I'm fast approaching that sink or swim decision, and I'm getting all kinds of advice in favor of bankruptcy. But I'm not fully trusting my attorney's advice, because I feel like he's trying to sell me something: bankruptcy. Where can I get an objective view of the harm (side effects?) of bankruptcy?
Of course any bankruptcy attorney will try to sell you on bankruptcy - their fees. The negative aspects of bankruptcy are that the creditors entries will stay on your CRs for seven years, and the public record for ten years. Big name creditors such as Amex, Citi, Chase, Bank of America and others will possibly never approve you for anything. Unless you now have A secure job until you retire you might have difficulties landing a position since most employers now check credit reports before they hire anyone. If your state allows insurance companies to profile, bad credit/bankruptcy might result in significantly higher insurance premiums for both - car and homeowner's insurance - if you're looking for a new insurance carrier and don't stick with your established one. These are the negative aspects of bankruptcy. On the flipside - you will be debt free if you qualify for a Chapter 7 and your debts get discharged.
Before you make your decision check out bkforum.com. Learn from folks that have been there and done that.
Not only does the public record stay for 10 years, but the bankruptcy stays forever on a "full factual" report, which can be pulled for mortgages over $150K and employment with a salary of over $75K. Something to think about down the pike.
Actually, I'm self employed. At 44 years old, I've never had a permanent full time job, and won't know how to look for one. Ten years ago I grossed six figures. In 2008 I made less than 10k. I have no revenue to fund any promotions, and I can no longer borrow. I do have a business property, which if I can sell will pay off all my debts. I could keep doing what I do from my basement at home. But potential commercial real estate buyers are just kicking the tires and waiting for me to go into foreclosure. So here's the big Q: Is it worth going into bankruptcy to save my property from foreclosure? I'm currently asking $280k for the propertyâ??down from $325, which is the where comparables were last summerâ?? and I owe $183k on the mortgage. I have about $60k in unsecured debt. My life savings is in this equity.
I went through chapter 7 in 1997; subsequently I was able to get new unsecured cards and/or mortgage and car loans from every lender except Amex who I stiffed in my BK. I see no reason not to try and save the property, I doubt anybody is willing to loan you money right now anyway!
Amex is also one of those hardassed crooks who never again will give you credit even if you didn't stiff them. Chase, Citi, and BofA belong in the same pile. I burned them in my 2004 filing.
I was actually able to get unsecured credit again from all three of those you mentioned, once I got all the derogs off my credit report. I disputed the public record of my BK and got that off after about 4-5 years, and I got most of the cards off around the same timeframe. Not sure it is possible now, the credit bureaus seem to have made it a lot harder.
As long as you can put together a chapter 13 plan that shows you can make the mortgage payments, you should be good to go. You should be able to discharge the unsecured debt fairly easily, you probably want to show that the proceeds of the sale of the property minus the note is as little as possible, hopefully falls under an exemption.
