Increasing 401k contribution before filing - did you do it and did it work?

[seanp951]

The attorney I"ve been consulting with has recommended that I increase my 401k contributions before I file. He indicated that with some of his clients - he is able to maintain some or all of the increased contributions as part of their plan.

right now, I contribute next to nothing to my employer sponsored plan. I needed all that money to try and stay afloat... now that I'm NOT paying on credit cards...I have the ability to contribute some money to these plans.

did any of you do this? was your lawyer able to allow the contributions to continue as part of the ch 13 plan?

If I was able to get into a 13 plan.. and actually have money going every month into my retirement accounts - that would be a windfall in that I'd be getting my BK to go througha nd i'd actually come out ofthe plan with a bunch of money saved up...

the lawyer commented that sometimes the trustee will clearly know that the retirement contributions were spiked pre filing and they will knock it back down.. BUT that they sometimes would NOT require them to be knocked back down to ZERO..and so if I am at ZERO contribution now.. I may be able to get a ch 13 plan approved that allows for some of my money to go into a retirement account.... hey, any is better than none!

any of you manage to pull this off? thanks!

[catleg]

Yes contribute as much as you can.
Even if they reduce it you can keep whatever you've put in.

[Flamingo]

What will happen here is that you will have to submit financial information for six months to one year (or more) prior to your filing and it will be noticed that you were not previously contributing to your Plan and just started prior to filing - trustees are aware of what everyone tries to do so you can bet it will be noticed. You can follow catleg's advice above or hold the extra money (as we did) for future emergency expenses because you are going to need it. Talk to your attorney. I stopped contributing to my 401(k) when my hubby lost his job to help offset the income loss to our household. I never contributed again until I started to contribute a small percentage when we were about in year three of our Plan (with permission) - however I would have to stop contributing if those contributed funds interfered with us making our regular Plan payments.

[seanp951]

my attorney said the local court/trustee only wants 2-3 months of records.. not 6. but he said even if they see and/or KNOW that I only recently jacked it up - they may still permit me to keep part of it....

i'll find out in the next few months. we are not paying credit cards or the second mortgage...and are saving that money up. partly to pay for the BK lawyer and partly to have a cushion of cash when we get into the plan. wish me luck.

[despritfreya]

The issue of the contribution allowance is currently at the 9th Cir BAP. Since the "credit industry" has applied for and is being allowed to file an Amicus Brief, I suspect that, no matter the outcome, the BAP decision will be appealed. Until a decision is reached, the allowance and/or the percentage of the contribution will be determined on a case-by-case basis, at least in the 9th Cir. You might as well increase the contribution as the worst thing that can happen is that the Court (not the Trustee as the Court makes the final decision in your case if you do not agree with your Trustee) determines that it should be reduced or discontinued in full.

Des.

[seanp951]

Des-

thanks for the suggestion. that is basically what we plan to do. we are saving money now by not paying our 2nd mortgage and credit cards..and plan to file in a few months.

[jmac]

I bumped mine up 3% and nothing was said, i was already putting in 12% so maybe that was why.

[rabelcher1]

We were both putting in 3% when we were thinking about filing. The first lawyer we talked to said that we could put in up to 15% so in December we increased them to 15%. Three months went by and we found another lawyer that we really liked so we filed in March 2011. At the meeting of creditors the trustee asked us about it and I explained that the 1st lawyer advised us to increase them. Anyway, we received a letter saying that we filed in bad faith by increasing them and the trustee wanted them back down to 3%. Our confirmation hearing wasn't until December to we were able to keep them at 15% until then. Right before the confirmation hearing the trustee decided to meet us halfway. Bottom line my wife's stayed at 15% and I knocked mine down to 5%. So we're still doing way better than before. I've really been pleased with our plan so far, we're buying things with cash now that we always used credit cards before. We got a really good deal on tires at Sams Club because we were able to shop around for a good deal. Before I had to get them at Sears because of the credit card. What the trustee decides to do might have something to do with age, we're both in our mid fifties, I'm not sure.

[sore looser]

We were adivised to also up our 401k to 15% asap.... we did the trustee looked at paperwork for the previous 6 months and not a word was said...

[Fallonedward]

Our attorney suggested the same thing as at the time I was not able to receive the 401K match as I was not contributing the minimum amount and we increased my amount by $175 a bi-weekly pay period and had no issues with our trustee or thereafter...good luck