Expert: Terry Leeders - 1/3/2008

Question
I currently have a $900 a month 401K loan re-payment.  I filed for Chapter 7, but did not pass the means test because my income is too high.  Under chapter 7 they will not allow me to take the loan re-payment as a deduction.  When I switched to a chapter 13, they allow me to take the deduction, but because of the deduction I don't have any left over income at the end of the month to make payments to creditors.  It looks like the whole thing may be thrown out.  Is there anything that I can do?

Answer
The Means test calculation for chapter 7 doesn't permit the payments for the 401k to be deducted.  Under chapter 13, you have to show the court that you can afford the repayment that the means test needs.  This income can come from any source, work, family, rental income, etc.  Be sure to calculate the payment for the 401k and the 401k loan into the chapter 13 means tests.  They do allow the money paid in over the last 6 months to be calculated for the chapter 13 means test though.