Retirement loans are an exception from a bankruptcy discharge and carry through the case until the loan is paid. Unlike unsecured creditor automatic payments, retirement loan paycheck withdrawals will not stop after the case is filed.
When you go through your future looking budget for the case, there is a section where your attorney will note your monthly retirement loan payments. In a chapter 7 case, there is not much done with your retirement loans as a chapter 7 is so quick. In a chapter 13 case they are looked at a bit more closely. This is because if your loan is paid off prior to your chapter 13 discharge, your case trustee will likely request what is called a step-up. A step-up means your plan payment will increase after your retirement loan is done. This is due to your retirement loan impacting disposable income and when it is paid off, you should have more disposable funds in your paycheck.
Retirement loans are very common, let the attorneys at LifeBack Law Firm answer the questions you may have regarding your loan and bankruptcy.
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No matter where you are in Minnesota, if you have any questions about your retirement loans or bankruptcy in general, visit www.lifebacklaw.com to speak with an attorney. You will be glad you did!
