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Good Afternoon, Currently I am about to set up a Chapter…

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Good Afternoon, Currently I am about...
Good Afternoon,

Currently I am about to set up a Chapter 13 plan and my income is very low because I have been taking out pension loans and I am paying money in arrears to add years to my pension plan. My total loan is about $12000.00 and my plan has about $15000 in it. Do you think it would be possible for me to take the money from my plan and pay off my pension loan? This would give me about an extra $1100 per month.
Submitted: 8 years ago.Category: Employment Law
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Answered in 4 hours by:
6/26/2010
Employment Lawyer: socrateaser, Lawyer replied 8 years ago
socrateaser
socrateaser, Lawyer
Category: Employment Law
Satisfied Customers: 40,157
Experience: Retired
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A loan repayment to a retirement plan is considered disposable income in Chapter 13. If you have $15,000 in assets, and you plan to use it to pay off your pension "loan," that may be considered "substantial abuse," and be found as grounds to dismiss the Chapter 13 entirely.

 

The reason why the loan repayment is income, is because you are not paying a creditor -- you are effectively paying yourself. See, e.g., In re Behlke, 358 F.3d 429, 2004 Fed.App. 0053P (6th Cir. 02/20/2004).

 

Hope this helps.

 

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