The Filing Bankruptcy Objection
Hey folks,
I have client who is about to lose a second home to foreclosure. This other home is vacant and has about $70,000 in equity, but he is going into bankruptcy and tells me he does'nt think it matters much losing this other house to foreclosure, with his bankruptcy at about 3/4 million.
Is he right? What can I say to him? Is it in his best interest to avoid BK and work with me to keep BK and foreclosure off his credit report?
Any advice is appreciated, thanks, Dave
you can tell him the truth and you'll be doing him a favor:
Bankruptcy is not a great option.
There are 2 basic forms of it - reorganization and liquidation.
What it does is eliminate your non-secure debt. It does not eliminate your house or car notes because those are secure.
Basically you will have a hearing and a judge will decide what your monthly payment amounts will be. They will always be more then what he is presently paying for the mortgage because of all the attached fees and missed payments. If he fails to make the bankruptcy payments then they will kick him out of bankruptcy and he will inenitably be right back in foreclosure about 4 months later.
other things that make it lowsy are - a bankruptcy will be on his credit for 10 years. If the guy just simply didn't pay his non-secure debt, that would only be on his credit for 7 years.
its just not a great deal for the individual - its more set up to help businesses.
hope that helps.
one more thing is; he will pay about $1500 to have a lawyer file it for him. If he is adamant about doing it anyway, he can save alot of money going to office depot, paying $30 for the forms and filing himself.
one last thing to consider is what state he lives and the homestead exemptions in that state.
DEAR GOD... I would not recommend you tell him to file pro se without even talking to a lawyer (most do free consultations)
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BK's aren’t easy these days, trust me. They affect every aspect of the debtor's financial life - so dump the $30 office depot suggestion. Unless the guy TRULY has absolutely NO assets and NO income (and even still I'd have him talk to a lawyer
He is your Client? Advise him not to file for the time being. Use it as a threat and see if you can get a handle on the debt. Most of the time I whittle it down to the point that he can get a part time job at Denny's and handle the debt burden.
There are so many many games that can be played. Out here in LaLa land they do a lot of BK filing and then go back in and retract the filing one day before lst Creditors Meeting. Oh my the threats and deals that are made. I mean the deal where you pay five percent of your (NET) income and that runs forever. Like buying a drivers license.
It is true this is flacky country. But even so the things I have seen in settlement.
The tiny little payment on a $1,000,000 debt. He pays that and once a year he sends in a statement of earnings and it is adjusted yearly. I mean they do not even research the statement of earnings. My god, he is driving a car that is so expensive you have to keep a mechanic in the trunk at all times. He has a tab at three of the leading trendy dendy restaurants. He tips the car parker who does not park the car just keeps it in front of the door. Etc. Etc. He wears an AudPig Philosophers Gold Watch with the single hand and flashes it continualy. He requires that any lady that accompanys him out at night take an oath that she has been unable to see her feet since 16 years of age.
But he pays on the debt and every year he resubmits his statement. If I were his creditors I would attach everything in sight. But there he goes a flagrent kvetchy deadbeat.
He butted into a lunch I was at the other day and I know he stole the tip from the table. I know because I had placed a $3 bill in the pile as my share. Oh well nobodys perfect.
Cheers Lucius 8-) 8-)
yeah he sounds like a real winner.