401k question

[BrokeBob]

OK, for a number of years I haven't been making any 401k contributions. I thought it would be financially wiser to use the money to pay down my CC debt. The only problem is, my CC debt kept going up. So, I have very little money in retirement accounts, and I'm well into middle age by now.

In the past few weeks, I've stopped paying most of my unsecured debt. I haven't decided if I will go into BK or not, but there is a very good chance of it. In any case, I have no immediate plans and it could be next year before I have to file if I'm going to file.

I now realize I've been a complete idiot by not making payments into my 401k.

I turn 50 in a few weeks, and that is a time when a lot of people increase the amount they put into a 401k. If I were to suddenly start putting money into a 401k around my 50th birthday, and perhaps (I haven't decided yet) file for BK next year, would that be considered fraud? The idea is, for BK, they would need to decide what my monthly net income is, and now I suddenly lower it at the same time I stop paying unsecured debt.

[bingo]

Go ahead and start the contributions. Any money you contribute is exempt in bkj.

Once you file, it's not net but, gross income that starts the means test. {the 6 months prior to filing}

Once you work through the first part, you start to schedule expenses. How a trustee treats 401K deductions isn't hard and fast. Most will allow it as an allowable expense up to the employer match. [in a Chapter 7}

If you're in a Chapter 13, many trustees will make you stop 401K contributions but, the amount already contributed is safe.

There is no fraud in what you're considering.

[BrokeBob]

Thanks.