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Chapter 7 401k loan and promissory note?

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Junior Member
What is the name of your state?I live in Independence, Oregon. I filed Chapter 7 bankruptcy on Aug 17. I have a 401k loan through my employer as well as a personal loan. I have no lawyer and am doing this myself. My employer needs to know if it is okay to proceed with the 401k loan repayment and the personal loan. From my research, it looks like the 401k repayment is okay to continue to take from my check. However, the personal loan should be reaffirmed and needs to wait for a reaffirmation hearing. Is this true? I have no idea. Both are listed on the bankruptcy petition and schedules.

Thank you.
Darryl Willaman :confused:
[email protected]


Junior Member
401k loan answer of sorts

I received no help here, but I figure I would post what answers I did get from elsewhere.

First, the 401k loan can continue to be repaid. Something about the plan not considered to have a lein or whatever against my estate. My employer is allowed to continue the repayment deductions.

Second, the promissory note, is another matter. The employer's association told my employers it would be inadvisable. My trustee could not give advice, but said my employer should seek council from their lawyer. My employer never came back with what their plan was, but they did not deduct for the note. At one point, my boss wanted me to write a check for it. I didn't end up doing that either. I thought that was a bad idea, especially as the note is part of the bankruptcy.

Should anyone actually have advice, I would still appreciate hearing it.


Senior Member
. My employer needs to know if it is okay to proceed with the 401k loan repayment and the personal loan
Unless repaying of that 401K loan is mandatory for you to keep your job, its going to cause you problems. In most cases, paying back a 401K loan is VOLUNTARY and you are essentially paying back yourself. Don't be surprised if the Trustee wants to take the payment amount and add it back into your disposable income. Unless you can prove it is NOT a voluntary repayment.

If your employer collects on the personal loan, they will be violating the automatic stay against ANY kind of collection action. If you were to pay it off or write them a check, it would be considered preferential and the Trustee would make them disgorge the funds.


Senior Member
I know in a 13 you may not pay into the 401K and the balance of the loan is treated as a dispursement and you are taxed accordingly.

Don't know about 7

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