401K weekly contribution and chapter 7

[Hlc]

I have around $70.00 week from my check deducted and contributed to my companys 401K plan.I have contributed to this for the past five years. The question I have is will this upset the trustee and cause me any problems when I file my chapter 7 at the end of Oct?

[ccsjoe]

I don't know about Georgia, but in my case (CA) we have 401K contributions that we have been advised by counsel not to stop. We did not use them for means testing, but did use them for Schedule J. I also witnessed almost 30 341's in preparation for ours and I did not hear the trustee questioning anybody about this. That being said ,I am finding that it appears trustees are a bit more liberal in CA than other states. You may want to jot this specific question down, lump it with a few others, and gather up a couple free consultations, even if you're filing pro se, just to get validation.

[Hlc]

Thanks for the information, my attorney said they would frown on this. I just wanted information from our forum members.

[ccsjoe]

The frowning is probably because in most cases 401K contributions are voluntary, not mandatory, so technically you are able to stop them and have additional DMI. I have found that a lot of what gets approved or not is extremely subjective, even within the same district, different trustees will have different parameters. Too bad there is really no way to standardize this process across the board so everyone knew exactly what to expect, no surprises or discrepancies.

[backtoschool]

As ccsjoe says it all depends on district. It can also depend on your age. If you are closer to retirement age, it is easier to make a case that the conributions are "necessary". If you are over the median thought, the US Trustee might object to the expense to try to put you into a chap 13. I would have $280 of other expenses ready to substitute if needs be.

[btbeme]

Agree w/ Backtoschool. I would also add that if stopping the contribution would move you from negative to positive DMI, you will more likely be questioned by the trustee during or after your 341. That does not mean that it would be disallowed - just a question. Check closely for allowable expenses that you have not claimed if this is the case. Leave as few "trip wires" in your filing as possible.

I wouldn't label CA as being more or less liberal or cautious - I'd say that Trustees are all different. The larger number of "new" trustees out there means there are more who would try to cut as close to the bone as possible, while most of the more veteran Trustees, especially in busy courts, tend to "triage" their files and only skirmish with those who ask for it.

A 5 year history is a good one to have, as long as $70 a week isn't a disproportionate part of your income (say, 10%), or if it would not make a huge difference in your DMI, or if the rest of your file is in order. Or, to put it another way, creating savings for retirement is a Very Good Thing, and one that needs an even BETTER reason for the Trustee to question.