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Voluntary Retirement Contributions Can Now be Included in a Chapter 13 Budget
The 6th circuit court issued an opinion last month finding that voluntary retirement contributions are acceptable budget items to include in a Chapter 13 repayment plan. Why is this good news?
This will allow Chapter 13 bankruptcy filers to:
- Save for their future retirement while they are restructuring, repaying and reducing their debts;
- Reduce their plan payments to the Chapter 13 Trustee by the amount that they are contributing to their 401K;
- This reduces the necessary payback amount to unsecured creditors if the client is proposing a percentage plan, meaning that they are paying back the unsecured creditors at a reduced rate. Ultimately, whatever unsecured debt remains at the completion of the Chapter 13 plan is legally eliminated with a court discharge. Many times, even with taking out 401k deduction, we can still propose a 0% dividend to unsecured creditors within the Chapter 13 plan.
The court does require that you have a history of retirement contributions. If you are considering filing for Chapter 13 in the future, you may want to consider opening a retirement account to begin a record of contributions and savings.
For current clients still in the process of getting their Chapter 13 repayment plan confirmed, we can modify your plan immediately to account for retirement contributions and in most cases lower the plan payment. For clients with already confirmed cases, we can evaluate adding in this retirement savings if we modify your plan for other reasons, i.e. increased expenses or decreased income.
Our goal is always consistent: resolve debt and place our clients in a better long-term financial position. This ruling helps to reach this goal by allowing us to encourage clients to save for their future while also resolving current debts that might be impeding their credit.
For more information on your Chapter 13 bankruptcy filing options, call us today for a free consultation. We offer free in-depth appointments to review your current circumstances and debt concerns, review your income and discuss your long-term goals. At the free consultation we will determine if:
- filing bankruptcy is right for you;
- which chapter (7 or 13) best resolves your debt and helps you to improve your credit;
- discuss alternatives, such as debt settlement;
- outline the process and steps for our recommended path to debt resolution.
Call us today at 866-261-8282 for a free phone or in office consultation. We have 6 convenient office locations in: Detroit, Dearborn, Southfield, Warren, Flint and Ann Arbor, Michigan.
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I greatly appreciate the excellent job done by Attorney Chris Jones together with Cindy Millns upon the completion of my Chapter 13. They are very prompt and thorough in helping me resolved my 2nd mortgage, credits, helped me make a realistic budget all thru…
It has been a pleasure working with you and Atty Chris Jones. Thank you very much for all your help and guidance. God bless you all. Thumbs up for your services.
Thank you so much for your help through the Chapter 13 process. It has been a tough 5 years for our family with both of us losing our jobs nearly at the same time, dealing with unemployment and bankruptcy…so glad to be at the end of this journey and getting back to normal. This entire process was…
Thank you for all of your help whenever I called or emailed you regarding my bankruptcy case. You were always helpful and quick to respond on helping me. I truly appreciate the awesome legal service that team at Acclaim Legal Services provided.
Many blessings…