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About a year ago or so my husband took a loan on his 401k. It's automatically taken out of his paycheck to pay it back (about $25 per month or so). How is this handled in a chpt 7?
Your husband's voluntary repayments are permitted as are payments to any creditor you want in a chapter 7, but not required as the debt is a dischargeable debt.
But if we discharge the 401k loan then he wouldn't have that money in his 401k, right? And he can reaffirm the loan even though he pretty much borrowed from himself? Those payments wouldn't be seen as preferential? I just want to make sure I really understand.
The money he's paying to pay back the 401K loan will have to be stopped and that payment money WILL be added back to his disposable income. He is paying himself back, essentially, and the repayment is voluntary.
Okay... I'll have him call his 401k place (I can't think of the name of it), but I think it's set up that if he stops the payments that he has to pay everything back at once. We don't have that money, but since he'd be paying himself back, basically, there's not anything we can do under the bankruptcy... is that right?
Do we still list it in the bankruptcy? Someone my husband knows mentioned it would listed as a secure debt???
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