Anonymous Posted February 18, 2003 Report Share Posted February 18, 2003 Hi, heres our problem oh great board , we are deep in debt suprise! We have a loan out on a 401k for 18,000 this is killing us ! We used it to pay off a car and some other debts.I know now that was stupid ......IF we filed a bk chapter 7 or 13 could we get this discharged or is there any way to get rid of it ? Thanks for any forth comin' help! Link to comment Share on other sites More sharing options...
wert Posted February 19, 2003 Report Share Posted February 19, 2003 Find out more information on your loan from the company.Sometimes, depending on the company that is holding the 401(k), they technically hold go ahead and pay you on the ghost amount of what you borrowed if they offer a fixed or interest account. That way if you default, you default on yourself and just lose the principal. By law you can only borrow up to half the amount of your pension, so you have more than enough to cover the loan.The really sad thing is a person should never borrow they pension. Depending on your age and what the market does in the future, that 18 grand could actuall cost you well over 50 grand of retirement money. Link to comment Share on other sites More sharing options...
michelle0916 Posted February 24, 2003 Report Share Posted February 24, 2003 You can't clear a 401k loan from bankruptcy since it is money that you borrowed from yourself. I doubt that your company will let you default on the loan if you are still actively employed with them. Also when a 401k loan is not repaid you are responsible for paying any taxes on the loan and possibly an early withdraw penalty. Link to comment Share on other sites More sharing options...
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