Legal Question in Bankruptcy in Florida

Re: 401k Loan and tax refund

You should consult an attorney and describe your exact situation. If you have a loan against your 401(k), I assume that the 401(k) is acting as security for the loan. In other words, if the 401(k) loan were erased,the amount owed would just be subtracted from your 401(k) balance. For this reason, the 401(K) loan cannot be erased.

Tax returns normally become property of the bankruptcy court in a chapter seven bankruptcy, so it's not likely that your tax return could be applied the penalty taxes, even if the 401(K) loan could be erased.