401k question

[junjun]

My lawyer today said that since my 401K is optional that I have to stop contributing to it. Is this true for Chapter 13?

[junjun]

BTW I'm in CA..

[maddog2112]

This is something you`ll see over and over on the site. I`m 30 months into a 13 and was giving 7% to 401k when I started and still do. My lawyer said if I was already doing it before I filed the trustee would be ok with it. There seems to be nothing etched in stone. I would try and keep it in. Another important thing is to go to 0 exemptions 6 mos prior to filing cause your payments are based on net income. You can readjust your exemptions later to give yourself a little more takehome throughout the year. Some trustees take tax refunds, some don`t. Of course, mine does. Good Luck.

[BnkrptcyLwyr]

Section 541(b)(7) of the bankruptcy allows that contributions to employee plans covered by ERISA (read: 401k's) and 403b's are not to be considered disposable income. So it is UNDOUBTED that you can keep contributing to 401k's and 403b's (and 457 plans too).

Whichever attorney tells you otherwise is out to lunch.

I put in 401k and 403b contributions all the time (both on the means test and I/J). Get no objections - at all.

Furthermore, if you're smart, you will wait to file ... AND RAMP UP your contributions. Adjust your tax withholding so that you receive zero tax refund at the end of the year, and ramp up deductible contributions like 401k contributions, charitable contributions, etc. Who'd you rather pay? Your creditors? Or your 401k?

I have people (who use to be able give to church) start giving to church again.

I'd rather have you spend your money on things you like to do, and put your money where you want it ... rather than back into your creditors pockets.

Now, you must be careful because in a Chapter 7 401k contributions can be tricky. Here in Michigan ... it depends on which judge you're in front of ... and it depends on whether the 401k contribution is necessary (if you're older, then it becomes more necessary to fund your retirement, if you're younger, not so much).

[strugglingda]

Bnkrptcylwyr, could you pm me some recommendations for ch 13 lawyers for the Detroit area? Much appreciated.