Keywords: means test . expenses . special circumstances .
"When the basis for an attack on an individual's status as a Chapter 7 debtor is the ability to pay unsecured creditors in a hypothetical Chapter 13 case, it only makes sense that the analysis involve a realistic estimation of what the debtor would be required to pay in such a case under current law."
"[I]f the Bankruptcy Code excludes certain retirement funds and loan repayments from a Chapter 13 debtor's 'disposable income', thereby protecting those funds from payment to unsecured creditors, the court can see no logical basis for including those funds in 'disposable income' when conducting a hypothetical Chapter 12 analysis unde Section 707(b)(3)."
Means Test > Expenses > Mandatory Payroll Deduction > 401(k) loan repayment deduction Expenses: 401(k) loan repayment allowed in Chapter 13 but not in Chapter 7: b/c not a "mandatory payroll deduction" or "special circumstance" or " debt"26 Cases , IssueID 4 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:Chapter 7 Means test form is generally held not to allow deduction of 401(k) loans repayments anywhere on the form. Lines of Cases:
Topic Background / Overview:Chapter 13 didn't always allow 401(k) loan repayment deductions, but the 2005 law wrote this allowance into the Chapter 13 version of the means test, but NOT into the Chapter 7 version. |
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Court can refuse motion to dismiss Chapter 7 despite abuse presumption to avoid "absurd result" where credtiors would get $0 under Chapter 13 because of 401k loan repayment.
Chapter 13 plan payments do not have to increase once 401Kk) loan is paid off. Here, debtors were allowed to increase 401Kk) contributions once the loan was paid off so there would be no net change in Chapter 13 payments. Court said that was OK under section 541(b)(7), Judge noted that form 22C and section 541(b)(7) excludes plan payments from a debor's projected disposable income.
No Chapter 7 means test deduction for retirement loan repayment
Repayments of 401(k) loans are not deducted when calculating a debtor's disposable income.
Only "actual" amount of payments to be made over plan period can be deducted; court can require increased payments when loan is repaid
Debtor filed for Chapter 7 relief, but the court held that he could repay all of his unsecured debt under a 60 month Chapter 13 plan instead (by ceasing his contributions to his 401(k) retirement account).
only actual amount of plan payments to be made over plan period may be deducted.
401(k) loan repayments are neither debt nor secured debt and, therefore, are not an allowed expense deduction on Form 22A.
ability to pay off 401(k) loan is an indicator of 707(b)(3) abuse in light of "totality of circumstances" even though congress granted them extra protection under BAPCPA. Although excludable in Chapter 13, can still be relevant to a "totality of circumstances" abuse finding in Chapter 7
401(k) repayment allowed in Chapter 7 means test
full payment can be deducted on Form 22C
Chapter 13 plan payments do not have to increase once 401Kk) loan is paid off. Here, debtors were allowed to increase 401Kk) contributions once the loan was paid off so there would be no net change in Chapter 13 payments. Court said that was OK under section 541(b)(7), Judge noted that form 22C and section 541(b)(7) excludes plan payments from a debor's projected disposable income.
No Chapter 7 means test deduction for retirement loan repayment
Repayments of 401(k) loans are not deducted when calculating a debtor's disposable income.
Only "actual" amount of payments to be made over plan period can be deducted; court can require increased payments when loan is repaid
Debtor filed for Chapter 7 relief, but the court held that he could repay all of his unsecured debt under a 60 month Chapter 13 plan instead (by ceasing his contributions to his 401(k) retirement account).
only actual amount of plan payments to be made over plan period may be deducted.
Court can refuse motion to dismiss Chapter 7 despite abuse presumption to avoid "absurd result" where credtiors would get $0 under Chapter 13 because of 401k loan repayment.
401(k) loan repayments are neither debt nor secured debt and, therefore, are not an allowed expense deduction on Form 22A.
ability to pay off 401(k) loan is an indicator of 707(b)(3) abuse in light of "totality of circumstances" even though congress granted them extra protection under BAPCPA. Although excludable in Chapter 13, can still be relevant to a "totality of circumstances" abuse finding in Chapter 7
401(k) repayment allowed in Chapter 7 means test
full payment can be deducted on Form 22C
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