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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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is it considered preferential treatment to payoff a 6k 401K

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is it considered preferential treatment to payoff a 6k 401K loan with money split between a tax refund and cash from income that could be considered non-exempt or at least need accounted for in an exchange to an exempt asset before filing ch 7 within the 90 non-insider rule/law.

cfortunato :

A "preference" involves paying a creditor more than the creditor would receive when a Bankruptcy is filed. In other words, there must be a creditor involved for there to be a "preference". Putting money borrowed money back into a 401K account is not considered to be a "preference", because the money is being "borrowed" from yourself - there is no creditor involved.

cfortunato :

I think this is what you wanted to know. If not, please let me know.

cfortunato :

Thank you.

Customer:

ok, thanks, XXXXX XXXXX case then, will the transaction be allowed by the trustee? I have a couple other questions also, should I enter them each on the site or can i ask you?

cfortunato :

Yes - since repaying the money you "borrowed" from your 401K would not be considered to be a "preference", the trustee will allow it.

Customer:

thanks, XXXXX XXXXX questions I have should be each entered on the site I guess

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