[merika]

My cousin was a well-respected banker. He's in his 40s, never married. He was a very nice guy, except for one vice - he gambled. And he gambled hard.

In my culture, gambling is rather strongly frowned upon. There is no concept of "recreational gambling" at all, and so my cousin kept his activities under wraps. No-one knew where he went on his frequent weekend absences, and only now do we know that he'd been going to the casinos.

He lost his job, but he kept on gambling...I'm not even sure if he lost his job because of gambling. He apparently gambled away all his savings, took a second mortgage on his house, took large cash advances on his CCs and is in debt to the tune of a couple hundred thousand dollars.

Now he's filed for bankruptcy...and so the family is worried. He doesn't talk to anyone about it, but the whole family has a pall of gloom hanging over their heads.

Since I don't know much about bankruptcy or why one would file for bankruptcy - could someone enlighten me about it? I assume becoming bankrupt would totally ruin your credit, but are there any other legal /financial repercussions?

Thanks!!

[wantmore]

If I'm correct.....there is what's called Chapter 11 where your unsecured credit is totally wiped out and there is Chapter 13 where it's only a matter organization of your finances and you still pay your debts. Chapter 11 is mostly done by individulas, while Chapter 13 is usually done by companies.

DH is in Finance, he's also a CPA. When he applies for a job, his credit is also checked, since he predominantly invests $$. As a banker, I think your cousin may also be subjected to a credit check and a bankruptcy appears on the credit reports.

[merika]

I suppose it'll come up if he's trying to get a job again. I wonder if it will be regarded as a serious negative especially in his profession, since it is one that handles $$.

[Litigatrix]

I understand that it is actually not impossible to get credit soon after having a discharge in bankruptcy, because you can only get a discharge every seven years. Creditors may be more nervous when it is closer to seven years passing since a previous discharge.

I also know that in I think 2005, but the last couple years at least, more safeguards have been put in to keep people from filing bankruptcy who do have the capacity to pay their debts (basically this means an income limit).

Individuals typically file a chapter 13 bankruptcy. I think the basic process is the individual will agree with the creditors to pay off a certain percentage or amount of the amounts owed. The creditors must agree to the amounts, and a judge must approve the plan. If the applicant completes the plan, the rest of the debt is discharged.

This is not legal advice.

[merika]

Originally Posted by Litigatrix

The creditors must agree to the amounts, and a judge must approve the plan. If the applicant completes the plan, the rest of the debt is discharged.

.

Do people have a certain time period (months/years) in which to complete the plan satisfactorily?

[titania029]

I think you're thinking of Chapter 7, which is liquidation. Chapter 11 and Chapter 13 both allow for paying of debts over time, a reorganization. The difference is that Chapter 13 is for individuals. It's been too many years since bankruptcy, so I don't have much more to offer.

[titania029]

Originally Posted by merika

Do people have a certain time period (months/years) in which to complete the plan satisfactorily?

I don't think there is a set amount of time. It probably varies considerably given individual circumstances.

[titania029]

Oh here, I found this website with some good information:

http://www.uscourts.gov/bankruptcyco...s/process.html

[Litigatrix]

Originally Posted by merika

Do people have a certain time period (months/years) in which to complete the plan satisfactorily?

Yes, I think there is usually a time frame set for fulfillment of the plan. If the plan is not fulfilled within the time limit, the applicant would probably not receive a discharge of the remaining debts.

And yes, Chapter 7 is liquidation of assets to pay off creditors, then the individual would start with a clean slate. Oh, and I think titania was referring to my post above... it looks like the income limits may apply only to filing under chapter 7.

[merika]

Originally Posted by titania029

Oh here, I found this website with some good information:

http://www.uscourts.gov/bankruptcyco...s/process.html

Thank you!!

[titania029]

Originally Posted by Litigatrix

Yes, I think there is usually a time frame set for fulfillment of the plan. If the plan is not fulfilled within the time limit, the applicant would probably not receive a discharge of the remaining debts.

And yes, Chapter 7 is liquidation of assets to pay off creditors, then the individual would start with a clean slate. Oh, and I think titania was referring to my post above... it looks like the income limits may apply only to filing under chapter 7.

I meant I don't think there is a set time under the law, but as Litigatrix said, the court will impose a time frame for each case.

And my first post was in response to wantmore. I think she mixed up Chapter 7 with Chapter 11.

[wantmore]

Originally Posted by titania029

And my first post was in response to wantmore. I think she mixed up Chapter 7 with Chapter 11.

You got it! Everything in my brain is a mush!

I think the Bankruptcy will affect your cousin's future job prospects. I'm in a different field and when I apply for a job, a federal background check is done on me instead of my credit report.

[Zophie]

Yes, bankruptcy messes with your credit, but it's not forever, and chances are that if you are filing bankruptcy your credit is already in the toilet anyway. I filed chapter 7 in 2004 and really it hasn't been a bad thing at all. The worst part is that I can't tell my family. They would be totally ashamed and I'd rather die than have them know. But I don't mind telling other people. They have changed the laws for filing since I did though so now it's not as easy to do.

BTW, Chapter 7 is the one that totally wipes out your debts and lets you start with a clean slate. The laws vary by state, but you are allowed to keep a certain amount of property under certain limits.

[fashionispoison]

for the most part, the BK record will be on his credit report for the next 10 years. as far as legal repercussions, it depends on which state he lives in. most recently, with laws changing and all, some creditors are able to collect even after one has filed for BK.

[Prada Psycho]

Twenty years ago, husband #1 packed it up, left me with our 1 year old kid, a 30 year mortgage and no child support or alimony. To make a LONG story short, I had two choices: feed my kid or pay the bills. Naturally the kid won hands down.

I filed chapter 7, everything was liquidated. The worst part of it was having that on my credit report for TEN YEARS. Sure, you can get credit even with a bankruptcy on your back, but the interest rates are hideous and it's so embarassing when you do try to get new credit!!

The best option is to work through a credit counseling service. They will negotiate lower interest rates and work with your creditors to pay off all your debts in usually 3-5 years. That still causes a hit on your credit report, but not like bankruptcy.

Unfortunately at the time I couldn't even consider credit counseling because of the financial mess the Ex left me in. I can tell you this much though, it was the most humiliating experience of my life. I'm someone that always pays their bills and had excellent credit. Ironically the day I filed for bankruptcy, all my bills were current, but I knew I wouldn't see a cent from the Ex (I was right). The day I had to appear in court, I had to stand before the judge. He all but shook his finger at me and the others standing in front of him when he said "Bankruptcy accepted." and "I don't ever want to see any of you in my (bankruptcy) courtroom again!" Holy $h!t, talk about humiliation.......

Yep, tell your cousin to go the credit counseling route (not to mention getting counseling for his gambling habit)......