401K Car Loan after BK...how to do it

[UhOh]

yes, I just filed recently. This is the first time it has come up. I also saw a similar thing about a Verizon Wireless contract. I wonder how that works.

I will call the BK department at GMAC and inquire about payment options. I suspect I will be running to the post office in a minute.

thanks for the suggestion.

[StartingOver08]

yes, I just filed recently. This is the first time it has come up. I also saw a similar thing about a Verizon Wireless contract. I wonder how that works.

I will call the BK department at GMAC and inquire about payment options. I suspect I will be running to the post office in a minute.

thanks for the suggestion.

I gave a detail answer about Verizon in another thread this morning - but the short answer is you have to talk with their BK dept too in order to make payments. They will accept phone payments. They keep it in the BK dept until discharge. They assume you are keeping the contract, they just change the account number to a 2 instead of a 1 (for the last digit, same account number but the last digit is changed). If you are going to cancel you have to do it now while you are in your 60 day period.

[lrprn]

We are not talking about early withdrawls.

Logan

Actually Logan, the OP is talking about an early withdrawal from his 401K before he reaches retirement age (or the minimum age stated in the 401K agreement). Go back and read his original post. I quote, "...to loan the money to ourselves from our 401K". That is early withdrawal with the intent to repay what's borrowed.

[EricaCallaha]

Actually Lrprn, if you read a couple more posts down from the OP, she says that she wants to do a 401K loan. And sounds pretty savvy about how her 401K LOAN can work. And at worst case scenario at 30% penalty, it could be a much better deal than some crappy bk lender out there.

I still agree that it is an option that should be investigated. As I said before...if you are okay with the worst case scenario of paying the penalties, then go for it.

[Logan]

LOL! Logan. I just wanted to make sure the OP understood that IF his/her (can't remember now) loses job, automatic 10% penalty to IRS and the total amount of Loan would become taxable. OP, you are right. At the end of the year, I doubt your tax bracket would be 20% and you would probably recoup some of that 20%.


The Thought process is Great! and your right, OP has already been through Bankruptcy, so should know to have a back up plan if 'Stuff' does hit the fan

Luci

Luci,

Are you saying the penalties incur if he loses his job or the penalties incur because he'll start missing his payments because he lost his job?

Logan

[Logan]

Actually Logan, the OP is talking about an early withdrawal from his 401K before he reaches retirement age (or the minimum age stated in the 401K agreement). Go back and read his original post. I quote, "...to loan the money to ourselves from our 401K". That is early withdrawal with the intent to repay what's borrowed.

[Logan]

Luci,

I did some research and you make a good point. A 401K may be due upon loss of employment. My 401K plan would NOT require me to pay back the loan in full if I lose my job but others may.

Thanks for pointing that out.

Logan

[LuciluS]

Luci,

I did some research and you make a good point. A 401K may be due upon loss of employment. My 401K plan would NOT require me to pay back the loan in full if I lose my job but others may.

Thanks for pointing that out.

Logan

Your company has a very Good 401K Plan!

I don't recall you mentioning any set up fees. If the fees are low, You really don't have much to lose if you borrow from your Plan and are able to keep funds in your 5% interest checking account -Neat!

Luci

[Logan]

Your company has a very Good 401K Plan!

I don't recall you mentioning any set up fees. If the fees are low, You really don't have much to lose if you borrow from your Plan and are able to keep funds in your 5% interest checking account -Neat!

Luci

Here's a link to find the best checking account available. Everyone can have a checking account at 5%.

https://www.checkingfinder.com/find-my-best-return