401 K

Hi,

Does anyone know about 401K's? I have 13% deducted from my paycheck weekly. I had a lawyer comment that it was a lot and that the trustee might not like it BUT it is the truth. As those of you who pay taxes know not all the money would come straight to me- it would be taxed on and thus only adds a minor amount to my overall cash flow. If they want the 401K they can have it! I assume it will be penalized and they can just eat up the penalties.

Also, I keep doing my balance sheet and still come out in the negative....does that raise a red flag to the trustee? I am being truthfull about my income and using the basic deductions. You may wonder how I make it? Well, I bum lots of money from my parents. If asked in court should I say I bum from Mom and Dad?

Thanks for everyones time,
Betsy

[bigun]

A 401K is exempt from creditor seizure in bk. If you make it on help from your parents and are asked that in court, tell the truth. It's not illegal to get money from parents.
I'll say this. Life may be easier if you used the money from Mom and Dad to get current on your bills and then, start to live below your means. You need to rough out a cashflow schedule. If you have enough income to pay your bills, you may have rough go from a trustee.

Thanks,

I do not have enough money to pay my bills BUT I do contribute to my 401 K. Obviously some of that money could be used to pay my bills (not in full obviously), will the trustee expect me to stop my contributions and pay debtors? Are 401K contributions considered frivilous by the trustees, money that could be better used elsewhere?

Thanks again,
Betsy

[nailtech]

we were told to stop all deductions from husbands paycheck, including the 401K.. the only thing we were allowed to deduct from paycheck was the insurance... and to stop his direct deposit to his credit union bank account...

the lawyer said the trustee would not appreciate us contributing to our retirement and ditching the creditors...

[bigun]

No, they aren't frivoulous. ANd, the 401K is exempt from creditor seizure. Ask your lawyers advice about how to proceed once you 2 have a chance to look at all of your paperwork. I would imagine, you would be allowed to do the employer match contribution but in any event, any curtailment would be only for a few months. When the bk is discharged, you can do as you wish.