401k loan

[phoenix44212]

My wife and I are finalizing our divorce in December. I am filing before mid December to avoid the new IRS means test expenses. I'm living in a new apartment with my daughter but no furniture. We've been without furniture (we have beds and dressers - NOTHING else). One of the benefits of divorce. We have been that way since August. I already have a loan that I am repaying back to my 401k but once divorced I can get another one. Would it be so bad to take out a loan to buy some furniture - just the basics???

[CATCHMEIFYOUCAN]

When I filed Ch13. I took out a loan from my 401k a month before I filed ($1000) . The Trustee never questioned it and if he did, I used it to pay the lawyer. Its funny the Trustee never ask, "Where did you come up w/the money to pay the lawyer?" AND I don't think you need a receipt to PROVE how you paid the lawyer, obviously one could not have filed w/out paying the lawyer first. If you take out a loan and are paying it back through payroll deductions MOST 401ks are untouchable. BUT every Trustee is different. Others will chime in to add to this.

Best of Luck, CMIYC

[phoenix44212]

I'm concerned about taking out a loan to buy some furniture. We really don't have anything except beds and dressers! Just the basics; nothing expensive and under my exemption. My attorney fees will be paid for by Hyatt legal since it's one of our employee benefits. I have a repayment on a retirement loan already and will just consolidate it. As far as the C13, from what I've read here and other places it seems the credit rebuilding kind of takes place in the 13 itself. I'm not sure if it is rumor but it seems all creditors view 13 better than 7 and if I can just make it through 3 years??? I'm not sure.

[SinkingFast]

I know a guy who makes a rather large 401K loan payment. Nearly $600/mo. He filed for Ch 7. The UST's Office has filed a Motion to Dismiss.

The 401K Loan repayment was one of the things that was specifically mentioned in the MTD. The UST specifically said,........... If he was filing a Ch 13, the payment may have been allowed. Since he's filing Ch 7, he's choosing to repay himself and not his other Creditors.

Kinda depends on what Chapter you're looking to file. If you're shooting for a Ch 7, I think I might hold off on that 401K loan.