I got a loan from someone I know for $5,000 and the contract we signed says I pay $6,000 back over the course of 18 months at 335 per month. The problem is the idea that the loan was for didn't go as planned and it failed. I have no income currently so it is going to be difficult to pay him that per month. (I am only 20 years old in college). Other than filing bankruptcy is there anything I can do? Filing bankruptcy over a $5,000 loan seems not realistic but I can't see myself being able to make the payments every time for 18 months straight. He has penalties written in the contract if i miss a payment too.
Also not even sure if filing bankruptcy would affect this agreement although I am guessing it would?
Depending upon the usury laws in Florida, you may only owe the $5,000.00 and possibly, you may owe $0.00.
You can discharge the debt in a chapter 7 and get a fresh start. However, as you stated, filing bankruptcy to discharge $5,000 or $6,000 in debt would be stretch. However, if the fees and costs of the not get the debt up over $10,000.00, then you may have no other option.
The best way to answer your question is to take advantage of a free initial consultation with an experienced debt collection attorney and bankruptcy attorney that handles chapter 7 and chapter 13 cases even if you think you need to file under chapter 7. Become educated on all the issues involved and related to your current economic situation, find out the advantages and disadvantages for filing under each chapter and use an attorney that can help you make the right decision for you, and also find out if you have other ways to resolve this under state law. Most bankruptcy and debt collection attorneys will meet with you at no charge for the initial appointment. You can use the Avvo "Find a Lawyer" link at the top of this page to search for an attorney.
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I agree that filing bankruptcy at your age and over this amount is not the answer. Go to the lender and work out another arrangement. Get busy finding employment.
Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.
Bankruptcy affects most agreements, but like you said, a single $5,000 debt is usually not worth bankruptcy. You can try to change the terms of the agreement if the other side is willing. For them to collect, they would have to take you to court and then wait to see what they get in garnishing your paychecks, etc. If you can get your hands on half the money, they might take it. They might agree to take lower monthly payments.
The dialogue on this website does not constitute legal advice nor does it form any sort of attorney-client relationship.
Talk to an attorney. These type of situations can usually be resolved by writing a new agreement for lower monthly payments. If it is an individual, they are more likely to work out an agreement and avoid all the legal fees and court action that would be needed to collect on the debt.
Bankruptcy will likely resolve this issue but it's best to exercise this option only as a last resort.
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The other attorneys are all correct. You can always file the bankruptcy. Almost always with debts & bankruptcy you want to be reactive, not proactive. See if your friend will work with you. He cannot do anything to you absent a lawsuit & eventual judgment, which he probably could eventually obtain, but lawsuits are labor-intensive, especially if you are not a lawyer. Bankruptcy in your circumstance should be a last resort. Take comfort that is always available to you - if you must file.
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