Chapter 7 and paying off a 401k Loan....

[nicole1969]

We owe $2000 on a 401K. If we paid this off in a lump sum prior to filing, does the 2K payment count as an eligible expense? Thank you.

[daylate]

I don't think so. I found this on another thread:

That is exactly what catleg was trying to say. For a Chapter 7, the 401(k) payments and/or contributions are not allowed. However, in the "hypothetical" Chapter 13 Means Test, which must be performed in order for the United States Trustee to win on their motion to dismiss, the 401(k) payments are allowed. This puts you in a precarious position.

NoTomatoCan, if you case is a Chapter 13, then all you do is have your Attorney challenge the Trustee's objection. The 401(k) deductions and payments are allowed, even if they are "relatively" new.

Try the search function at the top of the forum-there i lots of stuff out there

[tcreegan]

Hi Nicole,

Usually unless the repayment is involuntary and deducted from the paycheck, the repayment is not an expense and if it is big enough I can see the trustee wanting to pull it back as a cash asset.

Tread carefully,

Tom in Colo