One of the main drawbacks of traditional, payroll-deducted loans is that participants generally face a “pay off or default” dilemma upon termination of employment. MyPlanLoan solves this problem by allowing the loan for any terminating participant to be converted to MyPlanLoan. Once converted, the participant can continue making monthly payments directly to BPAS, thereby avoiding significant tax penalties associated with a loan default while bridging the gap between employment opportunities.
The loan, initially taken from the plan as a traditional payroll deduct loan, is transferred to MyPlanLoan for invoicing and payments. The loan is re-amortized to monthly payments based on original interest rate, remaining term and loan balance.