An idea I had

[leverage]

Since any 401K or 403B are exempt from creditors would it be possible to use a loan from this to get out of a 60 month plan early? I'm thinking that I'd borrow from my 403-B to play off the last 24 months of the plan. (I believe this would never be accepted before 36 months into the plan)

I wouldn't be out of debt any faster but the early discharge would allow me to start building credit faster and get a mortgage sooner.

The disadvantages I see are paying a little more due to interest on the loan and attorney's fees. Possibly the headache of the trustee wanting to go through my finances with a fine-toothed comb?

It's not a 100% plan.

Any thoughts?

[13for60]

I can totally appreciate your desire to pay off early. i haven't even started yet (341 on 11/10) and I dream of the same thing.

From what I can tell, there really is no "early payoff." If you're willing to lay your hands on the dough, the creditors (and the Trustee) want it. There is a reason our 401k/403b accounts are protected.

Maybe it's worth a call to your attorney - perhaps a cash settlement can be reached in which the creditors drop their claims and that is that. IMHO it's a longshot.

I'm looking at my first payment due 11/25. Sixty months is a long time. I vote you hang on to your retirement $$ for now and take a well deserved vacation when the whole thing is over!

--13for60

[walkthaplank]

For any early buy out, you would have to pay 100% of all allowable unsecured claims.

[leverage]

For any early buy out, you would have to pay 100% of all allowable unsecured claims.

This is not always true.

I will let you all know what my attorney says if he ever calls me back.

[LaurieM]

We have had a few clients withdraw from their 401K's to pay off their plans early. Of course, they would have tax implications for doing so. We simply called the trustee and got a payoff figure for the client and the client forwarded the funds directly to the trustee.

[LadyInTheRed]

We have had a few clients withdraw from their 401K's to pay off their plans early. Of course, they would have tax implications for doing so. We simply called the trustee and got a payoff figure for the client and the client forwarded the funds directly to the trustee.

Has that been done in cases filed after BAPCPA became effective? Did the unsecured creditor's get less than 100% of their claims?

[despritfreya]

The answer to this question depends upon the commitment period.

If you are a below median filer but you set your plan for more than 36 months, you can pay off the confirmed plan in month 37.

If you are an above median filer then I think you will only get out early if you pay off all allowed claims in full.

Depending upon your district, combined with the effect of Lanning, there may be an argument for those over median, that if your means testing DMI is negative you theoretically could ignore the 60 month commitment period and be done sooner, but I wouldn't want to be the one arguing this theory in light of Lanning.

On second thought. . . In light of Lanning, it may be a stronger argument since we may be back to dealing with only having to pay "projected disposable income" not actual. This may goes back to the old Anderson case in the 9th Cir which, if I recall correctly was applicable until BAPCPA.

Des.

[Flamingo]

Also remember one just can't say they want to take their 401(k) money and buy out of one's plan...the trustee will want to review the entire situation, the source of funds for payout during an active plan, etc. When big financial issues like this arise in an active Plan, always discuss with one's attorney. Things changed as to early buyouts after the new law became effective in 10/05.