Any person who is considering taking out a loan against their 401k to pay off credit card debt or medical debt should first meet with a local bankruptcy attorney. As a general rule, borrowing against your 401k is a stupid idea because the potential tax consequences if you default on the loan.
A host of legal issues needs to be attended to in filing for bankruptcy, and this is why reading up information on the processes are vital to understand what will happen when you apply. Certain conditions must also be met to make you legible to apply for this final solution. There could be alternative options to relieve you of your financial obligations rather than bankruptcy, which can be discussed with a legal professional.
Getting a bankruptcy attorney in Sacramento, the capital city of California is not that big of a deal. The only trick lies in the search process for finding the most suitable bankruptcy attorney for your specific case. Hiring a bankruptcy attorney will help you to better understand all the laws and the process which will help you in preparing yourself better for it. Basically there are two types of bankruptcies for individuals, the chapter 7 Bankruptcy and the chapter 13 bankruptcy. The attorneys that handle these kinds of sponsoring bankruptcies are the ones with the most accurate information and legal advice.
Another important benefit for small business owners filing for Chapter 7 bankruptcy is exemptions. Exemptions vary from state to state and are set values above which debtors must surrender property. States with higher exemptions are more attractive to debtors because it protects more of their property. It is important to note that for small businesses filing for bankruptcy, the filer must also list all assets, both business and personal, which makes the exemption value of the state an important detail to know before filing. It can make the difference between keeping a home or having it liquidated.
The “means test” should be performed as follows: subtract debt payments and some specific allowed expenses from your monthly income. This will result in what is called a “disposable income”. If this income is in fact lower or equal to your state's median income, you will be eligible for chapter 7.
An individual can be declared bankrupt either voluntarily or involuntarily. Voluntary declaration involves an individual initiating the proceedings after realizing that he is not able to honor his debts. The debtor can also be forced into submitting after a creditor with a strong base files for the same. Once the application has been accepted, you have no otherwise but to co-operate fully with the court and the parties involved.
Your case could take several years before it's discharged. In the meantime, you may receive a periodic report from the bankruptcy court. If you want more detailed information or information more often, you need to monitor your own case. You can get a username and password to monitor your case online. You can see who is being paid, how much you're paying, and other details in regards to your bankruptcy. Since your bankruptcy affects you so much, you should know what's happening and how it affects you.