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Sixth Circuit: Chapter 13 Debtors Can Shield Ongoing 401(k) Contributions from Creditors in Bankruptcy (PDF)
U.S. Court of Appeals for the Sixth Circuit June 3, 2020 "[We] conclude that the hanging paragraph is best read to exclude from disposable income the monthly 401(k)-contribution amount that Davis's employer withheld from her wages prior to her bankruptcy. That interpretation reads the amendment to Section 541(b), which added the hanging paragraph, in a way that actually amends the statute. It also gives a meaningful effect -- one not already accomplished by Section 1325(b)(2) -- to Congress's instruction in Section 541(b)(7) that 401(k) contributions 'shall not constitute disposable income.' The Trustee's proposed interpretation fails on these objectives." [In re Davis, No. 19-3117 (6th Cir. Jun. 1, 2020)] |
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