Burden v. Seafort (In re Seafort)

Summarized by J. Debbeler , Bricker Graydon LLP
15 years 5 months ago

Citation:

2010 FED App. 0009P (6th Cir.)

Tag(s):

6th Circuit

Ruling:

A chapter 13 debtor who is repaying a 401(k) loan, but not making any 401(k) contriubtions at the time the bankruptcy petition is filed, cannot use the income which becomes available when the loans are repaid to start making contributions to that debtor's 401(k) plan, but must commit the extra income to repay creditors.

Procedural context:

The bankruptcy court ruled that Debtors may use income which becomes available once 401(k) loans are repaid to commence making contributions to debtors' 401(k) plan. The BAP reversed the bankruptcy court's rulings confirming the debtors' chapter 13 plans and remanded for further proceedings consistent with the opinion.

Facts:

Debtors were repaying 401(k) loans at the time the bankrutpcy was filed, but were not making regular contributions to their 401(k) plans. Debtors attempted to have plans confirmed whereby upon repayment of their 401(k) loans, those funds would be contributed to the 401(k) plan and not used to repay creditors.

Judge(s):

Boswell, McIvor, Shea-Stonum

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