Dismissing CH13 BK and settling outside the courts

I have heard of many people who have got their Chapter 13 bankruptcy filing dismissed due to various reasons. However, not many people settle their dues with the creditors using a 401k loan. It is true that the creditors will receive a higher sum of money as settlement if you take out a 401k loan. But you should also note that you'll have to pay 10% penalty if you withdraw money from your 401k account before 59 and 1/2 years of age.

I wouldnt recommend it. The damage is already done to your credit...dismissing your BK wont remove it.

Save your retirement and stick with you 13 plan if you can.

I'm not so much concerned with the BK being on my credit report. Whats killing me is there is zero buffer in my plan. We already had an emergency car repair that sucked up half of my bonus, which, 100% was to go to the trustee. Now we will have to make payments on that on top of our plan. I can't work OT to cover emergencies without the trustee bumping up my plan payment, so thats out. I was thinking take out a $40k 401k loan, I pay myself the 6% interest for4 years and be debt free aside from my mortgage and 401k loan, being its not a withdrawal theres no penalty. My only concern is, will the creditors play ball considering the threat of BK is usually what pushes them to settle. If I drop the BK, that opens the door to the lawsuits where I suppose they could all sue me, but only one can garnish at a time so, would they really want to take 2yrs+ per garnishment to pay each creditor 100%? I'd think they would take lumpsums in the 30-40% range but who knows.