Ch7 might be dismissed!!!!!!!!!!

Re: Re: Re: Re: Re: Ch7 might be di

We aren't talking about getting the company to pay out your 401k money (which you could only get at if you left the company). We are talking about paying off a 401k loan. This money has already been removed from your account (which removes it from the protection of BK). I was just stating that paying it back was voluntary, so the trustee may look at it differently.

lets think about the leased car for a second -- having an expensive car depreciating under the lease is eating into the money that you could be paying other creditors. Given that you could give the car back and avoid this depreciation, leaving you more to pay off other debts (including the $15,000 you are upside down in the car), why not do that? This car is probably depreciating at several hundred dollars a month, which is mostly going to the prestige of owning the car (if you gave back the car, your debt would be fixed at $15,000) which you "benefit" from (although this car has probably been much more of a curse than a benefit to you).

Again, I'm certainly not against you, but I'm trying to figure out how the trustee is thinking. There do seem to be some valid issues here (the 401k loan being voluntary and the huge depreciation on an expensive prestige car).

--Galabar

 

Re: Re: Re: Re: Re: Re: Ch7 might be di

Now this I am curious about. Can't you simply have the payments stop being removed from your paycheck? I've never heared of this before, but you learn something new every day.

Does anyone else have information about this?

--Galabar

 

Re: Re: Re: Re: Re: Re: Ch7 might be di

I had a loan against my 401(k) at one time. It was secured against the value of the 401(k) at the time of loan. (Which is why you typically can not take out a loan against your 401(K) for over 50% of its net value).

In the loan docs it said that a defualt of the loan would be treated as an early withdrawal on the unpaid loan amount.

I know 401(k) plans vary some between emplyers, but it is highly unlikely an employer can prevent you from liquidating your 401(k) if you so choose since its your money you've paid into the account. You might want to check with yor personnel department to verify. Sounds like you were given some incorrect information.

GaryL

 

Re: Re: Re: Re: Re: Re: Ch7 might be di

I guess I'm getting really confused here. How can someone with 2 leases, one for $780, be bankrupted by only $80,000 in debt? You keep saying that you could "afford" the lexus, but only individuals who would not blink at $80,000 should be leasing for $780/month.

My wife and I do make a lot of money, but we certainly don't believe that we can "afford" a $780/month lease payment. Specifically, our retirement, child education fund, emergency fund, etc., can't afford it.

I don't mean to beat you up, but you certainly need to change the idea of what you can afford, or you will find yourself in debt again.

Also, taking your money out of your 401k, even though noble, seems to have been a really, really bad idea. While it is sitting in their it is protected from BK.

I really encourage you to take a look at the book "Financial Peace" and take a look at the website:

www.daveramsey.com

My older brother is a doctor and his wife a nurse. They make almost what my wife and I make (both engineers), but we are much better protected against the ups and downs of life than they are. They go on vacations all the time, lease cars, go out to eat 4-5 times per week, etc., etc.. No matter how much you make, this is not a safe way to live your life.

My wife and I max out our 401Ks, Roth IRAs, "educational IRAs" for our child, go out to eat once every few weeks, and we don't purchase lots of things that we don't need. It is actually liberating to free yourself from the need for all this stuff, it really is.

I say all this because, if you don't fix the underlying issues that got you into this problem, you will find yourself back in the same boat a few years from now. BK will not solve your problem, only you can.

I guess my point is: you COULD NOT afford the Lexus.

--Galabar

p.s. This motivates me to start bugging my brother again about his spending habits... No where is that phone number...

 

Re: Re: Re: Re: Re: Re: Re: Ch7 might be di

I don't think you can liquidate the money that is in the 401K without leaving the job, but you should be able to stop payments back to the 401K loan. Of course, I am not an expert...

--Galabar

 

Re: Re: Re: Re: Re: Ch7 might be di

169mph - You are right in discussing everything with your attorney. He/she will know what the best thing to do is.

I'm not sure how often you read this board but I'm sure that if you are here much you will see that most people are here to help but there are always a few that will preach to you. I don't post much but I am here almost daily and try to read as much as I can.

Only you know what your situation was/is and what you can/cannot afford. You are right...life "happens" and sometimes it is not for the better. You have to take it as it comes along and deal with it the best that you can.

Good luck & keep us posted. I'm sure everything will work out ok.

paw67

 

Re: Re: Re: Re: Re: Ch7 might be di

In much of the country, controlling law regarding 401k repayment in BK is defined by a case called "in re Harshbarger", see: www.law.emory.edu/6circuit/sept95/95a0286p.06.html

This case says that a 401k loan isn't really secured, isn't really a loan, and isn't "reasonable and necessary", so it can't be paid back.

The Trustee most certainly can alter the terms of the 401k loan repayment contract. He just orders your company to stop withholding the money. If your 401k loan contract was anything like mine, BK is a default condition anyway.

The poster apparently has a loan like mine was, where the money was withheld from my paycheck, and I did not have the right to ask my company to stop withholding the money.

This doesn't mean that your Trustee won't let you pay it back, some do, some don't. But don't be sanguine about it.

As for your budgetted $300 "personal loan", I find it hard to understand how you could be allowed to get away with claiming that. To permit you to file a C7 based on a budget which lets you pay back one personal loan at the expense of a list of other creditors is unfairly preferential, not to mention the fact that you could just blow it off after discharge.

 

Re: Re: Re: Re: Re: Ch7 might be di

Incidentally, I was not criticizing the poster for the Lexus lease, I just think that a BK Trustee and/or judge would look askance at it. They don't have to let you keep a Lexus in order to avoid a C13. The expenses must be "reasonable and necessary". There are Trustees who will argue that a Lexus doesn't qualify.

American Express objected to my C13 plan saying, in part, that a $1500/month mortgage payment was excessive, and that I should be required to move. And there is case law to back that up.