In re: Renita Sheri Hall

12 B 43452
Chapter 13 Trustee objected to confirmation on the grounds that by continuing to make voluntary 401(k) contributions, the Debtor was not applying all projected disposable income to make payments to unsecured creditors in violation of section 1325(b)(1)(B).  In this order, the court first reviewed the split in case law over the interpretation of section 541(b)(7). This subsection states that certain contributions to retirement accounts "shall not constitute disposable income, as defined in section 1325(b)(2)." The court determined that the majority viewpoint was correct and section 541(b)(7) is not limited to prepetition contributions. Postpetition voluntary retirement contributions are excluded from the calculation of projected disposable income. In dicta the court noted that even if the Debtor had not been making voluntary 401(k) contributions during the six months prior to filing her case, any future contributions would still be excluded from projected disposable income.  Objection overruled.

Tuesday, October 22, 2013