run it by them first. When I had a landscaping emergency, in my HOA, I spent about $2,700 on re-sod and landscaping to come back into compliance. I used a portion of my tax refund and asked the court to excuse me from paying that portion into the plan. The Chapter 13 Trustee wasn't happy, but apparently this happens all the time in Florida with HOAs.

In my case, I used the money first, then asked for forgiveness later (via motion to keep portion of tax return). I had to provide receipts. I actually had two major issues regarding landscaping, and one regarding a sewer line.

Thanks for your input, I'm hoping they don't take to long to approve it.

[eap82]

eap82 , I'm not sure if this will help you but we took out a large 401K loan (which we have since paid back from the home sale proceeds) late last year when our BK13 was about three months from completion. Our attorney said it was fine, but I'm not sure if that was because we were so close to the end or not.
I would think since you have a compelling reason (HOA violation and actual landscaping needs that can't wait) the trustee should allow it. What do you think justbroke?
Best of luck on making it through the rest of the BK13 trials and tribulations!

Thanks, it's rough for sure. I wonder if you are right and it's because you were close to done. Gives me hope the lawyer will just say go ahead and I don't need trustee approval. I'm surprised for you because your trustee was the worst!

[flashoflight]

If the 401k loan payment happens to approximate the 401k contribution, I don't think the trustee is going to care enough to make you submit a new budget if he or she is the reasonable type. That would avoid the legal fees from having to submit a motion to modify plan. You want your attorney to tell the trustee if required because the cessation of 401k contributions and maybe the 401k repayment will show up on your paycheck if you need to modify the plan in the future and show paystubs. I had to show paystubs with my motion to modify. If you're near the finish line of the 13, it's highly unlikely you would modify and I'd just do it without telling anyone and maybe that's what barb's lawyer did as well.

[eap82]

If the 401k loan payment happens to approximate the 401k contribution, I don't think the trustee is going to care enough to make you submit a new budget if he or she is the reasonable type. That would avoid the legal fees from having to submit a motion to modify plan. You want your attorney to tell the trustee if required because the cessation of 401k contributions and maybe the 401k repayment will show up on your paycheck if you need to modify the plan in the future and show paystubs. I had to show paystubs with my motion to modify. If you're near the finish line of the 13, it's highly unlikely you would modify and I'd just do it without telling anyone and maybe that's what barb's lawyer did as well.

That’s what I’m thinking, I’m not trying to modify my plan, I would spread it out so that it’s the same as my monthly contribution. I of course don’t plan on modifying in the future but who knows what will come up. It will
show up in my paystubs for sure.