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Chad Anderson Law Firm | Attorneys | Bismarck, ND
http://money.com/money/5641667/the-biggest-reason-you-should-never-use-your-401k-to-pay-off-debt/
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The Biggest Reason You Should NEVER Use Your 401(k) to Pay Off Debt
A Chapter 7 bankruptcy is a petition to the court for a complete discharge of all eligible debts.
However, the debtor must list all of their assets and use the applicable exemptions to protect the assets from the creditors. If an asset is not exempted the asset will have to be turned over the the bankruptcy trustee and sold for the benefit of the creditors.
In almost 99% of individual bankruptcy cases, the trustee closes the case without selling anything that belonged to the debtor.
Who is eligible to Chapter 7
An individual’s eligibility to file Chapter 7 is determined by the means test which is a specific calculation of the income and expenses of the debtor.
In some cases debtors with very high income may not qualify for Chapter 7. If you suspect this may be the case in your situation there is always the possibility of Chapter 13 bankruptcy. I suggest contacting an experienced bankruptcy lawyer, most people who want to file Chapter 7 can do so.
The process of filing Chapter 7 Bankruptcy
The case is begun by filing the official petition, schedules and statement of financial affairs. These forms require you to list all of your assets and debts as well as your income and expenses.
The schedules are signed under penalty of perjury. False or recklessly inaccurate schedules can prevent you from getting a discharge.
The most important date in the Chapter 7 Bankruptcy is the date of filing. The reason is we need to list all debts and assets as of the date of filing and the automatic stay goes into effect upon filing the petition, creating a legal barrier to collection actions by creditors. Additionally, if any property has been garnished or levied within the 90 days prior to the filing date you are able to recover those funds from the creditor.
The court appoints a trustee and gives notice to all creditors listed in your schedules that you have filed bankruptcy. You will get a copy of that notice at the same time it is sent to creditors.
The next step is the first meeting of creditors
The debtor must appear at the 341 Meeting or First Meeting of Creditors. The trustee and creditors can ask the debtor questions under oath about assets and liabilities. In actuality creditor seldom appear at the meeting.
After the first meeting of creditors
If there are assets which are not exempt, the trustee takes control of those assets. Often, the trustee will offer to sell back to the debtor any asset that has unprotected value.
The creditors and the trustee then have a 60 day period from the 341 meeting in which they may challenge the debtor’s right to a discharge (Bankruptcy Code § 727) or the dischargeability of a particular debt (Bankruptcy Code § 523 (a) (2), (4), and (6) by filing an adversary proceeding.
Debtors must complete a course of financial education from an approved provider in order to get their discharge. The class is generally several hours and is available online from several providers.
Individual debtors get their discharge within 4-6 months of filing the case. The discharge eliminates personal liability for dischargeable debts that existed at the commencement of the case.
One of the biggest mistakes people make when estate planning is stopping after they create their Last Will and Testament. The Last Will and Testament is a great start to an estate plan and if you have effectively designated your wishes for distribution of your estate assets. There are a couple of other tools that help to complete your estate. The first is a financial power of attorney which will allow someone to pay all of your bills and take care of your property while you are incapacitated. Next two documents go hand in hand, they are a Health Care Power of Attorney and a Living Will; the Health Care Power of Attorney allows a person that you designate to make decisions regarding your health care when you are incapacitated and unable to make those decisions. The Living Will is basically your instructions for the Health Care Power of attorney with regard to your wishes. The best example of this is when you are on life support and incapacitated: Most people have clear wishes as to whether they want to remain on life support, be removed from life support, or rely on the advice of two or more concurring doctors, which would be clearly outlined in the Living Will document for you loved ones to follow your wishes. To read more about this issue read the article in the link below.
https://www.forbes.com/sites/bobcarlson/2018/02/21/7-big-estate-planning-mistakes-part-1/#5394a6555d06