Another DMI Question

[Freddy03]

Ok since I'm working on getting my DMI as close to a negative as possible I need some help.

When were starting having problems I stopped my $25 biweekly 401K contributions. Can I start those back up again now? So my paychecks will be $50 less each month?

I'm going to up my auto insurance coverage b/c it renews this month? Is this ok if I file in March?

And I have some scheduled days off work for field trips and a doctors appt in Feb can I take those off without using my vacation pay? Or is that not a good idea? It would def help b/c of the Christmas bonus.

Thanks

[SunshineGal]

Hi Freddy,

My attorney said NO to IRA/401K contributions and we had been contributing for years.

SG

[JEM]

We're only contributing $25/mo. into our 401K right now and our attorney said no problem. (We met with him on Tues. to go over alllll the paperwork, and set to file on Wed or Friday of next week! WOOOOHOOOO!

As for taking a day off without using vacation, I don't see where that would be a problem. They can't force you to use a vacation day. You could be saving those for around the holidays, or for sick days etc...

ETA: I would definitely up the auto coverage. Attorney told us that was completely acceptable to make sure you have good coverage.

[NeedOptions]

6 months before I filed Ch. 13, my wife and I started a 403b retirement program (similar to a 401k) and we put in $500 each/month for a total of $1k/month. My trustee never questioned it.

[SunshineGal]

Freddy,

I was reading your expenses thread and if it were me, I really wouldn't do it. It gives the Trustee another $107.50 (4.3 weeks in a month) in disposable income to fund a chapter 13. The others may get away with it but they tend to have nicer trustees than ours here in FL.

SG

[Freddy03]

Freddy,

I was reading your expenses thread and if it were me, I really wouldn't do it. It gives the Trustee another $107.50 (4.3 weeks in a month) in disposable income to fund a chapter 13. The others may get away with it but they tend to have nicer trustees than ours here in FL.

SG

I'm sorry but do what? Add the 401K payments? Sorry it's been a long bad day I'm not going to change my 401K.

What about not getting paid for my days off? This isn't something uncommon for me. I usually save my all vacation time for a week before school starts. I have taken days off here and there without getting paid for them.

I wouldn't be having this issue if my husband didn't receive a bonus this year. The timing was really bad.

Thanks

[SunshineGal]

Ha! Must have been a long day for me too, I missed the part is was bi-weekly, but either way, I would not contribute to the 401K until after your discharged.

[Freddy03]

Ha! Must have been a long day for me too, I missed the part is was bi-weekly, but either way, I would not contribute to the 401K until after your discharged.

Lol Thanks

I get to add another judgment to my name today and more money to vacate it after the BK I'm really starting to despise the legal system............

[JEM]

Lol Thanks

I get to add another judgment to my name today and more money to vacate it after the BK I'm really starting to despise the legal system............

Oh crud.

I know what you mean though. This whole thing is so stressful. I keep seeing where everyone is saying that you can't contribute to your 401K. We only contribute $25/month and our attorney didn't think it was a problem. But now I'm second guessing that.

[Freddy03]

Oh crud.

I know what you mean though. This whole thing is so stressful. I keep seeing where everyone is saying that you can't contribute to your 401K. We only contribute $25/month and our attorney didn't think it was a problem. But now I'm second guessing that.

The judgments SUCK! At least this time the judge was super nice and told me he wish it could have been better but he has to follow the rules and b/c I didn't file a continuation (b/c my request for documents was never received). At least I will have filed BK before they can try to garnish any wages it just sucks still.

When I first met w/ my attorney he saw my paystub when I was still paying into the 401K and he didn't say anything about it. I'm just going to wait and try to pad the expenses somewhere else.

[debee]

I think you should reinstate your 401K contributions just for sound financial planning whether you can include them on schedule J or not.

If it turns out that your district allows it (I've read that this issue varies from one to the other, but can't speak for FL), then you have it there eating up DMI. If not, then you don't count it.

Not sure when you saw your attorney, but if you were making 401K contributions in 2010 they will show up on your W2/tax return and that will take care of any suggestion of bad faith. A second safeguard would be to make sure your DMI is still too low for a 13 even if you back the contribution out.

ETA: Here's a condensed version of something jb posted elsewhere:

401(k) can be used as a rebuttal to the "totality of circumstances" motion for dismissal. To prove that you have the "means" to fund a Chapter 13, the United States Trustee (UST) needs to actually create a hypothetical Chapter 13. In that hypothetical Chapter 13, 401(k) payments are allowed.

As for the insurance stuff, suppose you had no car insurance whatsoever. If you went and bought some the day before filing and factored that into your schedule J going forward, the trustee wouldn't bat an eye. Insurance is necessary. Same with term life insurance. The only real difference is who pays when the unthinkable happens: If you drive under-insured, you'll pay. If you live under-insured, your children will.

It's really just a smart financial-planning move with bk side-benefits. There's no funny business about making sure you have good insurance coverage, low deductibles and ample money for the survivors should something ever happen to you or your spouse.

[ValleYum]

Super good points, debee!! Also 2 wage households need to try to find the $$ for Short Term Disability policies (like AFLAC). An injury or illness and missed work would be doubly catastrophic within the 8 years after a Chapter 7 BK.

We are actually in BK due to that very reason. An kitty-cat darts through my feet at the top of the steps, I fall down 13 stairs, my whole life changed. I was laid off the day before the movers were due to pack us for a move into our dream home had finally found a dream job for more money and was in the 90 day probationary period at my new job and couldn't buy into the group AFLAC policy. Boom.

I would hope a UST would see the need for planning to purchase disability insurance Post-BK to protect a family from future financial issues. Premiums could be quoted from any company that sells it. Planning future prudent and reasonable purchases is okay on Schedule J right?

Note: I don't work for AFLAC. Actually, I don't work anymore.

[Freddy03]

Thanks again Dee I've called a few places today for the life ins. Hopefully will know more on Monday

Sorry Vall that happened it to you. At the start of our financial mess we were hit by an illegal immigrant with no insurance, no job,no social security number, no license, no nothing I found out just how little we were insured and the medical bills started adding up. Currently I am insured pretty well but today I added the best coverage we could get.

[ValleYum]

Yay! Freddy I am glad you got the best you could get!!

Thanks - now I am convinced it is what it is... and at least I am still around to kvetch about it! LOL

[JEM]

I agree on having a good insurance as well as a deductible that you could easily come up with. I have ours set at $100. We could lower it to $0, but the premium really jumps at that point. We could come up with $100 if need be. More easily than the $500 we had it set at previously.

I guess what makes me nervous on the 401K is that we DID just recently sign up for it. Mostly for no other reason than that happened to be dh's enrollment period. We've put it off for YEARS and decided it was a good way to start our new "fresh start". Since it's only $25/month now, we could absorb that into another area if we had to pretty easily.