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Question about bankruptcy

A

azev

Golden Member
Well, my parents are so deep in debt right now and they are thinking of going back to their country.
They came here around 6 years ago, and since then they have dig a hole and now the hole is huge.
They manage to get a house 3 years ago and they are thinking to sell it. But after broker fee, etc, they will only get about as much as they paid for downpayment for the house.
Now I told them to consider declaring bankruptcy; but I dont even know a thing about bankruptcy. I do heard a lot about bankruptcy where you dont have to pay what you owe anymore or just a little portion of it. I also know that their credit record will get hammered when they declare bankcruptcy.
I would like to help them, but I am barely getting by every month and digging my own hole.
Any help/info is appreciated.
 
You don't need a broker to sell a home. Has the home decreased in value? It doesn't seem that it could only be worth the down payment after the broker fees. (5%?)

Bankruptcy will kill your credit forever. It doesn't just drop of like a lot of things do. If they ever think they will want a good CC or home loan, they will pay huge fees to secure one after bankruptcy. Maybe they should consider a Home Equity loan to cover some of the larger debts.
 
Are they unable to keep their heads above water monthly? If they are, bankruptcy would not be the way to go. Is it just because the mortgage is large and they want a smaller payment? Go the FiSBO route but list with the MLS and you'll save on paying your own realtor a fee but will pay the buyer's realtor their fee if the buyer does have one.

Bankruptcy will stay on your credit for 7-10 years. But, many people can buy new cars immediately afterward (but the interest rate will be VERY high) and even a new home in 2-3 years (again, with higher interest rates). Have them get a referral for a bankruptcy lawyer and use that initial free consultation to see where they stand.
 
Originally posted by: MogulMonster
You don't need a broker to sell a home. Has the home decreased in value? It doesn't seem that it could only be worth the down payment after the broker fees. (5%?)

Bankruptcy will kill your credit forever. It doesn't just drop of like a lot of things do. If they ever think they will want a good CC or home loan, they will pay huge fees to secure one after bankruptcy. Maybe they should consider a Home Equity loan to cover some of the larger debts.
Click to expand...

actually bankruptcy is on the credit report for like 10 years. not forever.
 
Well they are pretty much in trouble keeping up with monthly expenses. My dad recently take a job back in indonesia (where we from) and they pay there is not even close to being enough to help my mom pay the monthly bill down here (eventhough it is enough if they both lived there). I think last time I talked to them, they are in dept of around $25-$30k, all of this is because my dad got lay off, my brother got laid of and my mom is working 14hours a day. Honestly I feel so sorry for her, and want to help somehow. But financial help is out of the question because with what I make, I barely make it every month.
The reason that she only going to get the downpayments for the house back is because the house hasnt increase in price much. Recently before my dad got laid off they had refinanced the house. Selling the house before the 3 years contract period will end up in a 3% fee.
We are thinking of going FSBO, but we are scared because we had no experienced on this what so ever.
They really dont care about their credit record if they can get a break from their debt.
My mom are planning to go back to indonesia as soon as the house is sold.
 
FiSBO isn't that difficult, esp. if you you list with the MLS. You'll have realtors bringing people to your house. Also, your local FiSBO office probably produces their own ad circular and you can list in there, too, with pictures.

Definitely contact a bankruptcy lawyer (check the yellow pages for a referral service) and have that initial free consultation. Have your mother bring copies of all of the latest bills (showing balances owed, payments due, account numbers, etc.).
 
10 years is a LONG time. Trust me, filing for bankruptcy is not fun. You won't have credit and you won't be able to buy anything for that duration. I'm paranoid b/c I have great credit and I don't want to end up like my parents.
 
Originally posted by: dxkj
debt of 25-30k isnt really that much..... you dont think you can get that much for the house?
Click to expand...

May not be that much equity left in the house. If the house is worth, say, $100,000 but the refinance left a mortgage balance of $90,000, there's only $10,000 in equity. Not enough to pay off the debt.

And, fwiw, I filed Ch. 7 a little over two weeks ago (divorce and unemployment took its toll on me). I've already received letters in the mail from car dealerships offering me finance plans on cars as new as 2001. :frown:
 
May not be that much equity left in the house. If the house is worth, say, $100,000 but the refinance left a mortgage balance of $90,000, there's only $10,000 in equity. Not enough to pay off the debt.
Click to expand...

Conjur, you're right on the money. My parents still owed $160k for the house and right now the house worth around $167k (according to the tax report) but we lived in a nice area so the realtor that we talked to we can ask as much as $185k for the house. If the house is even sold for $185, she will only get around $10K and that is not even close to paying off the debt.

Conjur, how much did you pay for the C.7 attorney ?? How much break did you get from your debt ??
 
Originally posted by: waggy
Originally posted by: MogulMonster
You don't need a broker to sell a home. Has the home decreased in value? It doesn't seem that it could only be worth the down payment after the broker fees. (5%?)

Bankruptcy will kill your credit forever. It doesn't just drop of like a lot of things do. If they ever think they will want a good CC or home loan, they will pay huge fees to secure one after bankruptcy. Maybe they should consider a Home Equity loan to cover some of the larger debts.
Click to expand...

actually bankruptcy is on the credit report for like 10 years. not forever.
Click to expand...

That is true, I should know I had to file chapter 7 about 15 years ago.

Ausm
 
Originally posted by: azev
May not be that much equity left in the house. If the house is worth, say, $100,000 but the refinance left a mortgage balance of $90,000, there's only $10,000 in equity. Not enough to pay off the debt.
Click to expand...

Conjur, you're right on the money. My parents still owed $160k for the house and right now the house worth around $167k (according to the tax report) but we lived in a nice area so the realtor that we talked to we can ask as much as $185k for the house. If the house is even sold for $185, she will only get around $10K and that is not even close to paying off the debt.

