June 2, 2020 / 1:07 PM / a month ago

Chapter 13 debtors can shield ongoing 401(k) contributions from creditors – 6th Circuit

Wage-earners who contribute to an employer-sponsored retirement plan can continue to do so at the same rate after filing for Chapter 13 bankruptcy protection, a federal appeals court held Monday in a case of first impression nationwide.

In a 2-1 decision, the 6th U.S. Circuit Court of Appeals said a Chapter 13 debtor’s voluntary contributions to her 401(k) are excluded from “disposable income” – the amount the debtor must pay her unsecured creditors for five years – to the extent those contributions “were regularly withheld from the debtor’s wages prior to her bankruptcy.”

To read the full story on Westlaw Practitioner Insights, click here: bit.ly/2zWmAWd

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