I see many clients who have attempted to stay afloat by taking out loans against their 401k retirement plans. Basically the clients have X saved in a work retirement plan and they have borrowed against it, usually to receive a lump sum payment, and then the client is required to make monthly repayments back on the loan. These clients typically ask me the following “what happens to my 401k loan if I choose to file for bankruptcy.” The answer is NOTHING.
If you file for bankruptcy in Florida and you have a 401k loan the loan will not be affected in bankruptcy and the debtor will need to continue to pay the 401k loan. The 401k loan cannot be discharged or wiped out in a bankruptcy.
If you are thinking of filing for bankruptcy and would like to schedule a free consultation then please contact Shmucher Law, PL at 305.741.5553 or 954.309.5559. We offer consultations in any of our Florida office locations located in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.