401k and means test

[artpacbell]

Hi, i took a 401k loan last year and im paying for it by deduction out of my paycheck. does anyone know if i can use that amount as far as the means test? i live in california.. so far im failing means test by 500 disposable income a month

[CATCHMEIFYOUCAN]

There is no such thing as past or fail, the Means Test is just calculates how much money you may or may not have left over after all the standard deductions. I believe the 401k is included somewhere. Keep in mine though this is where the "new law," (via Means Test) might not mean too much, if your real schedules I and J prove you have more disposable income than the means test, highly likely the Trustee will want the THAT.

For example: My Means Test calculated I was negative $60. However, schedules and I and J proved I actually had $800 available to be thrown in a Ch13. We tried to argue the Means Test is what it is, but congress didn't know what they were getting into when they developed the Means Test and the BK Judges didn't know what Congress intent was when they put the Means Test in place. But the Trustee doesn't care, if you show you have at least $100 or more disposable income via Means Test or Schedules I and J he wants it!

To explain further. Since my Means Test showed I was negative $60 and I filed for a Ch13, my lawyer has the right to propose a payback plan (unconfirmed) so we proposed I pay back $250 a month. The trustee didn't like that, he saw I had way more. So my plan was denied and I had to go before the Bk Judge. The Bk Judge said I had 10 days to negotiate a higher plan with the Trustee or be prepared to pay $800 a month!

Others will chime to explain. Hope this gave you an idea. Oh, btw - I had a couple of loans from my 401kplan as well plus some (all in all $600) which the Trustee didn't bat an eye to my surprise because I had an additional 6% besides 2 loans out payroll deducted. Most 401k plans are protected. I even had a recent loan taken out a month before I filed and told him I had used the money to pay for the lawyer.

Catchmeifyoucan

[artpacbell]

hi thanks for the reply and for all the info, altough im still not sure if i would put the 401k loan repayment deduction on box 25 or 26. Im hoping someone out there knows thanks

[getouttadebt]

You should not enter voluntary 401(k) contributions on Line 26 of the Means Test.

Line 43 is where you can include payments necessary to repay a 401(k) loan. (In re Thompson, 350 B.r. 770 (n.d. ohio 2006).)

Typically speaking, a 401(k) contribution can not be used to help you with the Means Test. Some states/districts even disallow 401(k) loan repayments.

I am not an attorney, so don't take my post as legal advice.

Good luck,
getouttadebt

[artpacbell]

Thanks for the reply your right i did find that article, and it does state that it can be used as secured debt for purpose of the means test.