Q+A: Are 401(K) Loans Secured Debts?

Q-A image

Q: I took a loan from my 401(K) retirement account. Is that 401(k) loan a secured debt?

A: A secured debt is one backed by collateral. Typical examples include a home mortgage or vehicle loan. But in its decision in In re Egebjerg, 2009 WL 2357706 the 9th Circuit Court of Appeals concluded that 401(k) loans are not secured because there is no debtor-creditor relationship between you (as borrower) and you (as holder of the account, hence as lender).

Source: The American Bankruptcy Institute‘s Chicago Consumer Bankruptcy Conference Educational Materials.

Advertisements

Comments are closed.