Expert: Terry Leeders - 9/2/2008

Question
Hello. My husband and I will be filing a Chapter 13 and we are uncertain about (1) our two 401K loans and (2) a refrigerator we purchased through Rentway and still have about 40 weekly payments on.

My question is, while I know that the 401K loans can be paid outside of the Chapter 13 Plan, can they be paid inside of the plan?  Have you ever seen this done?  The reason we felt this would be "beneficial" is that we could extend the payoff and the monthly amount would be reduced.  

Second, can the refrigerator be dropped into the plan as well or since it is a rent-to-own can the creditor insist that we pay it outside the plan?

Answer
You should be able to keep the 401k loan repayments, but you will need to add that amount to your plan once you complete the repayment term.
The rental items are usually treated outside the plan, as they are not actually financed, and you can terminate the lease by surrendering the items, with no further liability.