U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 11-06-2016, 12:48 PM
 
Location: Paranoid State
13,047 posts, read 10,460,401 times
Reputation: 15684

Advertisements

Quote:
Originally Posted by HarryLou View Post
Thank you, everyone who responded.
Chapter 7 will not work for him. In his state, he would lose his home, which is worth more than the debt bankruptcy would discharge.
this is extreme, but perhaps he could relocate to, say, Florida. I believe in Florida, a person's principal residence can't be confiscated to pay debts during a bankruptcy.

https://www.alperlaw.com/asset-prote...ead-exemption/
Reply With Quote Quick reply to this message

 
Old 11-06-2016, 01:13 PM
 
143 posts, read 132,895 times
Reputation: 802
Quote:
Originally Posted by Gerrygal View Post
Been there, done that, too. I sold my house and used the equity to make payments to CCCS, which barely made a dent in my debt, leaving me with no recourse but to file for bankruptcy. Your brother should do the same. There is no shame in this.
That is the problem. There is no longer any shame.
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 01:21 PM
 
Location: Myrtle Creek, Oregon
12,293 posts, read 12,533,436 times
Reputation: 19526
Quote:
Originally Posted by MI-Roger View Post
In a very few cases they don't. Sears was famous for their Credit Cards actually being Revolving Lines of Credit years ago, maybe they still are. From what I was told decades ago when taking a Personal Finance class as an Undergrad the difference is that with Sears, until you paid off all debt and reset the account, nothing purchased since the last 'reset' was fully paid for, and all these items could be repossessed.

Houses are sometimes, maybe often, exempted as the goal is not to make people homeless. But the courts know that a person/couple does not need a $700K McMansion to live in and a $1k/month rental will work just fine. Cars within reason (such as a single car of modest value and in driveable condition) are likewise often exempted since the owners will need one vehicle to maintain employment and to access grocery stores.

CAUTION!!!!! Be sure he knows that he will owe taxes on all forgiven debt as it is considered income. My MIL had $9k of credit card debt forgiven, never reported it to her tax preparer (me) or any other family member, and is now on a payment plan with the IRS. Debt discharged via Bankruptcy is not taxable.
Only the principle is forgiven debt. The interest and penalties are not. They may 1099 the whole amount, but just keep records. Since the majority of credit card arrearage is interest and penalties, it's probably not a big deal. This is probably a little over the head of the typical tax preparer.
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 01:38 PM
 
Location: Central Massachusetts
4,800 posts, read 4,856,396 times
Reputation: 6379
Quote:
Originally Posted by bobandsherry View Post
Sorry, you are wrong. More than likely they have already set aside a reserve and would offset against that - no reduction of income or tax benefit. Do your research, look for "loan loss provision" for financial institutions.
No I am right.

What Happens When a Bank Writes Off a Bad Debt? | Chron.com

Quote:
Write-offs
In a write-off, the bank includes a bad debt as an uncollectible loss on its tax return. This write-off is also called a "charge-off." The write-off reduces the bank's earnings and thereby reduces its taxable income. This accounting procedure may reduce the bank's overall tax liability, which is the goal of a write-off. The designation of the debt as uncollectible doesn't mean the bank will never collect on it -- just that it hasn't been able to collect on it until that point.
It is like this for any business. I had write-offs when a customer refused to pay for the manufactured goods I shipped them. There are things we do to try to mitigate it but I know that if you are faced with an uncollectible debt. It is in schedule C of the 1040 tax form.

https://www.1040.com/tax-guide/taxes...of-schedule-c/
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 01:44 PM
 
9,151 posts, read 7,226,505 times
Reputation: 13848
Quote:
Originally Posted by SportyandMisty View Post
this is extreme, but perhaps he could relocate to, say, Florida. I believe in Florida, a person's principal residence can't be confiscated to pay debts during a bankruptcy.

https://www.alperlaw.com/asset-prote...ead-exemption/
I believe Texas is too. I don't know of any others.
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 03:20 PM
 
Location: Backwoods of Maine
7,118 posts, read 8,167,139 times
Reputation: 18774
However this is resolved, he should put a freeze on his credit at all 3 bureaus.

If he does not, there will be "pre-approved" credit offers in his mailbox before the ink is dry on the bankruptcy papers. That's how badly these CC companies want us all in debt. They know you can only file bankruptcy every 10 years....and 10 years worth of interest is too good a deal to pass up.

And for those of you tossing around the word "shame"....what applies to a 30-yo should not be applied to a mid-70-yo. For gosh sakes, use some sense. There's nothing sadder than someone with only another 5 to 10 years to live, to spend those few years suffering, trying to pay off the impossible.

The fact that the CC companies would issue this man CC offers again in a heartbeat, should tell you how much "shame" they see in it. It's just good business to them, and there's another 5 to 10 years worth of interest they figure, they can get outta this guy. Freeze his credit.

CC companies are all EVIL. Thankfully, I never had to deal with one!
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 08:13 PM
 
1,314 posts, read 1,025,197 times
Reputation: 3398
Bankruptcy is his only option, aside from just ignoring the whole situation and letting them chase him down.
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 09:02 PM
 
Location: Metropolis IL
1,603 posts, read 1,896,091 times
Reputation: 2352
Quote:
Originally Posted by arwenmark View Post
Because if you just let it ride, the companies will eventually write it off, at which point the IRS steps in and you then owe taxes on the "forgiven" monies. It can be a lot, and they can attach your SS which other creditors cannot.
IF you file for and are granted Bankruptcy the debt is forgiven but the IRS does NOT tax you on the amounts forgiven.
What you're referring to is a 1099C. Once the creditor issues one, they can't sell the debt to a debt buyer, which is the usual practice in the industry. 1099C's are often used as a threat by debt collectors. In reality they aren't issued in great numbers, unless there's an underlying reason that satisfies a particular creditor's business model.
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 09:17 PM
 
Location: Metropolis IL
1,603 posts, read 1,896,091 times
Reputation: 2352
Quote:
Originally Posted by yellowsnow View Post
File for bankruptcy then get a Social Worker to help him file for benefits.
And what might those benefits be? He's in his 70's, and living on SS. Are you stating that seniors who file bankruptcy, are entitled to enhanced government benefits of some sort?
Reply With Quote Quick reply to this message
 
Old 11-06-2016, 09:22 PM
 
Location: Metropolis IL
1,603 posts, read 1,896,091 times
Reputation: 2352
Quote:
Originally Posted by LillyLillyLilly View Post
I had some relatives (by marriage) who used to do this. They were in their 20's and 30's too. They would get credit cards and run them up. Then a few months before the bankruptcy they would get furniture from a store that gave them X months or years without payment or interest, new electronics the same way, etc. etc. etc. Then they'd file and get all that stuff for free.

They did this every 6 or 7 years, so always had new furniture and stuff.

I'm no longer in touch with them but wonder how they're doing now that the bankruptcy laws have tightened.
I'm sure this is done by some folks, but there's a lot of pain in that 7 years, before they can hit the reset button. They don't tell you that part.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top