QUESTION
On schedule J, can I deduct my 401k that is taken out of my pay checks every 2 weeks?
Asked on Mar 28th, 2013 on Bankruptcy - Indiana
More details to this question:
I [we actually] am trying to file chapter 7 and did pass median income test. I would like to know if I did deduct my 401k that is deducted from my work check on schedule, I and therefore it lowers my net income on schedule J. If it may likely raise an objection or not be allowed by the trustee or do some attorneys not allow their clients to list it on schedule I and if attorney does not allow would that attorney be going against an actual law or just against the norm concerning this deduction being taken off on schedule I, do most attorneys in IL not allow their clients to list it on schedule I for a good reason? As I heard not to list it on schedule I by one attorney and now I am worried as to what to do. Could there be any possible reason there may be a problem with deducting it on schedule I especially in the IL central court division where the case will need filed? Is this deduction on schedule I always allowed on schedule I in spite of what court you are filing in and the attorney that said no to is likely incorrect? I am concerned if trustee or judge or attorney does not allow the deduction it will leave us with more disposable net income showing on J then we really have as disposable income and then have a possible chapter 13 plan that we really cannot afford. Please help and thank you for your answers in advance.
2 ANSWERS
Divorce and Family Law Attorney serving Hillside, IL
Partner at
The Law Office of Vincent C. Machroli, P.C.
1 Award
If you are trying to file a bankruptcy case pro se, my suggestion would be, don't. Look through the bankruptcy petition paperwork & you will find a notice from the bankruptcy court itself that states bankruptcy is a complicated area of law, & not easily explained. Sometimes a deduction for a 401k contribution is mandatory per the employer, sometimes not. That makes a difference in how it's dealt with on Sch. I. Also, if a deduction is being made as a repayment towards a 401k loan, that is a situation which is different still. A skilled bankruptcy attorney would need to discuss this matter with you in greater detail, & ask you many questions, before he/she could give you the proper legal advice (& possibly a quote to represent you) that you seek.
Answered on Apr 07th, 2013 at 9:18 PM
The law in many districts does not allow for it in a Chapter 7. It would be disallowed and the resulting disposable income could make continuing on to a Chapter 7 discharge improbable.
Answered on Apr 03rd, 2013 at 8:39 PM