Date of Decision:
November 3, 2011
Whether a chapter 7 debtor's 401(k) contributions and 401(k) loan payments should be considered in determining his ability to pay under 11 U.S.C. § 707(b)?
Yes. While Congress chose–in 11 U.S.C. §§ 541(b)(7) and 1322(f)–to exclude a debtor's 401(k) contributions and 401(k) loan payments from his disposable income in a chapter 13 case, it did not choose to likewise exclude such contributions and such payments from the Court's consideration in determining whether to grant a motion to dismiss for abuse under § 707(b). Moreover, the issue under § 707(b) is not whether a debtor could be compelled to pay his creditors, but whether a debtor has the ability to pay his creditors, if he were to choose to do so.