What is the maximum you can borrow from savings during chapter 13?

DURING A BK 13, I REALIZE THE MAX LOAN AMOUNT FROM A LENDER IS $1000.

HOWEVER, WHAT IS THE MAX LOAN YOU CAN BORROW FROM YOUR STOCK SAVINGS PLAN FROM WORK, AS THIS MONEY IS RE-FUNDED BACK EACH PAY INTO THE S.S.P. PLAN.

MY CURRENT PLAN SHOWS A MAX OF $3800 APPROX. ALLOWED TO BE BORROWED AS IT IS ALREADY APPROVED BY THE PLAN.

1 reply
  1. Russ Cope
    Russ Cope says:

    This is a great question. The Dayton Chapter 13 trustee allows you to borrow up to $1000 for non-emergency purposes. Your situation is slightly different, though. Technically, you are borrowing the money from yourself. Right? Even though this is not a traditional debtor/creditor transaction, the safest route is to ask the trustee’s permission by filing an application to incur this debt.

    Just as you stated in the question, you will be repaying this debt by way of payroll deduction. Your stock savings plan will take payments each paycheck until you’ve repaid the plan in full. However, your disposable income is property of the bankruptcy estate. The Chapter 13 plan allows you to keep some of your money for living expenses and commit a certain amount of your income to the plan. So, if you are electing to take less money home so that you can repay your retirement account, then the trustee and the bankruptcy court must know about it.

    In this case, we submit to the trustee an application to incur debt. The application will state with specificity the purpose of the debt, the amount being borrowed, and the extent to which it will change your “bring home” income and monthly expenses. The good news is that the trustee generally approves these applications. The whole process typically only takes a week or two.

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