Concentrating in Consumer Bankruptcy Law since 1988;
Wake Forest Law School JD 1987
Law Office of Susanne M. Robicsek since 1993,
Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

 

Author: Susanne Robicsek, North Carolina Bankruptcy Attorney

13 Mar After Chapter 7 Bankruptcy Discharge: Can You Take A 401k Loan?

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It pleases me to no end when I get a call from someone I represented in bankruptcy a few years back and I find out they are doing great and are back on their feet. I like hearing fromformer bankruptcy clientsand getting good news.

Often the call from former clients is prompted in because they need something from me to get a loan.

Not all loans are bad, but I start out worried when I hear that they are about to get into debt. Bang! If youhit your headon a low branch once or twice, you'd learn to duck or walk down another path. It is always my hope that filing for bankruptcy helps people get onto a new path with a balanced budget, the ability to save to cover purchases they used to have to finance, and to hear that they also have gotten to the point where they even have enough money to do something a little extra for themselves or are buying a new [modest] home.

The question I got this week was from a former Chapter 7bankruptcy client who had received adischarge last year. His case was completed and closed, and he had been able to get a fresh start free from overwhelming debts.

He wanted to know if he could take a loan from his 401k retirement which he hadexemptedin his bankruptcy case.

The answer to his question is:

"Yes. You can take a 401k loan...

  but then I can't help myself from answering the unasked question.

You can take out a loan, but it might not be a good idea to do so.

 

"Can I get a loan now?"

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