401K exemptions?

[julsmom]

Working to get started on CH13, & learned something new when meeting with ATTY. I gave him the current info on my 401K balance & that I have a loan repayment; which he told me I would be able to continue to pay (it will be paid off in 3 years into my 5 year repayt on my BK plan) so he said they would have to put at that time, I could start to put back into my retirement acct some of those funds but some would have to go back to the trustee for repayt to my debts...ok, I got that. BUT he mentioned that with my balance of 40K in my account, I was only "exempted" of 17K so basically the other 24K would need to be my target #, that would be the amount I would need to repay the creditors...is that how that's figured? I am so confused.
He also mentioned keeping my car payt out (newly purchased) so I am ok with that, keep making the payts, & keeping the car
But DH's car would be included with the BK??? We owe 8K on the vehicle & want to keep it, its a good car, but we haven't owned it over 910 days so I thought it had to be kept outside too? I am so confused!

[justbroke]

Your 401(k) balance is entirely protected (period). Even if you had $500K or even $1M dollars in the account, you do not need to contribute this to any creditor. 11 USC 522(b)(3)(C) Have your attorney recheck! (Unless your account is an IRA and "not" a 401(k) as defined by the IRS.)

Also, there really is no "outside the bankruptcy" in a Chapter 13. Everything is in the bankruptcy. Sometimes the terms get confusing because we then talk about "inside" and "outside" the Plan. The Plan is basically your plan of reorganization. Items "inside" the plan are paid through and by the Trustee. Items "outside" the plan are paid directly by the debtor. All items are still considered "in" the plan... the inside/outside distinction is just who pays it (Trustee or Debtor).

Hope that helps.

[julsmom]

Diff of Ch 7 with funds being paid...

Thanks for the follow up, i remember he said something about what would be exempted & what the creditors would be looking to get if we could file a Ch7 and that was where he was coming up with his #....maybe i ask for a clarification at our next meeting, as i was a little confused. This is all new to me so I am confused on all of it!

[albacore44]

you might also ask if the trustee will put you into a step plan. I kind of sucks but this is how it goes.

since your 401K loan will be repaid in 3 years, after that the amount you repay into it will be avaliable to pay back your creditors. so if you think after 3 years your going to get a raise in avaliable monthly income, dont count on it. The trustee will suck it up.