Will my employer be notified if I have a 401(k) loan?

[HelpMeFast!]

I have a 401(k) loan that is payed directly from my check. The loan was orginally for $2000 and the balance is now $600. I'm in Texas where there isn't wage garnishment, but I'm still worried that my employer's payroll department might find out. I don't think it's even listed on my credit report because I borrowed the money from my own account.

[CATCHMEIFYOUCAN]

You should be fine because Ive borrowed money from my 401k and had still owed money directly out of my paycheck to my 401k. If you are in a chapter 13, I dont know if your trustee will request a "wage order," to payback the creditors through the chapter (like you mentioned, texas does not allow garnishing) others will chime in here to give you their views!

best wishes, catchmeifyoucan

[HHM]

Let's back up, is the 401K loan from your current employer or a former employer. If it's paid directly from your check already (already being garnished), what is the problem? Wouldn't your employer already know?

401K loans are not really loans, at least not for BK purposes, so they do not get listed as creditors, and therefore, cannot be discharged. Also, since it is not a real loan, the wage garnishment prohibition in Texas probably does not apply.

[CATCHMEIFYOUCAN]

Let's back up, is the 401K loan from your current employer or a former employer. If it's paid directly from your check already (already being garnished), what is the problem? Wouldn't your employer already know?

401K loans are not really loans, at least not for BK purposes, so they do not get listed as creditors, and therefore, cannot be discharged. Also, since it is not a real loan, the wage garnishment prohibition in Texas probably does not apply.

Yeah, the 401k is an exemption like most are in most states. Its part of your paycheck (whether you have a loan or are just deducting a certain percentage towards that retirement fund). I had about $600 total coming out of my check towards my 401k (part due to a loan and an additional 8% towards the fund). If it wasn't exempt the Trustee would see that $600 as disposable income!

Your employer will only find out if you declared BK if they run a credit background check on you!

Catchmeifyoucan

[aa06a47]

I have a 401(k) loan that is payed directly from my check. The loan was orginally for $2000 and the balance is now $600. I'm in Texas where there isn't wage garnishment, but I'm still worried that my employer's payroll department might find out. I don't think it's even listed on my credit report because I borrowed the money from my own account.

No, they will not find out because of your 401k loan.

[HelpMeFast!]

Thanks for the responses...

Thanks to everyone who responded. One small comment though...does HHM always have to respond like someone just asked him to donate an organ? I've posted a couple of times and every time he responds he makes you feel like you've asked a stupid question. That's what the site is for correct, asking questions? I wouldn't call my wages being garnished for me paying back a loan I've set up at work. If so, they've never referred to it as that. I just wasn't sure if every single person that you have loans with are notified. I figured they wouldn't because it's my own money that I've borrowed, but you never know until you ask. Thanks again.

[HelpMeFast!]

P.s...

No hard feelings HHM, I'm just giving you a hard time.