Expenses on Schedule J

[ssmdem]

I've got two monthly bills that I don't see a place to put them - but I'm obligated to them. Do they not count though? One is my kids' pre-paid college plan. I signed a contract with them - I can't just quit paying it. ??? And the other is the 401K loan repayment from money we stupidly pulled out of the 401K.

[SMinGA]

My understanding is that the 401k loan is NOT a valid expense for ch. 7. For a chapter 13, I am not sure if it would be on J as 'other' or on I as a deduction from gross pay?

I would think the best thing to do on the pre-paid college plan would be to list it as other. I am not sure how the court will handle that though. Technically any contractual/financial obligation can be made void by the bankruptcy discharge. But if its not too much - I think an education expense will go thru. I believe the means test indicated something like $137/child?

[ssmdem]

Well, it's $280 for one child, $203 for the other. If they will allow at least $137 for each one though, we may can still go. I wanted to hold out until our average was under the median - but I'm so tired of all of this. Would love to just go now. We're close to a negative DMI even using the higher income. Just going to give it all to this last atty we're interviewing next week (she also works part-time as a trustee) and see what she thinks. Each month we wait, our average drops and will drop signifcantly in July as all my substitute teaching money will fall off (that's almost $1000 a month). Just ready to be DONE!!!

[chriselle]

for the 401K payments you can try to slide them to OTHER. unless it's just too big of a payment they might take a closer look

[ssmdem]

for the 401K payments you can try to slide them to OTHER. unless it's just too big of a payment they might take a closer look

How big is too big -- it's $282 a month.

[SMinGA]

It will ultimately depend on your district/trustee and the totality of your case. No matter where you put it, its not like you can call it something else and have no one notice. (Not what you're suggesting, just trying to make a point that where it goes is not so important as how your trustee views a 401k loan payment.)

If you go in under the median & showing negative DMI where taking the expense off means you still don't have $ to fund a plan, it ultimately shouldn't matter.

[ssmdem]

I did get an answer on the Pre-paid college plan - not really what I wanted to hear either. It's not a valid expense that can be listed on Schedule J - no matter where I put it.

However, she also implied that the trustee is not going to look favorably upon me paying almost $500 into a savings plan - which is essentially what it is - when that money could be going to pay a debtor. If we're negative without it anyway (which we are), she said it's still going to raise a few eyebrows.

So, I called today to ask them what happens in those situations. Luckily, my daughter's plan is up in October and paid off. So hers won't be an issue. It's all already paid in, and they can't touch it. My son's however I will be paying on until he graduates from high school - that's the $203 a month. They said there was an option for me to defer payments for six months, at which time I will have to pay that lump sum in full, and they will start my regularly deducted payments. So, I'm planning to stop his in October when my daughter's payment stops as well. It will still show on my bank statements up until that point, but my final bank statement that I provide to the trustee at the time of filing will show that I am no longer making that payment. It won't start up again until after I'm (hopefully) discharged.

Since I'm already at a negative without it anyway, I'm guessing this is the best way to go. That way if it does happen to be brought up and questioned, I can honestly say I'm no longer paying this at this time, as my November bank statement shows. Sound okay??

[momofthree]

Yep, as long as you're still negative without it as an expense and your bank statements show you're not paying it anymore, you should be fine.