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  1. #1
    Join Date
    Sep 2010
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    19,901

    Default Re: Can a Chapter 7 Bankruptcy Include a 401k Loan

    Not only taxable, but it's treated as a premature withdrawal, so you'll get hit with a 10% penalty as well.

  2. #2
    Join Date
    Apr 2009
    Location
    Somewhere near Canada
    Posts
    35,894

    Default Re: Can a Chapter 7 Bankruptcy Include a 401k Loan

    This is why 401k loans can be incredibly risky. The borrower SERIOUSLY needs to fully consider every single other option before taking out this loan, and ideally they need to discuss the possible repercussions with a financial adviser or tax professional before doing so.

    (such as llworking )

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