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What are the potential situations I could face for doing this?
Anonymous4 views2 answers
I am under chapter 13 bankruptcy and I took out a loan from my 401k plan without consent or permission from my trustee. I'm not sure how to go about fixing this. I have an attorney but haven't been able to set up an appointment. What are the potential ramifications of my actions. The amount was roughly 1400 dollars. Thanks in advance.
The only person that can answer this is your attorney. The first question is whether or not the terms of your plan and confirmation order place any limits on taking money out of retirement account. The second question is whether or not paying back the loan will interfere with your ability to make your plan payments.
I've had clients do this and have no impact on their cased. But the court's rules and procedures in your area maybe different.
Don't do it in the future. Given the small amount and assuming you can handle the payroll deduction to repay the 401K loan and continue to make your chapter 13 trustee payments, your situation is nowhere near the end of the world. Really, it is a situation of no harm, no foul...assuming you can repay the loan and the chapter 13 trustee without interruption, no one is going to care. I don't know that I would even bother your attorney at this point. Now, if you are going to have a problem keeping all your payments, then you need to contact your attorney.
