Have a 401K loan in my Chapter 13

[Taejon]

I have an existing 401k loan that was listed in my Chapter 13 (still pending confirmation??) that will be paid off in 2 years at 8%.
My question is can I pay of the loan (borrowing from a family member) and then take out a new loan (paying back family member) at a lower rate 4.25% which will free up an additional 200.00 dollars a month as I am having a hard time with my 13 payment ($680.00). Will I have to ask the trustee first? Should I wait until I am confirmed? I can't find anything in my papers that talks about the loan expiring in 2 years. This would reset the loan for another 5 years. Thanks

[Flamingo]

Your trustee is in control of your financial house during your Chapter 13 Plan years. Please contact your attorney before you make any financial moves as toi your 401(k) because you don't want to take the chance of having your Chapter 13 dismissed.

[agirlinindy]

I just recently started looking at filing bankruptcy, according to what I've read I have to pay back my loan as agreed(mine is through payroll deduction). I think I read that I could shorten or lengthen the repayment time(as long as I don't go past 5 years from the original date) I could not include it in the bankruptcy because I'm paying myself back........

[bobbyquefour]

I just recently started looking at filing bankruptcy, according to what I've read I have to pay back my loan as agreed(mine is through payroll deduction). I think I read that I could shorten or lengthen the repayment time(as long as I don't go past 5 years from the original date) I could not include it in the bankruptcy because I'm paying myself back........

But yet doesn't that affect how much you are theoretically able to pay in a payment plan. This is what annoys me about student loans and retirement loans...they are not dischargeable, but in many areas are not allowed to be counted as expenses, even though you are forced to pay them back. So it appears you have more disposable income when, in fact, you do not.

[NoTomatoCan]

Taejon - something to consider... In most districts, under a chapter 13 (NOT 7) you are allowed to pay back your 401k loans. Please ask this specifically to your attorney. This was one of the few positives to come out of the bankruptcy law changes back in 2005.

If you pay back that 401k loan with a loan from a family member, that debt would be unsecured, so you would only be allowed to repay them at the same % that you are repaying your other unsecured creditors. Attempting to repay that family member at full value would likely be considered a preferential payment and not be allowed (I assume you are not in a 100% repayment plan).