Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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Yes - you would be able to borrow money from your sister - either to pay back the 401K or to directly pre-pay your Chapter 13 plan. However, you would first have to get approval from the Bankruptcy trustee.
Once your Chapter 13 is paid in full, your case can be discharged and closed, and you can then start to re-pay your sister and your 401K loan.
We have attorneys retained for the length of the bankruptcy would we have them go to the trustee?
Yes - if you are using an attorney, your attorney(s) would have to contact the trustee.
The trustee will approve this, because trustees are very much in favor of getting their money and the creditors' money early.