bwallace
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| bankruptcy? |
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My girlfriend is a big mess financially, and I'm hoping somebody can give me some advice that she hasn't seemed to be able to figure out on her own. Basically, she has substantial credit card debt, student loans, and a mortgage payment, and has recently been unable to make the payments on any of these because she was fired from her job. The only positive is that she has pretty good equity in her house. She's exploring bankruptcy, but my fear is that she would pay off her credit cards with the bankruptcy, but still be unable to pay house and student loans. My advice to her was to sell the house, use the money to pay off all debt, and rent until she get's her situation back in order. Her fear is that it may take time to sell her house, and in the meantime there really is no income coming in. My question, what is worse, extending already seriously delinquent accounts, or filing for bankruptcy? The problem she feels is that her needs are immediate, and selling a house could take some time.
thanks for any help
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Sat Aug 06, 2005 9:32 pm |
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David Briggs
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Bankruptcy puts control over the house in the hands of the bankruptcy trustee, and probably leaves her penniless after all the accounts are settled. She should stall the creditors on her own by calling upon them for any interest and late charge moratoriums she can get them to agree to, and send them something each month, even if it is only five dollars. You didn't mention a vehicle. Paid for?
She should try selling the house on her own to save the broker's comission (I do recommend an attorney, however, to handle the initial contract through the closing for a flat fee.) Depending on the market the house is in, a quick sale at a fair price might possible. In the meantime, take any job for the income it will bring. When the sale of the house closes, put the proceeds in an account which she never pays creditors with, preferably at a different bank, so they can't locate and attach it.
What people forget is that you don't just turn over your debts in bankruptcy, you turn over your assets too. If she can hold off the appearance of recorded judgments (which would be deducted from the proceeds of the house sale), sounds like she could have a meaningful lump sum to start over with. When the time is right (all assets liquidated and hidden), default on all the debts, quit the job, disappear, and lay low, like she is going into the witness protection program.
Does that last part sound irresponsible? That's my advice.
~~David
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Sun Aug 07, 2005 11:14 am |
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bwallace
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thanks for the advice David. Are you saying she should stall the creditors, sell the house, hide the money and then file for bankruptcy? Or stall the creditors, sell the house, hide the money and then just stop paying the creditors? I would hope she could just sell the house and use the proceeds to clear her slate, even if that means having no savings left when all is said and done. Would her house be at risk with bankruptcy? The deal is I don't think she's concerned emotionally about keeping the house, but I would hate to see her lose the house AND the equity she's built up in it.
thanks
Ben
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Sun Aug 07, 2005 7:03 pm |
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joseanes
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Location: Marlborough, MA
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quote:
Originally posted by bwallace
thanks for the advice David. Are you saying she should stall the creditors, sell the house, hide the money and then file for bankruptcy? Or stall the creditors, sell the house, hide the money and then just stop paying the creditors? I would hope she could just sell the house and use the proceeds to clear her slate, even if that means having no savings left when all is said and done. Would her house be at risk with bankruptcy? The deal is I don't think she's concerned emotionally about keeping the house, but I would hate to see her lose the house AND the equity she's built up in it.
thanks
Ben
My advice:
1. Get a job: ANY JOB, even McDonalds! You need this for step 2.
2. Try to negotiate with the creditors. Tell them that you need to work out a repayment plan that is reasonable, otherwise, you will have to file for bankrupcy. Why the job? Simple, the Creditors will ask you: how much can you pay every month. If you tell them $0, because I have no job, then... you are out of luck.
3. Carry out the repayment plan.
BTW... If she keeps the house and has to file for bankrupcy, the house is protected if she finds a way of paying the mortgage. Otherwise, the bank will foreclose.- with the bankrupcy she will be protected from foreclosure for a while, but not forever.
If she sells the house and hides the money... that is fraud. They can go after the money (whoever has it, mom? brother? whoever), and they can probably bring her to criminal court. A jail for a house is worse than no house at all.
Also, the court may just decide she has to pay the debts... just slower, thus not eliminating the debt, just slowing it down. Bankrupcy doesn't always erases debt. (Depends on the chapter).
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Tue Aug 30, 2005 3:59 pm |
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Naomi1lh
New Poster
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Joined: 05 Sep 2005
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| bankrupcty question |
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If a person has no assets left, and is on Soc Sec disability but has credit card debt, how would bankruptcy affect this situation? Would the new law affect the situation any differently from the old law? Would it make any difference if application is made before Oct 1, or to apply at all?
Also I have heard that one penalty of the new law is that a person cannot go out of the country after filing bankruptcy. Is this true?
Thanks for the info
Naomi
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Mon Sep 05, 2005 5:51 pm |
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gators52
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You said she had student loans, from the best of my knowledge those can't be wiped out by bankruptcy. Maybe there is some loophole though..
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Tue Sep 06, 2005 2:16 am |
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bwallace
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Joined: 06 Aug 2005
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thanks for the replies, everyone. this is helpful. She does have student loans, but they've been very flexible with her situation. She has contacted all of her creditors, and for the most part they are willing to work with her, but for how long is the question. She got an appraisal on her house, so she may have to sell to pull some money out and pay off the creditors. would be better than foreclosure.
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Tue Sep 06, 2005 6:02 pm |
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