Hello, and thank you for contacting Just Answer. My name isXXXXX am an employment law professional and I look forward to answering your questions this afternoon.
First, let me say how sorry I am to hear that your husband's business is struggling. I know that in the current economy, it is often difficult for people to make ends meet, and I am sorry that your family is having a hard time. So that I understand the situation better, when you say that your husband's only income is social security, does that mean that the business is not paying him anything? Presumably the business is losing money?
that is right
Ok, thank you for confirming my understanding of the situation. With the sba home loan, how much equity do you have in the home? Also, how much credit card debt are we talking about?
credit card debt over $30,000 i am not sure about equity in home. as stated before, home has been paid for for several years. i know i am not giving you a lot to work with--but i have just gotten very nervous and upset and dont know what kind of options we have. i guess i am just mainly afraid of losing our house of 20 plus years forgive me
No forgiveness needed, you have provided plenty of information, and I just want to make sure I understand your question fully before I present legal issues that you could consider. I can understand why you would be upset, debt that high is upsetting and stressful, both normal responses to the situation.
thank you i guess i just need a starting point. what do we do
I understand. Now, ultimately, where debt is concerned, if the business does not look like it is going to improve, then rather than employment law, we are talking more about bankruptcy law. Unfortunately, there are not many mechanisms in the law to deal with debt, other than paying them, working out deals with creditors, or looking at bankruptcy.
Although it can seem like trying to walk away from debt, sometimes looking at bankruptcy is the right thing to do. There are generally two types of bankruptcy that an individual would look at, chapter 7 and chapter 13, or that the business would look at, chapter 11. Depending on the type of bankruptcy filed, often a person's home can be protected.
since it is a business related issue should both partners have sit down with a corporate bankruptcy lawyer and if so--does that need to be done after personal income and business tax returns have been done?
That is a good question. In terms of the business, yes, sitting down with a bankruptcy attorney who handles corporate winding down or reorganization through the bankruptcy code would be a good idea for both partners. However, because it sounds like much of the debt is personal debt, an individual bankruptcy may be what is needed (either a chapter 7 discharge of the debt, or a chapter 13 repayment plan). There are pros and cons to each approach, but based on the information provided, you are probably at the point that sitting down with an attorney in person is the prudent thing to do.
Depending on how much equity you have in the home, and how important it is to you that you keep the home, will be part of deciding between a chapter 7 bankruptcy, where the debt is completely discharged after selling any non-exempt property the debtor owns, and a chapter 13 bankruptcy, where the debtor agrees to pay back a portion of the debt owed over a 3-5 year period.
Sitting down with a bankruptcy attorney in person can help you determine which is the proper course based on the details of your debt.
after taxes have been done? and if so, what paperwork do we need to take with us to make process easier? we are just small town common folks. this is all very overwhelming and for 30 plus years, company has survived. what does non exempt property mean?
All good questions, and don't count out small town common folks, you are keeping up just fine. Ultimately, if your income has been low for a while, it may not be necessary to wait until after this last years tax return. Tax returns for the last few years are one of the documents that a bankruptcy attorney will need from you, but there is nothing wrong with sitting down with an attorney prior to filing the most recent return, and based on what they see, they can determine whether or not it is worth waiting for filing the 2012 return. Documents to take in to a bankruptcy attorney are last 3 years tax returns, last 6 months bank statements, profit/loss reports from the business to show that it has not generated income, as well as your mortgage documents and most recent mortgage statement, and most recent bill from each creditor that you have. Generally, if there is something missing that they need, the attorney can tell you and you can mail/fax or drop it off.
Once you have reviewed all of this with your bankruptcy attorney, they should be able to help you determine which chapter under the bankruptcy code you would file under (as I explained above there are different types of bankruptcy with different pros and cons).
and what is tax exempt property and what happens at end of 3-5 years if you have not been able to pay all debt?
What I mean by "exempt" property (not tax exempt) is property that, in a chapter 7 bankruptcy, the bankruptcy trustee (person in charge of administering a bankruptcy) cannot seize to sell and pay creditors. For example, a bankruptcy debtor can protect up to $3500 of value in a vehicle without risk of seizure by a bankruptcy trustee (very rarely does a trustee go after a car unless it is very valuable).
In a chapter 13 bankruptcy, where you are repaying a portion of the debt over time, the plan is based on your current income and ability to pay, and any amount not included in the plan is not paid after the end of the repayment plan. Generally the plan is set up to allow you to repay as much as you can while still being able to pay for basic life necessities. This 3-5 year plan is only in the chapter 13 repayment bankruptcy, and will be one of the options that you can discuss with a bankruptcy attorney in person.
i see. i guess i feel somewhat better. knowing what to take to be prepared and understanding the difference in 7 vs 13. are there any other suggestions you might have for me, other than a lot of prayer. this is just something i never thought would happen to us. any more info will be appreciated
I don't think so, that is a good starting place. I can certainly sympathize with how you feel, I don't think anyone plans on being in a place where they have to talk about bankruptcy. The best I can do, now that you have some basic information, is to encourage you to sit down with a bankruptcy attorney in person to review your options under the bankruptcy code.
I hope this chat has been helpful and let me know if you have any additional questions or need clarification. Otherwise, please remember to RATE my answer positively so that I can receive credit for my work.
i guess i knew that was the answer. just needed someone removed from the situation to verify for me. i shall give you very smiley face for excellent service
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