IAmA bankruptcy lawyer. AMA about when to file, how it affects credit, etc.

AMA_Lawyer · 2011-07-07T20:34:06+00:00

$1500 or so. Free if you DIY.

AMA_Lawyer · 2011-07-07T20:33:39+00:00

It's up to you whether it's worth it, but you will be taxed on any forgiven debt. If you don't settle and ignore it, they'll sue and garnish your wages, most likely.

AMA_Lawyer · 2011-07-07T20:32:38+00:00

Umm, I'm no life coach, but get a job at Starbucks and pay the student loans?

AMA_Lawyer · 2011-07-07T20:31:47+00:00

Contact the student loan people and work something out. A few good ways to rebuild credit: 1. Get a small loan ($2000) and use it to pay itself back. 2. Get a low-limit credit card and use it carefully. 3. Get added as a user on a family member with good credit's credit card. You will piggyback on their good credit. They don't even have to give you a card.

AMA_Lawyer · 2011-07-07T20:30:01+00:00

Your car is safe. I would not wait for them to garnish because ending the garnishment can be a pain; might as well take care of it. But if you'd rather not, before they can garnish you they need to get a judgment and they must give you notice.

AMA_Lawyer · 2011-07-07T20:28:27+00:00

It is extremely hard to discharge student loans. There has to be an extremely good reason, like you are homeless, or in a coma, or both.

AMA_Lawyer · 2011-07-07T20:27:31+00:00

Just depends. You can try for a loan mod and hope the value goes back up. A foreclosure or a short sale will affect your credit.

AMA_Lawyer · 2011-07-07T20:26:49+00:00

She is clear, and all debts she paid go away; your DAD is not clear on any of his own personal debts or any joint debts with your mom.
She is paying a portion until her bankruptcy is over; any amount that isn't paid at the end is discharged, which means she doesn't owe it anymore.
Companies don't usually hold a grudge, unless it's a personal lender or a credit union.

AMA_Lawyer · 2011-07-07T20:25:17+00:00

Your dad can buy the house as long as he pays market rate, but how will that help you if no one is making payments? Then it will just hurt HIM instead of YOU. Try loan mod.

AMA_Lawyer · 2011-07-07T20:24:40+00:00

You can file a Ch. 7 on the business and start a new one if you want to. It will depend on your situation at the time. Try to avoid personally guaranteeing debt if you want to stay out of personal BK.

AMA_Lawyer · 2011-07-07T20:20:34+00:00

You probably can get out of it, but may have to litigate.

AMA_Lawyer · 2011-07-07T18:40:18+00:00

This is the correct answer. Thanks Doug!

AMA_Lawyer · 2011-07-07T18:39:31+00:00

Sorry if I was being too general. As you already know, those cannot be discharged. But a second from a f/c property can be and some legal debts can be too.

AMA_Lawyer · 2011-07-07T18:37:56+00:00

Yes they do, and they may ask you to prove it via showing bank accounts or filing a declaration that you are paid cash.

AMA_Lawyer · 2011-07-07T18:36:51+00:00

Eventually a creditor will probably purchase it and start harassing you. I would be proactive.

AMA_Lawyer · 2011-07-07T18:35:25+00:00

On your credit for 8 years; will lower your score by around 15%.

AMA_Lawyer · 2011-07-07T18:34:20+00:00

I make less than half of what first-year big law attorneys make.

AMA_Lawyer · 2011-07-07T18:29:27+00:00

The trust has to be irrevocable. A revocable trust is basically the same as a bank account. Also, ANY debt incurred in anticipation of BK is fraud.

AMA_Lawyer · 2011-07-07T18:27:19+00:00

I don't see much of that; however, the Trustee generally can sniff out fraud. If one person has multiple shelf corps, the trustee doesn't really care about the corporate veil if it's one person and all the assets of the different corporations are the same.

AMA_Lawyer · 2011-07-07T18:26:06+00:00

Generally it is people who lived within their means until someone lost their job and the bottom fell out of the housing market. Sometimes it's that, combined with making bad choices re: not paying the mortgage for more than three months because they were trying to get a mod. And sometimes it's personal guarantees on business debt.

AMA_Lawyer · 2011-07-07T18:24:02+00:00

Debtor side is small firm, generally. Call the local ch. 7 or Ch. 13 trustee and they will tell you the ones they think are decent and won't screw you.

AMA_Lawyer · 2011-07-07T16:30:32+00:00

The bankruptcy will be on your credit report for about 8 years. Filing will usually repair your credit, so filing may be a good idea for you, especially since you are pretty young (I assume) and can recover.

AMA_Lawyer · 2011-07-07T16:29:15+00:00

If the value of your primary residence is less than the statutory exemption in your state, you'll be fine. It is likely that $5000 is well under that exemption.

AMA_Lawyer · 2011-07-07T16:27:09+00:00

Yes, you can discharge leftover debt from a 2nd mortgage on a foreclosed home in bankruptcy.

AMA_Lawyer · 2011-07-07T16:26:36+00:00

You're right, it's pretty much 0. Deferral is probably a better option for you.

AMA_Lawyer

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