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401(k) and chapter 7

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    401(k) and chapter 7

    Can I continue to make investment/contribution to 401K plan till the date I file for chapter 7 or do I need to stop doing it several months before filing?

    You can continue to make such contributions and the funds are generally protected (exempt). However, the contribution amount is not a valid expense in a Chapter 7. If you are relying on the 401(k) withholding to lower your disposable monthly income (DMI), most Chapter 7 Trustees will see right through this.

    In any event, if you are planning to file -- or are forced into -- a Chapter 13 you want to show that you have been continuously contributing to the 401(k). Counterintuitively, contributions to a retirement plan do count as an expense in a Chapter 13.

    Always take care of yourself.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.


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