I was recently terminated from employment and have 2 outstanding 401k loans totalling $8000. I have $10000 in my account. 1st rep said - you do not have to pay the loan back. I will need to pay a 20% penalty/ taxes for early distribution. She said that would be deducted from the $10000 in my account and they could send me a check for the remaining amount (cash out) 2nd rep said- I must pay back the $8000, I can request a check for the $10000 then send them back a check for $8000. If I don't it will go into default at 90 days and be reported to credit bureau. I have no job, I would rather risk defaultin on 401k loan than go into foreclosure. Do they report to bureau? if the $8000 was mine to begin with and had I paid it, it would have gone back into my account, who am I paying off with the $8000? What happens if I go into default and never pay it? I had $18000, took out $8000, and have $10000 left. Am I missing something here, isn't it my $8000? Help!