401 k

[Guidance]

I am so confused. My attorney stated we would be pushed into a 13 because we are over on the means by 300 and our DMI is over 659. She said we would have to go with the higher of the two in a 13. So we went out and purchased a car. Our payments are around 348. We reviewed and adjusted schedule J bringing us to 81 over DMI.

She stated that we should increase our 401K because we could use that in calculating the payment in a 13. With the purchase of a car and 401K (60 a pay) we might pass the means test right? Or am I not getting a clear picture of this?

Thanks

[chriselle]

401K contribution is not a part of the income deduction in 7. It's not going to lower your DMI. My advise is comb through everything, all expenses that you really incur, don't forget the life insurance you can deduct...by the way if you are filing for 13 you don't need to pass the means test. I believe a 401K contribution in the is allowed to somewhere reasonable and 60 a month sounds very reasonable. and a +81 DMI is good for chapter 7.

[justbroke]

While 401(k) can't be used in a Chapter 7, it can be used as a rebuttal to the "totality of circumstances" motion for dismissal. To prove that you have the "means" to fund a Chapter 13, the United States Trustee (UST) needs to actually create a hypothetical Chapter 13. In that hypothetical Chapter 13, 401(k) payments are allowed.

It's just a tool for rebutting the UST's attack. Technically, you can't include the 401(k) contribution/payment in your Chapter 7.