The question is should my sister file bankruptcy. She lives in Nevada. She earns minimum wage a Wal-Mart. She owes $12,000 on her one and only credit card. She drives a car worth $8000 and has about 10 payments owed on her car loan. She has about $35,000 in a 401K from a previous job. She is 56 years old. She does not own a house. Should she file bankruptcy? Will her 401K be protected if she does? What happens with the car if she files bankruptcy? She is about to begin searching for a apartment to rent or trailer home to buy. She has a Dad and 3 brothers to help her purchase trailer home and payoff the credit card debt if it turns out bankruptcy is not the way to go.

Why would should file bankruptcy? A $12K debt is not onerous. Even on a minimum wage. I think she just needs to manage her money better.

It seems at worst she may have to seek credit cousiling but not backruptcy. If she is doing as you say then you will have to consider all options but it sounds like she can do it and still be fine and pay all debts owed. In the new laws as far as I have heard she will be required to pay back the debts anyway and she would be saddled with a bankruptcy on her credit report for up to 10 years. It might not be the smartest way to go and Im not sure about your 401k question because a lot has changed in the last few years.

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Originally Posted by brothersteve

The question is should my sister file bankruptcy. She lives in Nevada. She earns minimum wage a Wal-Mart. She owes $12,000 on her one and only credit card. She drives a car worth $8000 and has about 10 payments owed on her car loan. She has about $35,000 in a 401K from a previous job. She is 56 years old. She does not own a house. Should she file bankruptcy? Will her 401K be protected if she does? What happens with the car if she files bankruptcy? She is about to begin searching for a apartment to rent or trailer home to buy. She has a Dad and 3 brothers to help her purchase trailer home and payoff the credit card debt if it turns out bankruptcy is not the way to go.

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With the new Law I don't know if she qualifies for straight bankruptcy - she would have to be counselled, possibly pay pennies on the dollar.

If her total debt is $12,000 plus 10 car payments and her net worth is $8,000 PLUS $35,000 she will "probably" be advised not to file.

These are questions better posed to an Attorney - but some things to consider.