[Muscateentank]

We were under the impression that the 401k was settled as it was listed in the discharge documents. There was no notification that it was not included in the discharge of the ch.7 bankruptcy and then they 1099 us so we thought we were finished with it after we were hit with the sizeable tax bill. But we asked for a small loan on the 401k and that was when we were notified we still owed it and we still owed the tax bill so it was a double whammy does this sound right to anyone knowledgeable in this area??

[Fr_Chuck]

The tax bill is the tax and penalty for withdraws from a 401K, this can be around 25 percent tax and 10 percent penalty.
Your attorney should have explained that even if discharged in the bankruptcy, the taxes on the money not paid back but taken out would have to be paid.

But no you would not owe the loan back, if they did a 1099 and you paid the taxes, They would have shown this as a pay out ( money withdrawn, not borrowed)

I would say perhaps they did not properly change the status ?