• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Bankruptcy and early 401K withdrawal

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

S

Suzack

Guest
What is the name of your state? IL

I borrowed money from my 401K and have been paying it back via a loan - as per my companies method. However, I am about to go through chapter 13 and the judge is going to force me to stop paying back the loan. Does the fact that I am being forced to stop the payments mitigate any of my tax liablility for early withdrawal from 401K. I have been told I will need to pay income tax and 10% for the early withdrawal. I would like to keep paying the loan back but I have been told the Chapter 13 will force me to stop. Thank you in advance.
 


Debtors are sometimes able to persuade the court that the tax penalties they will be forced to pay as priority claims outweigh the benefit to creditors from having money go into the estate that would otherwise repay the loans.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top