Debating CH. 7 BK or to negotiate being used by creditor

[nellie228]

Hi! I am new to the community. I am looking for advice of whether or not to file for Ch. 7 BK or to try and negotiate a 31K debt consolidation loan with the attorneys who are suing me, court date is January 5, 2021. Any help/advice/thoughts would be greatly appreciated. If I do go through with the Ch. 7, I am trying to find out if any of my 401-K will be taken from me or any other accounts, like my HSA or regular savings. Thank you so much. The shame is heavy.

[shipo]

Nope, you're good to go; your HSA and 401K are untouchable.

[nellie228]

Thank you for the information! Are you aware of anyway to drain my other accounts? Is there anything I can do?

[shipo]

Thank you for the information! Are you aware of anyway to drain my other accounts? Is there anything I can do?

There are other's here more versed in that aspect, but as a general rule, no, only your retirement is fully protected. If you have a fair amount of cash, I would talk with an attorney and come up with a plan which will work best for you.

[justbroke]

Thank you for the information! Are you aware of anyway to drain my other accounts? Is there anything I can do?

The term "draining" can be problematic as the Trustee may look back 90 days to see if any big spending is indicated. We like to use the term "spending down" on necessities. Get that non-elective medical treatment done. Maybe stock up on some food. Make that vehicle or home repair that you have postponed.

You still need to be careful that it wasn't frivolous or looks like you are hiding money. There are certainly good ways to spend down money, but you must also understand what "exemptions" are available. For example, if you lived in a State which had a wildcard exemption of $4,000 which allowed exempting cash, then you may just be able to keep the cash. For California, there are two different exemption schemes (systems) and depending on which one you choose you can save (exempt) different types of property.

If you have more than just a single vehicle (you own one or more homes, land, multiple vehicles, stock/bonds, etc), then you are more likely to need an attorney to help you file. Assets are the big deal in a Chapter 7, and making sure that you can exempt your assets is one of the major things that goes into the 30+ pages which make up your petition.