Options to keep my 401(K) in bankruptcy, when you hire bankruptcy attorney in Las Vegas, Nevada

by Recovery Law Group Recovery Law Group

Living with overwhelming debt can be stressful, and can make you feel hopeless. Though many may view bankruptcy as an admission of failure, but the truth is that this legal proceeding relieves you of some or all of your obligations to repay the debts. Bankruptcy allows creditors to regain a portion of their debt while offers you start fresh by forgiving debts that you cannot repay. When you hire bankruptcy attorney Las Vegas in Nevada, you may be advised to file for it either under Chapter 7 or Chapter 13.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the appointment of a trustee by the federal bankruptcy court who collects the non-exempt property of the debtor, sells it, and distributes proceeds to the creditors. However, some assets are exempt under Chapter 7 bankruptcy, which includes tools needed for employment, social security, pension, and part of the equity in your home and automobile. The bankruptcy will discharge your unsecured debts, such as credit card bills and personal loans. At the end of the process, all your debts will be eliminated except those that cannot be erased this way, such as bank accounts, investment accounts, and a second property other than the primary residence. If you hire bankruptcy attorney Las Vegas from the trusted law firms such as Recovery Law Group, the entire process can be completed with four to six months.

Credit counseling is mandatory before bankruptcy filing

On the other hand, Chapter 13 bankruptcy restructures your debt in a way that allows you to repay it all, or at least some part of your debt over a period of three to five years. Also known as a wage earner’s plan, this bankruptcy provides a substantial payback to creditors – at least equal to what they would receive under other forms of bankruptcy. At the end of the repayment period, any remaining debts (with certain exceptions) will be discharged, and you will not be under any obligation to repay them. However, when you hire bankruptcy attorney Las Vegas, you may need to undergo individual or group credit counseling before filing. A meeting, called 341 meeting will also be held under oath by your creditors or the trustee about your financial situation.

ERISA allows for keeping 401(K) saving plans

The state as well as federal government has exemption laws that prevent an individual’s property against creditors and bankruptcy trustee. Almost all pension and 401(K) saving plans, which are qualified under ERISA, the federal savings act, are excluded from the bankruptcy estate. Recovery Law Group’s experienced bankruptcy lawyers can help you with your endeavor on how to keep my 401(K) in bankruptcy. ERISA specifically prevents employers from commingling 401(K) assets with their own assets.

Rolling over your 401(K)

Moreover, if your company closes, then you have a few options to resolve your concern to keep my 401(K) in bankruptcy. Recovery Law Group’s experienced attorney may suggest you roll over the money to your new employer’s plan that offers qualified retirement plan. IRS allows you to roll over the money from your old 401(K) to a new one. If your new employer doesn’t offer a qualified plan, you could roll over your 401(K) money to an Individual Retirement Account (IRA) instead. The third option to keep my 401(K) in bankruptcy is withdrawing the money. However, withdrawals made before the age of 59.5 years are generally subject to income tax, and a 10% early withdrawal penalty.