FSA's and 401K's in a Chapter 7

[BKlooker]

Yes you can Jem, and yes you understood it right, but like others are saying, it's very likely to raise a red flag and have them poke around about it.

You lawyer may advise you to just go with the maximum fed exemptions instead for medical and leave off the FSA altogether UNLESS it's going to mean the difference between you in a CH13 or not.

As an example, I like you have excess medical expenses. Between insurance costs and out of pocked, i am currently paying about $400 a month for out of pocket medical and insurance, but the total of my allowed expense amounts are around $120. I could include the true amount...BUT my lawyer is telling me NOT to and just use the allowed amount...FOR NOW. Now IF we get to the 341 or after and they try to throw me into a Ch 13, then we can amend the documentation to include the true amounts. I like you have all the documentation to support it, so at that point it's all gravy.

So in essence, what I am saying is you want to try and ride as low on the radar as you can. If your case allows you the room to 'pass' everything without "going there" with the FSA and excess medical, go that route first.

[debee]

How much is being over the medical allowance going to raise flags?

Just to back up what others have said in the hopes that it eases your worry, being over the standard medical is not a problem as long as you document. It's not going to be a problem for you at all. The FSA is not an asset. We are like you - excessive monthly medical and an FSA that doesn't cover it all. We're over by hundreds every month and always will be. Not a problem. You'll be fine.

The FSA isn't an expense, it's just a way to pay the medical expense. It doesn't matter how long you've had it. It's not going to get any objections or cause you any problems in itself because it's not really a budget item. The underlying medical is the budget item & you've got that covered.

(Also, I hope nothing in my previous posts gave the impression that I was suggesting you were trying to fudge, or adding last minute items, etc. Not at all. Just sharing what I'd read in terms of possible UST interpretation.)

Hang in there, JEM!

[JEM]

Just to back up what others have said in the hopes that it eases your worry, being over the standard medical is not a problem as long as you document. It's not going to be a problem for you at all. The FSA is not an asset. We are like you - excessive monthly medical and an FSA that doesn't cover it all. We're over by hundreds every month and always will be. Not a problem. You'll be fine.

The FSA isn't an expense, it's just a way to pay the medical expense. It doesn't matter how long you've had it. It's not going to get any objections or cause you any problems in itself because it's not really a budget item. The underlying medical is the budget item & you've got that covered.

(Also, I hope nothing in my previous posts gave the impression that I was suggesting you were trying to fudge, or adding last minute items, etc. Not at all. Just sharing what I'd read in terms of possible UST interpretation.)

Hang in there, JEM!

Thanks! This does make me feel better. I mean I guess I look at it this way....of all the things in our budget that we really have little control over...medical is one of them. I'm all for playing it safe in other areas, but I guess medical expenses are probably one I'd be willing to take a stand on. If we were a family that spent very little out of pocket for medical...no one wore glasses, no one had a chronic condition, I'd probably be willing to "downplay" what we spent. But that's just not our situation. LOL.

I will be so glad to see the day where we don't have to scrutinize every expense and wonder if it's "allowed" "how it will be looked at", "will this raise flags with the trustee?". LOL