Conjur, how much did you pay for the C.7 attorney ?? How much break did you get from your debt ??
Click to expand...

Total cost is $700 for me filing. Ch. 7 is a total wash of personal debt, meaning I'll owe nothing. I would have chosen Ch. 13 but I have some large tax bills from the IRS and the state that will chew up any remaining monthly income I have (now that it's 1/2 what I used to make 🙁). Although, I'll reaffirm the balance on my car ($5500) and they may even negotiate that down some as if I just turned it in...they'd get bupkis for it.
 
Originally posted by: conjur
Originally posted by: dxkj
debt of 25-30k isnt really that much..... you dont think you can get that much for the house?
Click to expand...

May not be that much equity left in the house. If the house is worth, say, $100,000 but the refinance left a mortgage balance of $90,000, there's only $10,000 in equity. Not enough to pay off the debt.

And, fwiw, I filed Ch. 7 a little over two weeks ago (divorce and unemployment took its toll on me). I've already received letters in the mail from car dealerships offering me finance plans on cars as new as 2001. :frown:
Click to expand...

I am sorry to hear that. I was in the same boat 15 years ago and it took 10 loooong haaard years to dig my ass out of it 🙁 I was able to buy a house though in my fifth year after my bankruptcy. The bad part of it was when the loan officer grilled me for two hours and I had to prove my worth just short of a Body Cavity search to get the loan. Oh Another thing, they will rape you on the interest until you prove your ability to repay the loan and then are allowed to refinance.

Now my credit is awesome and I vowed NEVER to be in the position to have file bankruptcy again.

Ausm
 
Originally posted by: ausm
Originally posted by: conjur
Originally posted by: dxkj
debt of 25-30k isnt really that much..... you dont think you can get that much for the house?
Click to expand...

May not be that much equity left in the house. If the house is worth, say, $100,000 but the refinance left a mortgage balance of $90,000, there's only $10,000 in equity. Not enough to pay off the debt.

And, fwiw, I filed Ch. 7 a little over two weeks ago (divorce and unemployment took its toll on me). I've already received letters in the mail from car dealerships offering me finance plans on cars as new as 2001. :frown:
Click to expand...

I am sorry to hear that. I was in the same boat 15 years ago and it took 10 loooong haaard years to dig my ass out of it 🙁 I was able to buy a house though in my fifth year after my bankruptcy. The bad part of it was when the loan officer grilled me for two hours and I had to prove my worth just short of a Body Cavity search to get the loan. Oh Another thing, they will rape you on the interest until you prove your ability to repay the loan and then are allowed to refinance.

Now my credit is awesome and I vowed NEVER to be in the position to have file bankruptcy again.

Ausm
Click to expand...

I certainly plan on being there, myself! My bout with unemployment last year made me realize that I'm not a good money manager, esp. as the sole proprietor of a business. I will be back on my own again, business-wise, but will definitely enlist the services of a good CPA! 😀 I figure refinancing my car over two years won't be that bad...even if it's some a**-raping rate like 18% or so since the balance isn't that much. And, that would give me a good two years' of showing good credit, too.

As for azev, I wish your mom the best of luck and hope things work out for the best!
 
Conjur, just as a guidelines, how much debt would a C.7 eliminate??? I talked to my parents and they said if they can get off all their debts they would be fine. Anyway they are going to start again back in indonesia. So in the next 5-10Yrs they will not be here anyway. I dont think bankruptcy record in USA will affect anything there.
 
Ch. 7 clears one of ALL personal debts. Well, it would not include Federal/State taxes nor student loans but it doesn't sound like your parents fall under that area. That's why I chose 7 and not Ch. 13. I just do not make enough money now to maintain the bills I had from before in addition to repaying my Federal/State taxes. If I was making the same amount of money as I was 18 mos. ago I'd be fine. And, in your parents' case, if they're moving to Indonesia, then filing Ch. 7 probably wouldn't be affecting them, esp. if your dad is already over there and earning a living. They could 'flee' the country and turn their backs on their creditors but, obviously, that's not the 'right' thing to do.

OH! One very important thing to remember! If some bills (I would imagine the house, too) is in BOTH of your parents' names, you'll need BOTH of them to sign documents, I would imagine. But, again, a bankruptcy lawyer would be able to better advise you and your mom considering your father is already out of the country.

Chapter 7 FAQ
 
Originally posted by: dxkj
debt of 25-30k isnt really that much..... you dont think you can get that much for the house?
Click to expand...

I got $10k more than that just in Student Loans and with my mortgage and everything I am ... well let's just say about 8-9 times that.

Times have been bad from time to time, but I have never filed Bankruptcy. Recommend that your parents go to a NON-profit debt counseling office.
 
Thank you for all the info.... I will definately go look into some debt consolidation or maybe bankcruptcy.
 
If your parents are planning on leaving the country (presumably permanently), why bother declaring bankruptcy?

I usually don't advotate irresponsibility, but why not just move and leave the debt behind in this case?
 
Well the thing is, they still want to be able to go back.... Visiting their grandchildren, etc etc... But most definately they will not try to live here anymore. They dont want to be black listed when they leave the country so they have to do something with their debt.
 
sux, my dad lost his job two years ago and was jobless for 6 months, he bounced between a few jobs but they only paid a tiny fraction of the 6 figure salary he used to make, he finally landed a solid job... in China and it pays half as much.

in between the $400/month unemployment checks
we had to borrow $10k thru credit card advances and a "home improvement" loan. although if they're that deep in debt, they probably can't get any loan

your parents biligual skills can be valuable in your country


do a reverse mortgage?
 
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