Bankruptcy can probably solve some of your problems. It is questionable whether it can solve all of your problems. It would appear from your question that you have $60,000.00 in credit card debt in your wife’s name. I suspect that most, if not all, of this debt is dischargeable in bankruptcy. The other debt is a little more problematic, and I would suggest that you and your wife contact my office (978-459-8359) and come talk to me about it. However, even if we can only make $60,000.00 go away, that would probably be a good sized help. In terms of assets, your IRA’s are certainly exempt, meaning the Trustee in Bankruptcy cannot touch them, no matter whose name they are in. It is unclear to me what you mean by “annuities”. If you are talking about a union pension annuity, then you are again talking about an exempt asset. If you are talking about products that insurance sales people might sell, then it becomes a little more complicated, and we can discuss it when you see me. As the credit card debt stands in your wife’s name alone, it is possible for your wife to file bankruptcy without you. As a result, those assets which are truly yours will not be at risk. The problem, of course, is determining whether these assets are truly yours alone. Again, whether or not the assets which stand in your name would be safe depends on the specific facts of your case, so this is also an issue which we would need to discuss. These issues are not really appropriate for a blog of this nature. Your case is more complicated than most, but I believe we can probably help you.    « less

I have a hard time accepting that there are any bankruptcy lawyers who would file a Chapter 7 petition in which they have not been paid in full. The point of the payment plan is to come up with an arrangement such that a person in financial distress can afford to file bankruptcy. It is often the case that people filing Bankruptcy do not have money in the bank. Similarly, people in financial distress will have some difficulty saving money, even after the decision not to pay the credit cards but instead to file bankruptcy has been made. The payment plan allows the client to give to the lawyer some or all of the money which might otherwise have gone to the credit cards, and thus pay off the legal fee in a manner whch does not disrupt the life of the clientl. Once the client has entered into a payment plan, then it becomes important to do things to keep the creditors from harassing the client, and otherwise to stop the client's situation from getting worse during the course of the payment plan. For example, we instruct our clients that when the creditors call, to have the creditors contat us so that we can verify that there will be a bankruptcy petition in the near future. This will generally keep the phones from ringing for several months, while the client makes the payment. I believe that a lawyer should be able to defeat the discharge of the attorney's fee, but not without putting himself in a very awkward position. What is more, he would now need to sue a client and try to collect money in state court, having just represented in Bankruptcy Court that the client is insolvent. This is why I have a hard time accepting that any experienced bankruptcy lawyer would allow this to happen.    « less

401(K)s and most other retirement plans are exempt assets and thus completely safe in Bankruptcy. The rules on college 529s are quite complicated. My suggestion would be that you come in with the specifics of your 529 contributions. In principal, only small amounts of contributions made recently would be exempt, ever larger amounts would be exempt as the contributions are made further in further in the past.   « less

The primary function of Bankruptcy is that it "wipes the slate clean" and gives people a fresh start. After Bankruptcy, people who might otherwise never be able to pay off their bills on their own can move on with their lives, rebuild their credit, work, save, and invest. At 80, getting this fresh start may not be so important. One advantage Bankruptcy may offer you is that it gets your creditors off your back. I do not know if they are calling your or not. I do not know if any of them have taken you to court. I do not know how much these things may be annoying to you. There is a peace of mind that comes from knowing that your creditors will not call you any more, and that you will never have to go to court again.    « less

My experience has been that credit counseling is usually not very helpful, and will almost certainly not work in your case. The basic problem with credit counseling in all caess is that it is voluntary. As a result, if a credit card or two chooses not to cooperate, then your arrangement will fail in the end. It may take a year or two, but you then wind up in bankruptcy any way. What is more, as it is voluntary, it is questionable how much help a credit cousnelor can really be. Finally, I am uncertain what the advantage is. If you do not pay your bills in full and on time, you ruin your credit. If you are involved with credit counseling for a period of years, then it is a period of years before you can even begin a rebuild. At least with bankruptcy, the process is quick and you can start rebuilding from here . In your case, I have little doubt credit counseling will fail. First, you and your husband have suffered a significant drop in income. Your regular expenses have almost certainly not decreased much. As a result, there is unlikely to be income to support a repayment plan. Soon you will divorce. Your expense will then rise as you are supporting two households. This will destroy whatever arrangement you are now able to make. Finally, the two of you, as divorce spouses, will need to work together to complete a plan that has been made for the two of you as a married couple. Very rarely does such an arrangement work over any period of time. It may work at first, but not for a very long time. A joint bankruptcy filing in advance of a divorce has two advantages over filing later. First, as it is a single petition, the fee for married couple is only $20 higher than the fee for an individual. Once divorced, it is two separate petitions, with two separate fees. Second, by getting rid of the debt before filing for divorce, it gives you one less thing to fight about in the divorce. There is no longer any dept to divide up. There is also an interesting advantage to filing bankruptcy before you separate. Financial distress in an important cause of marital distress. I have seen cases where getting rid of the debt has made the other problems in the marriage more manageable, and thus the impending divorce did not happen. That is the exception, not the rule, but it happens.   « less

