401k loan & bankruptcy

[andysmom]

Anyone file bankruptcy with a 401k loan?
I guess, according to this forum, we made a huge mistake by taking a 401k loan to help pay down a credit card.
We have our first consultaion w/ a lawyer tomorrow; any insight on chapter 7 or 13 with a 401k laon would be greatly appreciated.
Thank you.

[MrBankruptcy]

A 401k is protected in a bankruptcy. Many people continue to try and postpone the inevitable by paying creditors by borrowing against retirement or from a family member only to have to file anyway. That's where hind sight is 20/20 comes from. Always try to file Chapter 7 if possible as it is a lot cheaper, faster and there is no repayment of debts. Chapter 7 will wipe out all unsecured debts including credit cards, medical bills, etc.. There are exemptions also to protect your property. This is the fastest way to get back on your feet even though it will damage your credit.

[LALADY]

I agree. the 401 assets are protected.

The 401k loan repayment is not, in my opinion, based on personal, recent and ongoing experience.

[TEW]

Yes It's a mistake. You took money that was safe from the BK and paid off debt that will be discharged Plus you are going to get whacked with taxes and penalties for touching that money.
AND you can't use the payments on that loan to lower your disposable income.
So what did you accomplish?

[andysmom]

Hi, Mr bankruptcy.
You are completely right about hindsight. We wish we never did this. You can see what happened in my previous post/ we have our 1st consult w/ lawyer tomorrow but on here and online now I'm finding out I could be in big trouble due to the 401k Loan.
I am scared sensless & don't know what we are going to do.

[andysmom]

yes, TEW, you are completely correct. It accomplished absoluteley nothing & wish I had found this site first- before I realized what a mess we were in and would never otherwise get out of. I don't know the laws/don't know what to expect & am scared to death. If I knew then what I know now, we never would have done that. We never thought we'd end up in bankruptcy.

[LALADY]

You won't get whacked with tax/penalties IF you can pay back 100%. I've already discussed the paying back issue.

[andysmom]

I know I'd ever be able to handle 100% payback.

[TEW]

Don't be scared you will come thought this just fine. But this is a good time to start learning what not to do.
The government wants you to put that money away but but leave it alone.

LALADY how is OP going to pay this back during the BK please explain that to me???

[andysmom]

Thanks, TEW
I do have/ been diagnosed with panic disorder and I have a serve nerousness problem so it's my nature to worry about every little thing.
Everything I'm reading now seems to say we can't file bankruptcy because we can't pay the 401k loan pymt and 100% of the unsecured debt in 5 years.
If this is the case, I have NO clue what I'm going to do.
I know you are absolutely right & we should not have taken a 401k loan, we should have seen the writing on the wall long before that we were headed for bk; but now that the loan's been taken out we can't change that fact and seems it's going to mess everything up & if we are not allowed to file either a 7 or even a 13 because of this stupide mistake, I don't know what we'll do.
I just can't stop crying.

[espo1357]

Thanks, TEW
I do have/ been diagnosed with panic disorder and I have a serve nerousness problem so it's my nature to worry about every little thing.
Everything I'm reading now seems to say we can't file bankruptcy because we can't pay the 401k loan pymt and 100% of the unsecured debt in 5 years.
If this is the case, I have NO clue what I'm going to do.
I know you are absolutely right & we should not have taken a 401k loan, we should have seen the writing on the wall long before that we were headed for bk; but now that the loan's been taken out we can't change that fact and seems it's going to mess everything up & if we are not allowed to file either a 7 or even a 13 because of this stupide mistake, I don't know what we'll do.
I just can't stop crying.

Things will work out.
Just make sure you get a good attorney, and not some jackass.

[andysmom]

Thanks espo1357.
I have 1st consult tomorrow - he seemed nice on the phone; according to his website has alot of bk and law experience former assisant DA, etc/ even gave his cell # and is meeting with us on sat afternoon.
2nd appt is with another lawyer on 3/18- he was more through on the phone- i did mention the 401k loan and he didn't say anything negatively. Seems like that one (2nd lawyer) is a way bigger practice.
I just want to get this over with because if we can't file because of this stupid 401k loan I have NO CLUE what we'll do. I never imagined we'd be in this situation and then to find out we may not even be allowed to file because we made a stupid mistake & took out 401k money, the only funds available to try to pay down creditors & stay afloat. I wish I would have filed sooner & not done the 401k loan. what's done is done; now i just don't see how there's anyway out of this huge mess if we can't file bankruptcy. we have no money to even try to settle.

Anyone out there successfully file any kind of bankruptcy w/ a 401k loan in the mix?

[Flamingo]

We had a small 401(k) loan at the time of our filing. The loan was included in the bankruptcy with instructions for us to continue to pay it back via payroll deduction as was being done with no change in the amount of the payment. It was paid off in full after a few years during the course of our Chapter 13.

[andysmom]

Thanks Flamingo.
Quick question, did you have to pay your creditors back 100% and not allowed to count your 401k as an expense?
Thanks

[TEW]

We had a small 401(k) loan at the time of our filing. The loan was included in the bankruptcy with instructions for us to continue to pay it back via payroll deduction as was being done with no change in the amount of the payment. It was paid off in full after a few years during the course of our Chapter 13.

You file chapter 13 ? pink bird ?