CAN WE FILE chapter 7 ?

[vietnamvet]

What is the name of your state? Fl

we sold our house last june and have used whatever procedes for moving and living expenses since then. my wife hasn't been able to find much work. we left about 22000.00 worth of credit card debt after moving and we're starting to hear from these creditors now. recently, i received a check from the va for back disability for the past seven years that came to about 20 k. i used most of it to pay back a relative the money that was loaned to me over the past few years (about 16 k ). i have two questions...one, can i file chapter 7 now or do i still have to wait? number two, can my va and ss disability income be touched by creditors or bk trustees?
thanking you in advance....
vietnam vet

 

[Ladynred]

Your VA and disability are exempt.

Your problem now is the repayment to a relative - considered an 'insider' in BK terms. How long ago was this payoff to the relative ? Consult with an attorney, but I'd put at LEAST 6 months between that payoff and filing for BK.

 

[vietnamvet]

10 k was paid back in june of 03...but 6000.00 was paid in february of this year. how long should we wait before filing ?

 

[Ladynred]

The problem is that it was a pretty fair sum of money and it was a preferential payment to an insider. That can cause you lots of problems.

You really should talk to a BK lawyer about this one, that 6K is a lot of money you chose not to pay creditors but did pay a family member.

 

[vietnamvet]

thank you ladynred......we'll have to talk to a bk lawyer.

keep up the good work.....
vietnam vet

 

[nov99]

Alternative Solution

If you are unable to file for chapter 7 I may be able to off you an alternative solution. Debt settlement can be a good option for you without the severe effects of a chapter 7. Normally you can relieve yourself of the debt for about 55% of what you owe with a monthly payment that is comfortable.

 

[Ladynred]

Yeah.. right, and how much do YOU get out of that arrangement ??? Far too much I'll bet !

A 'paid collection' or 'settled for less than full amount' on your credit report will be just about as damaging as a bankruptcy.. and there is NO guarantee that the unpaid amount that remains won't be sold to some collection agency - which comes after you later - after adding more interest and fees. There's also the probability of getting sent a 1099-C - 'cancellation of debt income' for which you MIGHT end up paying taxes on.

Besides, 55% IS not all that great and there is NOTHING that any debt settlement scheme/company can do that you can't do for YOURSELF - and do it without paying somebody a hefty fee !!

 

[nov99]

I am not here to argue with you whether settlement is a better alternative then bankruptcy but since you asked…
When I stated that we would settle the debt for 55% that included my fees.
If you believe for one second that a settlement is as damaging to your credit as a bankruptcy you are severely misinformed. We have had clients in the past get a mortgage within one year of completing our program because of the significant positive effect on thir debt/income ratio.
And yes, it is true that you may receive a 1099C from your creditor. However, if you are familiar with tax law you would know that it is possible to write off the fees paid for our service. Or, if the taxpayer is insolvent, which is likely, there is no tax consequence whatsoever.
We are a legitimate company registered to do business in all states and listed with the BBB with a satisfactory rating. I do resent the fact that you call me a scheme so you can push your agenda on everybody to go bankrupt. There are other alternatives to people that are not all frauds.
This is an open forum for people to discuss possible solutions to their problems and all I was doing was offering an alternative

 

[Ladynred]

I do not have ANY kind of "agenda" to 'push' people into bankruptcy.

As for your assumption that I'm 'severely misinformed' on the effect of a 'settled for less than full amount' tradeline, YOU are the one who is, at the very least, misled.

I am VERY familiar with the FCRA and as familiar as any human can be with how credit scoring works. Any way you slice it, a 'settled' notation on a credit report is a NEGATIVE ENTRY, there is nothing positive about it and it WILL damage your scores. If you don't believe me, go hang out at www.creditboards.com or www.creditnet.com, or any number of similar sites where thousands of people work at repairing their credit on a daily basis.

To add to that, settling a debt will ADD to the time period that a bad debt is glued to your credit reports. The 'settled' date becomes the DOLA and you're stuck with that NEGATIVE 7 years more ! Yeah.. that's a real effective move - NOT !!

Mortgages a year after your "program" ?? Guess what -- people get mortgages in the same time frame after bankruptcies. All it takes is some attention to your credit reports and making sure that furnishers tow the line and the CRA's obey the FCRA. Combine that with careful credit rebuilding and you've got yourself in position for a mortgage.

To the 1099-C, I did say one MAY have to pay taxes on the forgiven debt, proving insolvency to the IRS is all it takes.

55% including your fees ?? Still NOT a good deal in my book. If *I* can settle a debt myself for 25-30%, why the heck should I pay ANYONE an ADDITIONAL 25-30% ??? Especially since *I* can and will negotiate for how the it is reported on my credit reports AND I can accomplish all of this with a few sheets of paper, some toner, stamps and a bit of certified mail charges. I save a LOT of money by NOT paying anyone else to do it for me- and only *I* will look out for my best interests.

The bottom line on these debt negotiation/settlement/ management/ elimination companies is that 90% - or more - are PURE SCAMS and cost people more money and grief than they ever help.

/end of input

 

[AttorneyOney]

To the OP: you will need to find a bankruptcy attorney to help you on this case. In some situations, it's possible to exempt TRACEABLE proceeds of exempt property. Your VA benefits were exempt, and your house probably was too (given that you're in FL). Some legal research and argument is going to be required to establish these exemptions for you, however.

The lookback period for payments to "insiders" is one year. The trustee can recover payments within that period under code section 547(b). The term "insider" includes relatives of the third degree: spouse, siblings, children, grandchildren, great-grandchildren, nieces and nephews, aunts and uncles, parents, grandparents, great-grandparents, and in-laws of any of those degrees.