401k Loan and Chapter 7

[KCane28]

The fist lawyer I saw regarding BK looked at my pay stub and said I had to do a Chapter 13. I didn't have the money to pay him and I asked him if I pay off my 401k loan and get another 401k loan to pay him and he said that was ok. Long story short I changed lawyers who is at least going to look at a Chapter 7 for me. Now I am worried that at the 341 meeting the trustee is going to see I paid off my 401k and took out another loan. Is this going to screw me?

[tcreegan]

Hi KCane,

Now I am worried that at the 341 meeting the trustee is going to see I paid off my 401k and took out another loan. Is this going to screw me? ....that depends....on your attorney....so getting a good BK attorney is worth some effort shopping around until you get a good one. Awhile back I made a list of the most common complaints about attorneys, figured they should be discussed b4 paying the retainer/fee.

Communication: phone/email/face-to-face, secretary/paralegal/attorney, turnaround time on responses
Organizaton/work ethic: dot all i's, cross all t's or 'good enough,' document filed ASAP or 'before the deadline'
Competence: know the local trustees, judges, filed cases like yours, up-to-date on relevant court rulings
Retainer/Fee: exactly what is covered, what is extra, what to expect as 'extra'

401k factors in the BK paperwork a couple places, I would want someone who seemed informed and confident when discussing what to do w/ the loan juggling, how that would affect the BK case.

Good luck to you, hope you don't have to kiss too many frogs before you get a winner!

Tom in Colo

[daleintampa]

When I started the Bankruptcy Process, I had two 401k loans and had the option for a 3rd. My Lawyer told me it would not matter. Its not the same thing as going to the bank and getting a loan. The only thing is, Lets say you take home $600 a week and you pay $50 a week to the loan. You cant say you only make $550. and the Creditors cant touch your 401k. This is my opinion.