Most retirement plans including 401 (K) plans, are exempt assets in Bankruptcy. Therefore, I am uncertain what you did to allow the Trustee to get his hands on your 401(K) money. Bankruptcy is a very technical area of law. The Bankruptcy Court is a very dangerous place for “do it yourselfers”. Although I am uncertain as to how the Trustee got his hands on our 401(K) money, now that they are there, the rest of what you have described is probably o.k. The Trustee’s ten percent is in the nature of a commission. In addition, the Trustee is allowed to bill for his expenses. The expenses unambiguously include the C.P.A. What is more, the Trustee is allowed to hire a lawyer to represent the interests of the Trustee. It would appear from your question that the Trustee has hired his own law firm to represent him. While I also question the propriety of this, it is nevertheless well established to be legal.    « less

Usually. Obviously, you will need to continue making payments on your Mortgage and your car loans. After that the question becomes one of how much equity do you have in the property. In Massachusetts, it is possible for people to protect as much as $500,000.00 of equity in their home. In addition, it is possible to exempt a fair amount of equity in a vehicle. Cars tend not to be a problem as people commonly owe more on the car than the car is worth. Those cars which are paid off are usually not worth very much. As a result, it is very rare that we would have problems taking a house or a car through bankruptcy, unless the problem is with the mortgage or the car payment itself. Every case turns on it owns facts. I do not keep statistics on such things, but I have little doubt that I have successfully taken hundreds of homes and well over a thousand vehicles through bankruptcy without problem.    « less

I give a free initial consultation to anyone who contacts my office. My number is (978) 459-8359. If I cannot see you the same day that you call, I can almost certainly see you the next day or soon thereafter. It would be good if you brought with you your paystubs and a list of people you owe money, including names, addresses, account numbers, and total amounts owed. It would be a good idea to bring your last two years tax forms with you as well. It is not necessary that all this information be brought to an initial consultation, but obviously the more information I have, the better I can advise you. If I am understanding your question correctly, you are telling me that you can pay your debt, you can pay your mortgage, but you cannot pay both. If this is a correct interpretation of your question, then you maybe a candidate for what is known as a Chapter 13 Bankruptcy. In Chapter 13, you would start paying your mortgage again once we file. We would reorganize the mortgage arrears (the four months that you have not paid) so that you would repay this amount monthly over the next three to five years, depending upon what you can afford. For example, if you are behind $6,000.00, you may contribute $100.00 per month for five years toward repaying that $6,000.00. We will then take that $32,000.00 in what I will assume is credit card or other unsecured debt, and probably reduce that. I will assume that, other than the house, you have no significant assets, and that you and your unemployed husband are not high income. In that scenario, I would envision giving your unsecured creditors ten cents on the dollar, or $3,200.00. If we spread that out over five years, that would add a little over $50.00 per month to the plan. There are some administrative costs involved with this, but using my example you would pay approximately $170.00 a month for five years. At the end of five years you would be current on your mortgage, and your $32,000.00 in debt would be discharged. Obviously, a change in any of my assumptions changes my answer. Also, there may be facts of which I am not aware, which would change my answer.    « less

I am asked this question frequently, and I always advise my clients to speak with a college financial aid officer. However, I also tell my clients, and have not been contradicted on this yet, that in my experience the impact on financial aid is minimal at worst. Keep in mind, financial aid is generally need based, and therefore the worse off you are financially, the greater your entitlement to financial aid. As a result, creditworthiness should not be a criterion. In fact, the reason the guaranteed student loans come with a government guarantee is specifically because the banks would often times not make the loans as the people are not creditworthy. The proof of this fact is in your question. You have asked about the ability of your daughter, who is a high school student, to qualify for a loan in her own name. The fact that a high school student is even receiving a loan tells us that credit is not an issue, as she has none. Your bankruptcy will not affect her credit in any event. Although it ought not to have an impact on your or her ability to get financial aid, it may have an impact upon your ability to take a out a personal loan, as opposed to a guaranteed student loan, for the purpose of financing her education. But even there, where you already have a lot of debt, you may find that it is easier to get the personal loan after the bankruptcy than it is now.    « less

I would urge you to contact my office so that we can get a little more detail regarding your situation. I am going to assume that your debt is quite old and quite high. You have certainly indicated that you are in a mess. My experience has been that it is much easier to rebuild credit out of bankruptcy than it is out of a mess. You have indicated that you want to “buy a home some day”. To get a conventional mortgage, it is necessary that you be two years post discharge. For a Chapter 7, that is about two and a half years after you file. Obviously, you need to have sufficient income and everything else to justify the mortgage, but the bankruptcy is only blocking you for those two and a half years. As you already have bad credit and bills you cannot pay, it is unlikely that you have any other option which will get you back on your feet, or restore your credit, as quickly or as easily.    « less