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Time to "clear" bankruptcy vs. weight of debt

Collegestudent2017
Regular Contributor

Time to "clear" bankruptcy vs. weight of debt

My Fico Community,

 

I am posting for someone close to me whom I have seen run into financial turmoil - seperation, business failure, medical bills.  I myself was able to settle my debt, but the individual I am posting for is far past that point -- in fact most debts are outside of the statute of limitations.  Untimately, my own past financial turmoil stemmed from this individuals business failure.  

 

This individual who is a family member has over $200,000 in unsecured debt also owes a family member $72,000.  (my thought is the 72k can be written off for the family member owed and he can get a tax credit).  

 

At the present moment his car is at jeopardy of being reposessed (4 months behind -- PenFed).  He is having a major surgery and will be out of work, utility bills pass due -- but ultimately is boggled down physically and mentally with debt, not being able to "get ahead" and buy a home.

 

He is 50 years old.  Should he be considering bankruptcy? I want to reccomend it, but ultimately most debts ARE PAST SOL. He has been sued for $13K owed to Capital One and a judgement has been placed (2 years ago), and this is the only debt he was sued for. 

 

I dont want to reccomend bk if its not ideal given most will be falling off his reports... any suggestions? I am struggling with seing someone I care about suffer due to finances and really his ability to "rebound" in 2 years or so without BK.  However, I DO KNOW that BK would stop the reposession, GIVE PEACE OF MIND, etc...  Any thoughts? 

 

 

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3 REPLIES 3
FireMedic1
Super Contributor

Re: Time to "clear" bankruptcy vs. weight of debt

If they are that much in debt. They must make much more than the means test to file a Chapter 7. So it would be a 13 and payback time. Consult with a few lawyers and see what options they have. Were not lawyers.Only post from past experiences. Tough call.





Homeowner since Sept 2020. My posts are JMHO. My siggy is not to brag. Just sharing my experiences after BK from learning here from rebuild to recovery from the @ 540's.
Message 2 of 4
AnnadownSouth
New Member

Re: Time to "clear" bankruptcy vs. weight of debt

This is a really tough call since he is hoping to buy a house in the near future.   With a BRY, there is a 2 year wait for FHA and 4 yrs for conventional loan.   It is possible to get an FHA sooner than 2 years, but a hefty down payment would be required which most post-BRY filers wouldn't have.    

 

On the other hand,  he/she doesn't need any added stress with surgery coming up, and being sued is certainly a stressor.  IMO, worse than BRY.    

Message 3 of 4
sccredit
Valued Contributor

Re: Time to "clear" bankruptcy vs. weight of debt


@FireMedic1 wrote:

If they are that much in debt. They must make much more than the means test to file a Chapter 7. So it would be a 13 and payback time. Consult with a few lawyers and see what options they have. Were not lawyers.Only post from past experiences. Tough call.


If they debt is majority business related (I don't know if it is) then the means test doesn't have the same effect. It is a "Non Consumer" Chapter 7. 

Ch 7 Discharge 3/12/2018
Cap One VentureX $30,000, CapOne Savor $5,300, Kohls $3,000, Comenity MC $4,900

California Coast CU Auto Loan $36k 2.48%
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