401k Loan Repayment + Contributions

[Buzzbolt]

Situation:
$7600 gross per month
$1232.13 per month in mortgage PITI + HOAs
$1315 Alimony (expires in June '10)
$528 Child support
Approximately $1200 per month on minimum (2%) CC payments (5% beginning Aug. 1)
Unknown utilities, closed at the beginning of this month.

I just closed my house, I took out a 401k loan to buy it and fix it up; I'm on a payback schedule for the loan. I have maybe 10K in equity in the house. I am planning on doing the following before talking to an BK attorney, just wanted to get some feedback. I've lived a spartan lifestyle after the divorce, I've been trying to pay off the divorce debt and starting life back from scratch. And was getting close, so I bought the house. Then my CC companies informed me that they are raising their minimums beginning Aug 1st.

1 - I own a car 99 Vovlo s80 outright; Broker will give me $2500 for the condition it's in (mechanical issues), which I will pocket or turn around to finance a 08 Ford Ranger. I'm going to try to keep the equity below the exemption amount.

2 - I will need to paint and patch up some holes in the house.

3 - Buy groceries, maintenence/cleaning supplies, batteries

4 - Sell/Trade in my Glock 23, Walther P22 and Remington 410 Over/Under for one sporting fire arm.

Feedback on those items will be appreciated. Then specifically, I want to know if I will still be able to make 401k contributions during the BK13 and contribute the maximum amount?

Thanks

[aa06a47]

Situation:
$7600 gross per month
$1232.13 per month in mortgage PITI + HOAs
$1315 Alimony (expires in June '10)
$528 Child support
Approximately $1200 per month on minimum (2%) CC payments (5% beginning Aug. 1)
Unknown utilities, closed at the beginning of this month.

I just closed my house, I took out a 401k loan to buy it and fix it up; I'm on a payback schedule for the loan. I have maybe 10K in equity in the house. I am planning on doing the following before talking to an BK attorney, just wanted to get some feedback. I've lived a spartan lifestyle after the divorce, I've been trying to pay off the divorce debt and starting life back from scratch. And was getting close, so I bought the house. Then my CC companies informed me that they are raising their minimums beginning Aug 1st.

1 - I own a car 99 Vovlo s80 outright; Broker will give me $2500 for the condition it's in (mechanical issues), which I will pocket or turn around to finance a 08 Ford Ranger. I'm going to try to keep the equity below the exemption amount.

2 - I will need to paint and patch up some holes in the house.

3 - Buy groceries, maintenence/cleaning supplies, batteries

4 - Sell/Trade in my Glock 23, Walther P22 and Remington 410 Over/Under for one sporting fire arm.

Feedback on those items will be appreciated. Then specifically, I want to know if I will still be able to make 401k contributions during the BK13 and contribute the maximum amount?

Thanks

401k contributions are not a given as an allowable expense to reduce your disposible income, however it appears some trustees allow some contribution, others do not. Nothing will prevent you from contributing once your plan is completed, it will depend alot on how much wiggle room you have in your plan. I wouldn't expect the trustee to sign off on a plan if the plan showed one of your monthly expenses 1000 to a 401k plan.

I also think some trustees take age into consideration as well. If your closer to retirement, then they might actually allow a bigger contribution.

[Buzzbolt]

Thank you for the response. I'm 28, so they may not look at the 401k contributions too favorably. But I could say try to pay down that 401k loan through payroll contributions as much as I can before I file, and then back off however much the Trustee will allow but will be paid off sooner.

Another question: My alimony payments will expire in June of next year, will I have to inform the trustee of this? Or will be taken into account right away and my plan be adjusted accordingly?

[lrprn]

Another question: My alimony payments will expire in June of next year, will I have to inform the trustee of this? Or will be taken into account right away and my plan be adjusted accordingly?

If your trustee states in writing or verbally that he/she must be notified of changes in income, then yes, you need to notify your lawyer when your alimony drops off. Your lawyer will then notify your trustee.

If you are in a less-than-100%-payback plan, then it's up to your trustee to decide if he/she wants to petition the court to amend your plan to raise your monthly payments accordingly. However, you and your lawyer also have the opportunity to present increased expenses as well in an amended plan, so it may be a wash depending on what happens to you financially in the coming year.