Are 401(k) Contributions Disposable Income or Not?

For a system that is supposed to rehabilitate personal finances and set debtors back on their feet, Chapter 13 nationwide is schizophrenic about on- going retirement savings, divided about whether post petition contributions to retirement accounts preclude confirmation of a Chapter 13 plan.

Too many courts, in my opinion, come down barring voluntary provisions for old age for the 5 year duration of a Chapter 13 plan, regardless of the age or retirement readiness of the debtor. The plan will dispose of debts, but spit the debtor out of bankruptcy to face penury at retirement.

It looks like you are not signed in or registered! This content is only available to members.

Or Sign In Below:

moran_cathy

Head of Moran Law Group

Cathy Moran has headed her own small firm Moran Law Group in Mountain View, California, for nearly 30 years. Family law and tax issues as they play out in bankruptcy are areas of particular interest to Cathy.

Related Articles

June 21, 2020
By The Honorable William Houston Brown (Retired) Portion of divorce award was priority domestic support claim and portion dischargeable unsecured claim. Applying Third Circuit’s factors from In re Gianakas, 917 F.2d 759 (3d Cir. 1990), and considering special master’s intent in divorce proceedings, one-third of former spouse’s claim was priority domestic support but two- thirds was reclassified as general unsecured...
Members
Copy of Hildebrand-2016
February 4, 2022
Chapter 13 debtor’s counsel’s fee award was reduced to $48,116 from the requested $95,480 due to pre-petition payments, confusing and “lumped” time entries, and excessive hourly rates for some services performed, even though the debtor’s Chapter 13 plan was never even proposed much less confirmed. The debtor never attended a meeting of creditors, but the debtor managed to recover his...
Members
Danielle headshot (2)
January 30, 2022
Gambling is inherently risky, but that rings even more true when a bankruptcy is involved. Section 727(a)(5) allows for denial of discharge if “the debtor has failed to explain satisfactorily, …. any loss of assets or deficiency of assets to meet the debtor’s liabilities.” 11 U.S.C. §727(a)(5). Recently, Bankruptcy Judge Timothy A. Barnes in Chicago wrote an opinion in which...
Members
November 7, 2021
By Lawrence R. Ahern III, Brown & Ahern (Nashville, TN) Introduction This year's changes in the Rules of Bankruptcy Procedure are summarized below. They will be followed, in Part 2, by a digest of selected judicial decisions in the past year of interest for their procedural implications. December 1, 2021, Amendments to Bankruptcy Rules 2005, 3007, 7007.1 and 9036 On...
Members
October 6, 2019
With scam artists hard at work all year, taxpayers should watch for new versions of tax-related scams. One such scam involves fake property liens. It threatens taxpayers with a tax bill from a fictional government agency. Here are some details about the property lien scam that will help taxpayers recognize it: This scheme involves a letter threatening an IRS lien...
November 15, 2020
Lawrence R. Ahern, III Brown & Ahern Nashville, Tennessee Appendix A Federal Rules of Bankruptcy Procedure Amendments Effective December 1, 2020 The proposed rules and Committee notes are set forth below, with changes indicated by striking through deleted text and underlining new text. Rule 2002. Notices to Creditors, Equity Security Holders, Administrators in Foreign Proceedings, Persons Against Whom Provisional Relief...
Members
moran_cathy
July 17, 2022
Mention keeping time records to a bankruptcy lawyer and you’re likely met with expressions of utter revulsion. All too many assert that the major appeal of being a bankruptcy lawyer is precisely that they don’t have to keep time. Between flat fee deals with clients, and no look fees in Chapter 13, they feel liberated from the clock and the...
Members
May 17, 2020
By The Honorable William Houston Brown (Retired) Sanctions for including foreclosed property in petition. On creditor’s motion, sanctions for attorney fees and costs were awarded against Chapter 13 debtor’s attorney for scheduling as property of estate real property that had been foreclosed and on which debtor’s redemption period had expired. Under Rule 9011(c), a safe harbor letter from the creditor...
Members
__ head shot
May 21, 2023
Chapter 13 plans and confirmation orders will occasionally include post-confirmation disclosure and turnover requirements for tax returns and refunds and for other types of post-petition recoveries and income. Debtors are expected, on their own and without the need for rigorous trustee oversight, to fulfill the turnover requirements as a condition of plan completion and discharge. What happens when the case...
Members
April 28, 2019
By William Houston Brown, Co-chair of the Commission and Adviser to the Academy for Consumer Bankruptcy Education The Report of the Commission on Consumer Bankruptcy for improvements to the consumer bankruptcy system was made public on April 11, 2019. The full report is available free by download from the American Bankruptcy Institute’s website, www.abi.org. The following Foreward to the Report...
Members