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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31789
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My husband and I have been having financial difficulties for

Resolved Question:

My husband and I have been having financial difficulties for several years. He owns his own business and with the recession, his business has dropped a lot the last few years. In order to keep our bills paid, keep cars running and food on the table, we have run up credit cards and now are just deeper in debt. We are struggling each month to get our bills paid (but have done so thus far, but only paying minimums many times) and have used up all but $1500 in savings. I don't know how long we can keep this up and may be out of our savings by the end of this month. We owe about $88,000 on our house, $19,000 in loans, and about $58,000 in credit card debt. Some of our credit cards have had the available credit lowered by the CC companies already. My questions are: Should we just keep doing what we are and hope the economy improves? See if we qualify for bankruptcy and ruin our credit? Maybe look into Debt reduction companies? If we qualified for bankruptcy, what will happen to our possessions? We would also not want to lose our house. Please help.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 5 years ago.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney here to assist you.

Bankruptcy should certainly be a last resort. However, if you don't see any way that you would get out of this debt by paying it off, bankruptcy is certainly a good consideration. You're correct that bankruptcy will harm your credit for 7 years, and will make it much more difficult to borrow money, get lines of credit, etc. for at least that long. However, if you get to the point where creditors are closing your lines of credit/accounts, suing you for balances due, etc., your credit is going to be shot anyway.

If you want to fie bankruptcy, there are 2 real options - the first is a chapter 7, which is a complete liquidation of your assets to pay your debts. It is possible to keep your house if you are current on your loan. You can enter into a reaffirmation agreement with the lender that allows you to keep the debt and the property. You can usually do this with at least 1 vehicle as well. All other debts will be discharged if unsecured (no collateral); if there is collateral securing a debt, the collateral will be turned over to the creditor (unless you do a reaffirmation agreement), liquidated and applied to the debt owed. The remaining debt would be discharged through bankruptcy.

The second option is a chapter 13 bankruptcy, which is a debt reorganization. In this case, you can keep all of your assets, but you also have to pay all of your creditors. The way this is do-able is by extending loan terms, reducing interest rates and reducing monthly payments. If you have the cash flow to be able to afford a plan, that is a good option since you can keep your assets. Also, a chapter 13 doesn't look as bad on your credit as a chapter 7.
Customer: replied 5 years ago.
We hear all the time about these debt reduction programs. Is that something that is a real option or are those just a scam? Our other concern about bankruptcy is what will happen to our vehicles? We don't owe on any of them. I have a 2002 vehicle and my husband has a 1990 Bronco. However, he also has three carpet cleaning vans for his business. Two of them are regular vans and are 87 & 95 models. His third is an international box truck 97 I think. On the box truck, the title is in our name, but my brother in law lent us the money to buy and we still owe him.
Expert:  Roger replied 5 years ago.
Most companies that profess debt relief cannot perform a miracle. It is possible that they may reduce the debt somewhat, but the money you pay for the service usually makes up for any reduction you receive.

Usually, you can keep vehicles necessary for work, and you can claim the business vehicles as tools of the trade (usually).

I would recommend that you consult with a local bankruptcy attorney and see what is best for you.
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