401k contributions and disposable income

[17CharleyCo]

Hi all, just found this forum and what a great resource! My question is whether increasing my 401k contributions to decrease my overall disposable income will have a positive effect on my ch13 filing. Can the trustee make me lower them to increase my disposable income? Printing the tactical bankruptcy as I type

[justbroke]

Chapter 13 Trustees are aware of this tactic. They may want to see that you have been contributing at that level for many months prior to filing (not just before filing).

[17CharleyCo]

How long should those contributions be made so not to flag? I plan on filing in the April time frame.

[justbroke]

I can't tell predict how much your trustee will review your contribution. In fact, some bankruptcy districts and trustees don't even care about contributions. I would at least have been making the "some" contribution for the 6 months preceding the filing. I would change my rate at least 90 days before filing (because you usually need to provide 60-days of paystubs in your filing).

I would not do this just to hide money. I would only do this because I can afford to contribute at that specific level.

[sophieanne]

Hi - it is also going to depend if you're in a 100% plan or not. If you are not in a 100% plan you may be told to stop your contribution until the plan is complete. There were a few
people that happened to when we attended our 341 meeting. Creditors don't take well to not getting all they're owed while you pay yourself first. I understand each district has it's own rules regarding this.

[17CharleyCo]

Hi - it is also going to depend if you're in a 100% plan or not. If you are not in a 100% plan you may be told to stop your contribution until the plan is complete. There were a few
people that happened to when we attended our 341 meeting. Creditors don't take well to not getting all they're owed while you pay yourself first. I understand each district has it's own rules regarding this.

100% plan as in matching? Yes it is a 100% plan that matches up to 4% of my salary.

[sophieanne]

No, as in you are required to pay back 100% of the debt that you owe. If you are paying less then 100% of that debt (based on your disposable income) you may not be able to
make 401K contributions during the bk period. The reasoning, as I wrote earlier, is that it's not fair for you to put extra money into your 401K, when that money can be used to
pay your crediitors. That will be explained to you when you file. We were paying 100% of our debt so we wee allowed to continue our 401K contribution; however, we were told
if that 100% changed, we woukd be told that it was no longer allowed. Each district has it's own rules; you might want to check yours out.

[despritfreya]

This:

No, as in you are required to pay back 100% of the debt that you owe. If you are paying less then 100% of that debt (based on your disposable income) you may not be able to make 401K contributions during the bk period. The reasoning, as I wrote earlier, is that it's not fair for you to put extra money into your 401K, when that money can be used topay your crediitors. That will be explained to you when you file. We were paying 100% of our debt so we wee allowed to continue our 401K contribution; however, we were told if that 100% changed, we woukd be told that it was no longer allowed. Each district has it's own rules; you might want to check yours out.

Please consult with several bk attnys before you start playing the game.

Des.

[17CharleyCo]

Well I've increased my 401k as I usually do at this time of year. Every pay raise season I increase my contributions to the amount of my pay raise. If I need to stop or decrease the amount I will. I'll be very clear with the attorney. I'm filing CH7 if that helps.