C13 debtor borrows from 401k and buys a home
Posted: Fri Dec 02, 2011 3:34 pm
One argument you could use is that the debtot will live in the condo and so
his rent expense will be reduced. This could actually increase the amount
of plan payments.
On Dec 2, 2011 2:12 PM, "Law Offices of Jonathan Leventhal"
wrote:
> **
>
>
> If the debtor does not pay it back then it is taxed. I have seen it
> happen a few times.
>
> The bigger issue for you will be the trustee objection if it is less than
> a 100% plan.
>
> Jonathan Leventhal, esq.
> Leventhal Law Group, P.C.
> 818-347-5800
>
> On Dec 2, 2011, at 1:58 PM, "AlikS" wrote:
>
>
>
> Jonathan,
>
> The debtor would be borrowing from his 401k, not from a 3rd party lender.
> What kind of tax issues would this raise?
>
> Alik
>
> --- In cdcbaa@yahoogroups.com, Law Offices of Jonathan Leventhal
> wrote:
> >
> > You need court approval for the new debt. Likely an objection from the
> Trustee for the new debt and change in plan to repay debt and tax issues.
> >
> > Jonathan D. Leventhal, Esq.
> > Leventhal Law Group, P.C.
> > P: 818-347-5800
> > F: 818-936-0302
> >
> >
> >
> > [cid:image001.jpg@...]
> >
> >
> > NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail
> notice for ex parte Applications via voicemail or by email. You must comply
> with California Law and give notice to a person in my office during regular
> business hours.
> >
> > Jonathan D. Leventhal, Esq.
> > This email and any attachments thereto may contain private,
> confidential, and privileged material for the sole use of the intended
> recipient. Any review, copying, or distribution of this email (or any
> attachments thereto) by others is strictly prohibited. If you are not the
> intended recipient, please contact the sender immediately and permanently
> delete the original and any copies of this email and any attachments
> thereto.
> >
> Of Alik Segal
> > Sent: Thursday, December 01, 2011 11:35 PM
> > To: NACBA BK; CDCBAA Listserv
> > Subject: [cdcbaa] C13 debtor borrows from 401k and buys a home
> >
> >
> >
> > Group,
> >
> > I have an unusual situation. Help me analyze it.
> >
> > Debtor could not make ends meet because of student loans, so I put him
> in a chapter 13 plan. He has 50K in a pension plan, which is of course
> fully exempt. Debtor wants to borrow this money from the pension plan and
> use it to buy a home.
> >
> > 1. What is the impact on his chapter 13 case?
> > 2. What is the impact of his chapter 13 case on his property?
> >
> > A. One thing that I can see is that the money is exempt while in the
> pension plan, but once it is borrowed and taken out of the pension plan, it
> would lose the exemption. We have a substantial homestead exemption in
> California (CCP 704.730), which would protect the equity in the home, but
> this can only be done at the cost of giving up the the wild card exemption
> (CCP 703.140(b)(5)) and exposing some of his personal property to loss.
> >
> > B. Repayment of pension plan loans in chapter 13 has been held to be
> unobjectionable. In re Kimanzi Musili Mati, 390 B.R. 11, 15 (Bankr. D.
> Mass. 2008); In re Johnson, 346 B.R. 256, 262-63 (Bankr. S.D. Ga. 2006). I
> believe there is no 9th Circuit law on this issue.
> >
> > Are there other issues that I should be looking at?
> >
> >
> > --
> > Alik Segal
> > Alik.Segal@...
> > 310-362-6157
> > California Central District
> >
>
>
>
One argument you could use is that the debtot will live in the condo and so his rent expense will be reduced. This could actually increase the amount of plan payments.
On Dec 2, 2011 2:12 PM, "Law Offices of Jonathan Leventhal" <law@3yl.com> wrote:
If the debtor does not pay it back then it is taxed. I have seen it happen a few times.The bigger issue for you will be the trustee objection if it is less than a 100% plan.
Jonathan Leventhal, esq.Leventhal Law Group, P.C.818-347-5800On Dec 2, 2011, at 1:58 PM, "AlikS" <listserv.inbox@gmail.com> wrote:
Jonathan,
The debtor would be borrowing from his 401k, not from a 3rd party lender. What kind of tax issues would this raise?
Alik
@yahoogroups.com, Law Offices of Jonathan Leventhal <law@...> wrote:
>
> You need court approval for the new debt. Likely an objection from the Trustee for the new debt and change in plan to repay debt and tax issues.
>
> Jonathan D. Leventhal, Esq.
> Leventhal Law Group, P.C.
> P: 818-347-5800
> F: 818-936-0302
>
>
>
> [cid:image001.jpg@...]
>
>
> NO EX-PARTE NOTICE VIA VOICE MAIL OR EMAIL: I do not accept e-mail notice for ex parte Applications via voicemail or by email. You must comply with California Law and give notice to a person in my office during regular business hours.
>
> Jonathan D. Leventhal, Esq.
> This email and any attachments thereto may contain private, confidential, and privileged material for the sole use of the intended recipient. Any review, copying, or distribution of this email (or any attachments thereto) by others is strictly prohibited. If you are not the intended recipient, please contact the sender immediately and permanently delete the original and any copies of this email and any attachments thereto.
>
cbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] On Behalf Of Alik Segal
> Sent: Thursday, December 01, 2011 11:35 PM
> To: NACBA BK; CDCBAA Listserv
> Subject: [cdcbaa] C13 debtor borrows from 401k and buys a home
>
>
>
> Group,
>
> I have an unusual situation. Help me analyze it.
>
> Debtor could not make ends meet because of student loans, so I put him in a chapter 13 plan. He has 50K in a pension plan, which is of course fully exempt. Debtor wants to borrow this money from the pension plan and use it to buy a home.
>
> 1. What is the impact on his chapter 13 case?
> 2. What is the impact of his chapter 13 case on his property?
>
> A. One thing that I can see is that the money is exempt while in the pension plan, but once it is borrowed and taken out of the pension plan, it would lose the exemption. We have a substantial homestead exemption in California (CCP 704.730), which would protect the equity in the home, but this can only be done at the cost of giving up the the wild card exemption (CCP 703.140(b)(5)) and exposing some of his personal property to loss.
>
> B. Repayment of pension plan loans in chapter 13 has been held to be unobjectionable. In re Kimanzi Musili Mati, 390 B.R. 11, 15 (Bankr. D. Mass. 2008); In re Johnson, 346 B.R. 256, 262-63 (Bankr. S.D. Ga. 2006). I believe there is no 9th Circuit law on this issue.
>
> Are there other issues that I should be looking at?
>
>
> --
> Alik Segal
> Alik.Segal@...<mailto:Alik.Segal@...>
> 310-362-6157
> California Central District
>
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