401K - Means Test expense or not?

[lrprn]

(I moved your question from the old 2008 thread in the wrong forum area to here in its own thread, Bankruptcy. You'll get more and better answers this way. - lrprn)

To answer your question, whether you can use your 401K as an expense on the Means Test depends on how your local bk court or bk district interprets the bk law. Most courts and trustees do allow it, but there are still a few who don't.

If you are planning to file with a lawyer, he/she will know what's allowed and what's notwhen you file.

[Bankruptcy]

Thanks for moving it and the reply.

[SuzieBK]

Our attorney in the Northern Ohio district said that it's not allowable because it's a discretionary expense and the money could be used to pay creditors.

[pcn]

How about a 401k loan? I don't think I can just stop having that deducted without incurring some penalties from the IRS and the plan.

[lrprn]

How about a 401k loan? I don't think I can just stop having that deducted without incurring some penalties from the IRS and the plan.

Whether your 401K loan payment can be included as an expense when you file depends on your local bankruptcy court practices and case law. Most courts allow 401K loan payments to be included as expenses, but a few still do not.

There is case law from other districts that your lawyer can use to challenge your court's practices if necessary.