Bankruptcy - Posted by Mark

Posted by Bud Branstetter on May 01, 2000 at 21:20:59:

Will they take a deed in lieu of foreclosure. It would be much more friendly to your credit than a bankruptcy. While they may not go for it it would be to your benefit to convince them that it is in their interest. The old story of no payments to them for how long/vacant versus getting started now. Without knowing more details of the financing and the properties I can’t suggest much in the way of getting new owners or renters that may be able to more fully fund it. They may even consider a write down if you presented it the right way. Even a personal note to pay some of it back. You have to make it in their interest to do something for you. Bankruptcy is usually not the best way. There are many statagies to go through it and emerge with credit cards and assets. Don’t do it blindly.

Bankruptcy - Posted by Mark

Posted by Mark on May 01, 2000 at 09:59:33:

I’ve gotten myself in so deep that I can’t get out. My accountant says that the best thing I can do is to file for bankruptcy. Does anyone have any advice or horror stories about bankruptcy for me.

Thanks,

mark

Re: Bankruptcy - Posted by StewNE

Posted by StewNE on May 01, 2000 at 14:18:03:

I know it may be painful, but it would be helpful to us newbies, if you tell us some mistakes that you made. Any words of advice, would be good also. Sorry to hear that you are sinking. Good luck in the future.

Yep… - Posted by soapymac

Posted by soapymac on May 01, 2000 at 10:51:07:

Been there, done that, and got the credit rating to prove it.

First, it depends on the source of your debts that is causing you to think about Bankruptcy. If the bills are as a result of a business failing, then I suppose that is a way out. I’m not trying to second-guess your accountant…I am not an accountant and I don’t want to step on toes here.

If those bills are caused by personal spending for “doodads,” (as Robert Kiyosaki calls them,) then you have another alternative you may want to look at. Check the Yellow Pages or the White Pages for an office of the Consumer Credit Counseling Service. They are a non-profit agency, funded by the United Way. They should be able to help you with the consumer debt.

There is one thing that I can not emphasize enough, however. If you go through the bankruptcy process, and you are relieved by the courts of paying those debts, WHAT DO YOU LEARN BY IT? If it is just a way to get out from under…and you DO NOT LEARN new habits, you will soon find your way back to the same spot.

No, I am not trying to back you into a wall here. I’ve walked this mile in my own mocassins and I will NOT do it again. Having walked that path personally, I would suggest:

  1. List each debt. Call each account. Explain your position. Work out a minimum payment AND STICK TO IT…even if it means going without the fast food eats.

  2. Organize each debt by the highest interest rate FIRST. Pay as much as you can on that, minimum pay the rest to keep them happy.

  3. When the first is paid off, take that money and ADD IT TO the second highest interest rate bill. Add this to the minimum payment until you get the second one paid off. As you pay off each bill, repeat the process.

  4. When you are talking with your creditors, explain that you have a plan IN PLACE, and you will be paying them THIS MUCH per month OR MORE. If they do not ALL “buy into the plan,” you will be forced into bankruptcy…and they will get NOTHING. (Strange, but do you realize what POWER this gives YOU?)

  5. Get a second…or, in my case, a third…job. You have to have money for investing, to increase your cash flow, to pay off these bills. Dedicate THIS money solely to acquiring assets that pay you for owning them (i.e., “flips,” “Lonnie’s,” tax certificates…whatever.)

  6. Easy? NOT BY A LONG SHOT!!! Took me better than five years. But sweet? Let me tell you this: my three children saw what their mom and dad had to go through (I did not hide any of this from them…I used it as a teaching tool.) None of them…I repeat…NONE OF THEM…will ever have to go through it on their own.

I’m stepping off my soapymac soapbox now.

Cordially,

Roy MacLean
"soapymac"

Already did it…NOW WHAT??? - Posted by Tom

Posted by Tom on May 02, 2000 at 13:43:15:

I went bankrupt in October. Mostly from medical bills but, some of it was for “Doo-Dads” I have changed jobs,moved to another state and the medical situation has resolved itself. I really want to buy a house and I just can’t seem to stomach 10%-12%. I am a veteran and can use my VA no money down loan in 3 years but, what can I do in the mean time? I thought about Land contracts but, will many people go for one with no money down?

I’m following closely behind your mocassins…in my flip flops! - Posted by SusanL.–FL

Posted by SusanL.–FL on May 02, 2000 at 11:00:24:

(GREAT post, Roy!)

I’m nearing four years (this August)…of gritting my teeth and finding ways to get thru a similar ordeal (as opposed to throwing in the towel and just giving up).

