401(k) and chapter 7

[Atlanta7]

Can I continue to make investment/contribution to 401K plan till the date I file for chapter 7 or do I need to stop doing it several months before filing?

[justbroke]

You can continue to make such contributions and the funds are generally protected (exempt). However, the contribution amount is not a valid expense in a Chapter 7. If you are relying on the 401(k) withholding to lower your disposable monthly income (DMI), most Chapter 7 Trustees will see right through this.

In any event, if you are planning to file -- or are forced into -- a Chapter 13 you want to show that you have been continuously contributing to the 401(k). Counterintuitively, contributions to a retirement plan do count as an expense in a Chapter 13.

Always take care of yourself.