He is retired with a federal pension of $34,000 a year; after life, health and dental insurance are deducted, he ends up with $1970 going into his bank account. He owes 195,000 7.5% fixed-rate mortgage on a house that the city thinks is worth $318,000, but whose present market value is probably much less, not to mention whether a qualified buyer can be found. He has very little savings left; was trying to build an online retail business that now grosses about $40 a day, might improve a bit. He has $55,000 in credit card debt. His son wants to buy the business for about $9,000, with promissory note, payable out of sales revenues over 18 months. He is trying to find paid employment now, but has not yet succeeded. QUESTIONS: 1. Is he a candidate for bankruptcy, and if so, what kind? 2. Will sale of business to son be a problem if he later declares bankruptcy? 3. If he cannot or does not declare bankruptcy, what will happen when he begins defaulting on credit card payments? 4. Is there any way of accessing his equity in the house to pay his bills and debts, short of selling the house?
THE $1970 going into the bank account is a MONTHLY amount!
Not enough information. Whose name is the house in? What is the real market value, that is, what would it sell for today, without being painted or otherwise fixed up in any way? When was the credit card debt incurred, what was it used for? How much is the monthly mortgage payment? How much does he have left after paying his living expenses, not counting the credit cards, each month? Any sale of property on the eve of bankruptcy raises red flags. Not sure what will happen with credit card defaults, there could be calls, letters, lawsuits, judgments, then garnishments. He could borrow against the house, but probably not qualified based on the facts you present.
1 lawyer agrees