As you said, it’s TUFF going…never an easy moment…


When the smoke cleared and I could think more clearly, I discovered that there were MANY MANY opportunities and options available out there for people who decide to hang in there and pay off what we OWED everybody.

(At the time, I had just closed on a commercial property. I had nine mortgages, $62K in car payments ALONE!, about 4 credit cards maxed out, and every other conceivable bill imagineable!) This was just the beginning—cause with all the stress came medical problems and medical bills! Then the IRS. It seemed like no end in sight!! Husband played ‘ostrich with his head in the sand’…which didn’t help…


Eventually turned this ‘obstacle’ around into a ‘challenge’…

I WILL survive this and I WILL be stronger for having stuck it out.


A person needs to dig down into their ‘inner reserves’ and their inner strength. It is in there somewhere and it will help a person to survive.

Susan

Re: Yep… - Posted by mark

Posted by mark on May 01, 2000 at 12:21:36:

All of my debt is basically from the investing. I made alot of bad decisions and now I cannot pay back the mortgages. I already have a job. My account reccommended filing Chapter 7 in which I won’t have to pay back the loans, they will just get the properties back. He said that it will be on my credit report for 10 years and after that no one will ever know that I filed. So I will have to deal with it for 10 years, I think I can handle that. Did you file Chapter 11? Is that why you are paying back the debt ?

Yes You Can!!! - Posted by Scott

Posted by Scott on May 02, 2000 at 16:45:10:

Yes they will! The house I’m currently in was deeded in a land trust to me for TAKING OVER THE PAYMENTS! I have a past due water bill to pay, but they signed and handed over the keys - said to call when I got the house sold.

The key is finding a motivated seller. By that I mean someone who has the U Haul backed up to the porch and the stuff loaded ready to roll out of town. They are out of here and they will do anything you ask them to do. Memorize those last 9 words, they are your key to your next house.

Scott

Re: I’m following closely behind your mocassins…in my flip flops! - Posted by Laure

Posted by Laure on May 05, 2000 at 05:19:09:

You go Girl ! I have been fighting hard in another un-related business. I just, after 5 years of struggling, got a suit filed on me for the LAST DEBT ! I am discussing a plan with the attorney and hope to come to a resolution in May. WHEW ! I still entertain BK as this is a 35k suit, and I’ve already dumped all my cash into this business. It’s tough.

My situation has been completely out of my control too. Mostly credit problems that were created as the result of a 4 year tax audit and the expenses from fighting that. Thank goodness it’s a corporation !

Keep fighting. I am.

Laure :slight_smile:

A quick ‘P.S.’ - Posted by SusanL.–FL

Posted by SusanL.–FL on May 03, 2000 at 08:07:36:

I kept in constant touch with all of the creditors…and it paid off in two such instances.

One was the mortgage on my duplex. I was running consistently late (2-3) months on my mortgage payment but I let them know every step of the way ‘where I was at’ (new renters/repairing vandalism, when I’d be making my payment…whatever) and guess what! They never ONCE reported my account late (to the credit reporting agencies). That was a miracle.

The other instance where a bank worked with me—I had three loans on my commercial property (still do). The first mortgage ($60K) was due the first of the month. I asked the bank if they would move my due date from the 1st to the 5th (because my rent was always received after that date. I explained that I was having to pay a late fee every month because I didn’t have the funds to cover the mortgage b/4 my rent came in.

BAM! They changed is ‘just like THAT’!! Where most banks would want new paperwork drawn up so that they could gouge you for every possible nichel, these guys didn’t – for which I am STILL very grateful.

Re: Yep… - Posted by JohnBoy

Posted by JohnBoy on May 01, 2000 at 21:46:42:

One thing you need to check on is the tax liability. Even though you file BK and get the debt discharged on the mortgages you may face potential tax liabilities with Uncle Sam. If the lender ends up selling the property for a loss, they must 1099 you so they can deduct their losses. Then the IRS may tax you on the amount of those 1099’s where you would owe income tax on those amounts. Check with your accountant or a good tax attorney about this before filing.

You say you got in to deep from these investments. What is happening with the properties now? Is anyone occupying them or are they vacant? If occupied, are they paying? How far behind are you and what would it take to cure the loans? What are the property values vs. mortgage amounts owed? If you could give some more details on the situation then maybe someone can come up with a solution to help you out of this. After all, this site is full of investors that deal with this type of problem everyday!

You’ve already told us the problem, so what about giving more details on this and see if anyone here can help find a solution better for you?