A plan has a participant with a loan that is in default. The loan was originated 6/93. The defaulted loan was discovered by the plan auditor. The five year repayment period expired in 1998, however to date a 1099 has not been issued for the loan. May the loan be repaid now via payroll deduction? Could the participant take out a new loan ( the plan allows for multiple loans) and pay off the old loan?

Additional details about this question: The last payment was processed 2/17/97, so 90 days would make the defalcation 5/17/97. The original loan was about 2000 and the remaining principal balance is about $1000. The participant filed for bankruptcy in 1996 or 1997.