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Judge Rules 401(k) Contributions Not A Ch. 7 Right

Law360 (September 13, 2006, 12:00 AM EDT) -- In a precedent-setting case, the Ninth Circuit Court of Appeals has ruled that individual debtors seeking Chapter 7 bankruptcy protection are not always entitled to include voluntary contributions to a retirement plan in calculating disposable income.

However, the court said that voluntary contributions to a retirement plan may be reasonably necessary for some debtors, and courts must therefore conduct fact-specific inquiries, which overturned the bankruptcy court’s ruling.

The court upheld that such payments were not necessary in this case based on the plaintiff’s age—33—and financial status—she...
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