Can I take a loan on my 401k if I filed chapter 13? 19 Answers as of June 17, 2011

I am paying 100% to all creditors on a chapter 13 case. I am almost 2 years into my case. Can I take a loan on my 401K since I am already paying ALL of my debt back? Thanks for any assistance you can provide.

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Lakelaw - Loop Bankruptcy
Lakelaw - Loop Bankruptcy | David Leibowitz
I wouldn't take a loan against my 401k unless absolutely necessary.
Answer Applies to: Illinois
Replied: 6/17/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Normally in a Chapter 13 you are required to get Court permission for any credit or loans that you undertake.
Answer Applies to: New Hampshire
Replied: 6/16/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
In order to take a loan on a 401k during chapter 13 you need to seek permission from the trustee.
Answer Applies to: California
Replied: 6/14/2011
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
You need to speak to your attorney who you have hired and paid. You have to file a motion with the court before incurring any debt of any kind. Are you using the money to pay off the bankruptcy? something else? your answers will lead to more follow up questions.
Answer Applies to: Missouri
Replied: 6/14/2011
Jackson White, PC
Jackson White, PC | Spencer Hale
You will need to get court approval to do so.
Answer Applies to: Arizona
Replied: 6/13/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Most orders confirming Chapter 13 plans require court approval before taking out any new loans. Look at the order confirming your plan.
    Answer Applies to: California
    Replied: 6/13/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    The answer is likely yes, but you would be well advised to first run the idea by your case Trustee and your counsel if applicable.
    Answer Applies to: Indiana
    Replied: 6/13/2011
    Saedi Law Group
    Saedi Law Group | Lorena Saedi
    You may be able to take a 401K loan but you will need to request permission from your Chapter 13 Trustee. Your attorney can file a motion with the court to obtain this permission. The trustee will of course want a detailed description of what you need the money for.
    Answer Applies to: Georgia
    Replied: 6/13/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Probably. Technically you may need court approval to do so (you need to check the terms of your plan and the confirmation order, as well as the local rules of your jurisdiction). The potential problem here is that if your income changes later on and you have to modify your plan to lower the percentage to be repaid, you will have theoretically created a senior liability that has to be paid, but for a 401k loan, that's probably not as much of an issue since you're essentially repaying yourself. Failure to repay that can, however, create tax consequences that you would have to deal with.
    Answer Applies to: California
    Replied: 6/13/2011
    Law Offices of John J. Ferry, Jr.
    Law Offices of John J. Ferry, Jr. | John J. Ferry, Jr.
    New borrowing will likely require a change in your chapter 13 plan and court approval. (Or at least approval of the trustee.) Talk to your attorney about this before you take out the loan.
    Answer Applies to: Pennsylvania
    Replied: 6/13/2011
    Law Offices of Virginia E. Fortunato
    Law Offices of Virginia E. Fortunato | Virginia E. Fortunato
    Technically you need to request permission from the court to take the loan from the 401k because once you take the loan you will likely have deductions for the loan taken out of your pay check. This can effect your case even in a Chapter 13100% case because it will reduce what you have each month to live on and make your Chapter 13 plan payment. Here in NJ I have never seen any one request permission and it is done by debtors routinely. In fact I have seen judges give adjournments so debtors could apply for 401k loans. You should speak to your attorney for guidance as to your district.
    Answer Applies to: New Jersey
    Replied: 6/13/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    No, unless the Court approves your request. This is something your lawyer should have already advised you on (and the Trustee tells you at the 341 meeting). To get approval, your lawyer would have to file a proper motion.
    Answer Applies to: Georgia
    Replied: 6/13/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    yes. Not sure its a good idea. If there's a change in your situation maybe you can ask to have your chapter 13 payment reduced.
    Answer Applies to: Virginia
    Replied: 6/13/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    I would say yes if you are paying all creditors back. Probably a good question for your existing attorney on your chapter 13.
    Answer Applies to: California
    Replied: 6/13/2011
    Ellahie & Farooqui LLP
    Ellahie & Farooqui LLP | Javed Ellahie
    Loan requests after filing a petition should be approved by the trustee and/or the court. In some jurisdictions a no objection by the trustee is enough. In others you may have to file a motion and obtain approval of the bankruptcy court to the request. If the "new" payment on the loan will not effect your ability to pay the Chapter 13 the Trustee will probably not object to the loan. If you are taking the loan to help pay off the Chapter 13 that would help given you have a 100% plan.
    Answer Applies to: California
    Replied: 6/13/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Yes. But you will need court approval for any debt over 500.
    Answer Applies to: California
    Replied: 6/13/2011
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    To borrow money during a Chapter 13 case, you must first obtain permission to do so. Depending upon where you live, you may be able to obtain permission from the Chapter 13 trustee. If your Trustee does not have authority to do it, your attorney may need to prepare and file a motion with the Bankruptcy Court. The Bankruptcy Court may or may not grant it. There would likely be additional fees due to your attorney for the additional work and costs. You will surely need a very good reason to borrow money, as the Court will not want you to incur a debt that you must pay before your Chapter 13 plan payment. The Court would not want you to endanger the success of your plan, or permit you to incur a debt which would result in you not being able to repay 100% of your debt as you are now, at least not without a very good reason. Consult with your attorney about this matter, and follow his or her advice.
    Answer Applies to: Texas
    Replied: 6/13/2011
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