Central District Consumer Bankruptcy Attorney's Association

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It's usually more the 401k loan repayment than the contribution to the
retirement plan itself, but of course each case is different.

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As they say, "it depends."

But for the voluntary contributions to the retirement plan, is there a
surplus? If so, you're facing OUST 707 wrath since the debtor has the
ability to pay back some of their debt if they (a) stopped saving and (b)
made payments to a Chapter 13 plan.

("Yes, dear client, I understand that saving and investing are smart and
wise. Yes, I understand the income is taxed differently if the
contributions are stopped and the full amount doesn't drop to the bottom
line as net income.")

Maybe if your client is nearing retirement age or the saving amount is de
minimus resulting in a minor surplus this is an issue you might prevail on.
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Sorry to keep bringing this up, but it drives me crazy every time I have to
think through this..
I keep getting clients who pass the means test, but show a surplus on I&J
solely because of large 401k loan repayments, and regular voluntary 401k
contributions. I understand that the 401k deductions/repayments are not
"allowed" in Chapter 7, but they are in Chapter 13 (at least on the Ch. 13
means test form).
So must these cases be filed as Ch. 13 with some minimum repayment plan over
36 months (per Kagenveama), or has anyone successfully made this work in a
Chapter 7 context?
I just don't understand the allowance of the retirement contributions in Ch.
13, but not in Chapter 7. Chapter 13 shows no projected disposable income,
and Chapter 7 I&J shows substantial surplus income. My head hurts.
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Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at

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