Chapter 7 - Strategy Question - How to MAXIMIZE Expenses

[gman]

I think you're getting it. I'm in a similar position. Currently working a ch13 trying to confirm a plan with the least dividend to unsecured creditors.

If you can borrow from 401k and spend the money on some exempt purpose you then have the loan repayment as an expense (to payback yourself).

Likewise switching to a Roth 401k / Roth IRA generates higher tax expense.

I am putting every possible dollar into 401k (after tax contribs, etc). So far trustee has not made it an issue.

Term life insurance, "cadillac-plan" auto, health, disability insurance is another idea.

Best idea would be to reduce earnings for a few months. Not sure if that causes the "totality of circumstances" objection.

I was considering maxing a 401k - but I thought the means test did not permit that as an "expense."

Totally agree with the insurance ideas....

Made a huge mistake in draining earlier 401k/IRAs to make ends meet - but I can't cry over spilled milk.

If only they had not passed this debt-slave act back in 2005. I had 720+ credit until I was 41 years old when the wheels came off QUICKLY.

Oh well - lessons learned.

Thanks for the help!

Curious - did you have assets to protect (I do not anymore) and that is why you took a Chap 13? Personally I see no upside to the Chap 13 but am always open to different ideas/views.......

[JackBondLove]

Reason - I work in sales - receive a salary PLUS commissions that can be ZERO for months at a time - and then a BIG commission when a sale occurs.

I am not in my own business.

Well, why don't you just be less aggressive and make less sales calls, etc.?

[loser104]

Is it possible to increase one's term life and auto insurance RIGHT before one files, or would all of you recommend doing this 6 months prior to filing so that it shows a track record as opposed to last minute increases??? How about 3 months before filing?

[gman]

Well, why don't you just be less aggressive and make less sales calls, etc.?

True - but then I walk a fine line between lowering income and getting fired (from making no sales.)

Interesting quandry....

[GHG7F0]

Any updates, I am also above the means test.

[debee]

There are a lot of people on the forum who successfully filed a chapter 7 and who were over the median. This thread pertains to "high income" filers - substantially over the median.

The only thing that I know of that wasn't mentioned here (perhaps because this thread was pre-Ransom) is a car payment. If your cars are paid off you don't get the vehicle ownership expense. Buying a car before filing (luxury brand or price presents risks) can give you the peace of mind of not having to worry about breakdowns in your post-bk adjustment period as well as the expense on the means.

[BROKEDED]

We were over median by $24,000 for 3 people. Two mortgages just over $1900 (not reaffirmed), 2 car payments around $1050 (reaffirmed) and a couple credit cards with payments around $825 on about $44,000 (not reaffirmed). Our only other big expenses were childcare just over $500 and health ins. just over $300. We failed Part 1 of the means test but passed Part 2 on Legalconsumer using standard deductions listed on the website and our petition numbers closely reflected the same.

Our trustee didn't seem to blink at our numbers.