401K Loan

petey, you are missing the boat on this question. the creditor for your 401k loan is yourself. the money you borrowed is your own money, so the payback is to yourself. in other words, only you lose if you stop paying back the loan.

Thanks for your answer ( i really missed the boat on that one! ) I guess I have too many thoughts in my head
If I were to file bankrupcy, would I still be able to keep my house? When would I be able to get another home loan. I have pretty good credit (781) no late payments and no mort. lates. Our credit card bills have completly consumed us and we are quickly sinking.

wow, petey, 781 is not "pretty good" - it is terrific. if you are contemplating bankruptcy, i surmise that the bankruptcy laws and your current credit standing will be leading you to chapter 13. under ch. 13, you'd pay back your debts, instead of having them outright forgiven.

if you went that route, you'd be able to obtain a mortgage, for the most part, after discharge of the bankruptcy, i.e., when you complete your repayment plan. your credit score will take a hit, and that will consequently require you to take a hit in getting a loan (higher price), but that ought not to keep you out of the market.

you can usually keep your home as well, as long as you can continue to maintain payments. get yourself a lawyer to alleviate some of your concerns - hey, call legal aid society first if you want to save some money; but don't delay too much, especially if your bills are as dastardly as you say.

HI Petey!

Welcome to forums!

Once you file a bankruptcy, it will affect your credit score. However, if you file Chapter 13, then your credit score will improve as soon as you start the payments. If you want to take a FHA loan you will have to wait for 2 years after the discharge of bankruptcy and in case of conventional loans, you will have to wait for 3 - 4 years.

Feel free to ask if you have further queries.

Sussane

I agree with the response made. Actually a 401(k) plan allows a worker to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of his or her wage paid directly, or "deferred," into his or her 401(k) account.

My husband and I are considering filing for BK. My question is: do I have to list a loan I have from my 401K? I don't want to stop making the payments and I really would hate for my boss to find out my financial situaltion.

Hi Maria,

If you dont want to list the 401k in bankruptcy, then you dont have to. But you will have to keep on making payments towards it.

Thanks,

Jerry

i am filing for a chapter 7 bankruptcy. do i have to continue paying my 401k loan payments. i really can not afford to. can i receive relief on this payment after filing for bk, or does this loan absolutely have to be paid back.

can 401k payments be

First of all, George is correct in that you borrowed from yourself. If you dont pay it back, you are cheating yourself.

On another note, you pay into your 401k with pre-tax dollars. When you pay back your loan, in most cases you are paying with POST TAX dollars. That means you are borrowing from your 401k at a rate close to 30% AND you are also missing out on any gains (or losses) those dollars would realize if the money was still in the account.

Eric
"http://www.dreamhomefinancing.com"

[Link deactivated as per forum rules. Thanks.]

Let me give a real world example. I get that you borrowed the money from yourself so you are cheating yourself if you don't pay it back. What if you can't pay the money back though b/ too much is being taken out each pay period. Yes, I am losing by not paying it back, but my 401K account is not completely empty. Plus, the $540 I am paying back will make my mortgage payment. So can I or can I not file bankruptcy on it and just stop paying myself back.

Hi Jaye!

Welcome to forums!

You can include your 401k account in the bankruptcy filing. However, you should note that your retirement savings up to 1 million is exempt. If there's some excess amount, then the bankruptcy trustee will use it to pay off your creditors.

Sussane