QUESTION
Do we settle with a credit card company or declare bankruptcy when selling our home?
Asked on May 08th, 2013 on Bankruptcy - Montana
More details to this question:
My 88 and 89-year-old parents have $98k in credit card debt and about $60k in equity in their home. We just put them in assisted living and need as much money as possible to afford their living expenses. Their retirement is $2500/mo and we are applying for VA help as my father is a WWII veteran, but the cost of assisted living is high! What is our best option to get as much money for them...bankruptcy or try to settle with credit card holders? The biggest credit card debt is with the bank that holds their equity loan. If we sell their house after bankruptcy how much of the equity do we keep?
8 ANSWERS
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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Are you in Austin or nearby area? If so, you should see an Austin bankruptcy lawyer before proceeding with the sale of the home. The best estate planning you could do for them might be to file bankruptcy and then sell the home. The availability of the homestead exemption might be clouded by the fact that they are now residing in assisted living. Proceed cautiously.
Answered on May 14th, 2013 at 6:28 AM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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It really depends on many factors. Don't forget that there will be tax consequences if any debt is forgiven outside bankruptcy. You might want to investigate bankruptcy as part of the overall picture.
Answered on May 10th, 2013 at 11:00 AM
You can keep the equity in your house and still get rid of the debt you should consult with a bankruptcy attorney as soon as possible.
Answered on May 10th, 2013 at 7:07 AM
Deborah F. Bowinski
Your parents need to speak with a bankruptcy attorney. The question of how much equity they can keep when filing bankruptcy is a matter of where they live since the exemption laws vary significantly from state to state.
Answered on May 10th, 2013 at 6:54 AM
Debt Settlement Attorney serving Chicago, IL
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Law Offices of Daniel J. Winter
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There are several complicated factors in making this decision. Chapter 7 Bankruptcy in Illinois only allows $15,000.00 worth of equity in a house to protect. You should bring your parents to an experienced Bankruptcy attorney to discuss your options.
Answered on May 10th, 2013 at 6:28 AM
Personal Injury Attorney serving Glendale, CA
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JT Legal Group
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Talk to a bankruptcy counsel ASAP! All of us give free consultations. It sounds like a Chapter 7 is perfect for you guys and you can protect the full equity in the home if done right.
Answered on May 09th, 2013 at 4:02 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Bankruptcy would be best to keep most if not all of the equity, but more information needs to be provided. Settling with credit cards is at best a fiction and requires cash. A settlement may result in imputed income which then be taxed.
Answered on May 09th, 2013 at 4:01 PM
Corporate Law Attorney serving Billings, MT
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Oliver & Associates, P.C.
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I would sell the home as soon as possible and, if pressed by a creditor, negotiate with the creditor. If any creditor has a judgment it will be paid at the time the home is sold. Only negotiate with a creditor if they are going to get a judgment. If they get a judgment, they can execute against the bank account that has the proceeds of the sale.
Answered on May 09th, 2013 at 4:00 PM