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joenobody

Can credit card collectors come for my house and how long do I have after defaulting?

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Long story short, due to divorce and some terrible investments within the last 2 years, I've lost everything and I'm about to stop making payments on my cards. The only valuable asset I have is about 80-100k equity in my 280k house. I have about 10k equity in my car which is worth about 40k. I work for myself so I don't have any wages that can get garnished. Also haven't' filled taxes in 2 years if that makes any difference.

My cards are 15k to 25k each. Totaling about 200k. Can/will any of these creditors, some of which I owe 50k+ (multiple cards), come after my primary residence if they obtain a judgment? I know the homestead exemption in Georgia is about 21k so it would seem that they would come for my house, but how typical is it for them to do that? How long do you think it would take before the first judgement? I'm thinking about a year?

Just trying to figure out if meanwhile I should sell my house and take my equity before any of that happens. 

Tough times but I know I won't stay down so I'm going to try to avoid bankruptcy and just settle the debts in a year or two. Beside, I think I'd have a better chance of losing the house in a bankruptcy vs prolonging it with collectors. What do you guys think?

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welcome to CB...

 

if you're technically bankrupt you may not want to delay talking to a couple BK attorneys just to learn your options. You also need to get caught up on taxes STAT!

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You might consider transferring the house into someone else's name since you "haven't stopped paying" on the cards yet. It would be almost impossible for them to claim a fraudulent transfer a year down the line.

 

Otherwise, you might want to sell the place and wipe out some of the debt. In some states, if there is enough equity to pay off a judgment lien, they can force foreclosure. Check your state laws.

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Is this personal debt or business debt?  Yes, it makes a difference with respect to some elements of the process...

 

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You should talk to a BK attorney to see what the laws are. Selling your house to pay unsecured debt is a bad idea. 

Depending on the limits you’re allowed , you might consider having a trusted person put a lien on your house so you don’t have any equity. 

First you need to find out what the law and asset limits are.

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Do NOT sell your house. Pay your property taxes. Are you saying you have NO mortgage loan??

http://www.bankruptcyaction.com/gaexemptions.htm

 

The $21000 homestead exemption is only what the equity balance would be after a foreclosure  sale, after a judgment is obtained and recorded as a judgment lien. If any one or more of your creditors sue you and obtain a judgment lien on your house it would be valid for 7 years. 

 

Bankruptcy is IMO the best route for you. It  is easier to rebuild your credit after BK than it is after default on credit cards. If you have 1 or 2 low balance credit cards that you can pay off at least 90 days before declaring BK and do not use until 90 days after final adjudication you will have a better start.

 

If you decide to risk being sued by 1 or all of your creditors, make sure that you keep your $ in an account that is not in your name as primary.

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20 hours ago, banditone said:

You should talk to a BK attorney to see what the laws are. Selling your house to pay unsecured debt is a bad idea. 

Depending on the limits you’re allowed , you might consider having a trusted person put a lien on your house so you don’t have any equity. 

First you need to find out what the law and asset limits are.

You don't just have somebody put a lien on your house. In most states, you have to have a judgment against the person. That requires a lawsuit and showing the court some sort of legal agreement between you and the other person. Fooling around with stuff like that when it isn't true can get you into a lot of trouble.

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51 minutes ago, legaleagle2012 said:

You don't just have somebody put a lien on your house. In most states, you have to have a judgment against the person. That requires a lawsuit and showing the court some sort of legal agreement between you and the other person. Fooling around with stuff like that when it isn't true can get you into a lot of trouble.

A mechanic’s lien does not usually require a judgment.  However, what the poster suggested is considered to be fraud.  

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21 hours ago, banditone said:

 

Depending on the limits you’re allowed , you might consider having a trusted person put a lien on your house so you don’t have any equity. 

 

 

That’s called fraud. 

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On 11/29/2018 at 10:19 AM, centex said:

Is this personal debt or business debt?  Yes, it makes a difference with respect to some elements of the process...

 

Personal but some of the cards are business with personal guarantee.

 

23 hours ago, Why Chat said:

Do NOT sell your house. Pay your property taxes. Are you saying you have NO mortgage loan??

http://www.bankruptcyaction.com/gaexemptions.htm

 

The $21000 homestead exemption is only what the equity balance would be after a foreclosure  sale, after a judgment is obtained and recorded as a judgment lien. If any one or more of your creditors sue you and obtain a judgment lien on your house it would be valid for 7 years. 

 

Bankruptcy is IMO the best route for you. It  is easier to rebuild your credit after BK than it is after default on credit cards. If you have 1 or 2 low balance credit cards that you can pay off at least 90 days before declaring BK and do not use until 90 days after final adjudication you will have a better start.

 

If you decide to risk being sued by 1 or all of your creditors, make sure that you keep your $ in an account that is not in your name as primary.

 

I do have a loan. 180k loan and the house is worth 280k. I think I will just sell the house to my step dad for a little over the loan amount and buy it back few year later when the dust settles and I'm back on my feet.

I have a joint credit card with my step dad with 18k available which I'm not burning. It's from 1993 so it should help the rebuild process.

I also have a bank account with a small local bank which I remember reading is safe from collectors. I'll still keep most of it away from any bank(crypto exchanges)

 

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33 minutes ago, joenobody said:

Personal but some of the cards are business with personal guarantee.

 

 

I do have a loan. 180k loan and the house is worth 280k. I think I will just sell the house to my step dad for a little over the loan amount and buy it back few year later when the dust settles and I'm back on my feet.

I have a joint credit card with my step dad with 18k available which I'm not burning. It's from 1993 so it should help the rebuild process.

I also have a bank account with a small local bank which I remember reading is safe from collectors. I'll still keep most of it away from any bank(crypto exchanges)

 

What are the tax implications of this?

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14 minutes ago, cv91915 said:

What are the tax implications of this?

I bought it for 210k in 2014. I think I wouldn't have any capital gains tax since it's my primary residence but I'll be selling it to him for about the same price I bought it anyway so not worried about the taxes for the 10k or so profit.

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26 minutes ago, cv91915 said:

That's a good point. I guess it wouldn't automatically trigger an audit, but "if" audited it could be a problem. But even then we can say the house needed work. Also, my estimate of 280k is on the higher side.

Another option would be to sell it for top dollar to him and him keeping that extra funds for me to spend from his account, so it won't be considered mortgage fraud or anything.

Last option is to just sell it to a stranger for top dollar, send the profit to my step dad to use as down-payment on another house for me. Only problem I can think of is if I file for bankruptcy or lose a judgement, they'll ask me why I sent that money to him. How far back will they look? Thinking maybe I'll just fight collectors for a year or two and then file for chapter 7.

Edited by joenobody

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Most of what you describe could be interpreted by a court as a fraudulent conveyance, and can be set aside by a judge. That means Daddy could be  out the house, and all the money he paid for it. Kind of like receiving stolen property. Besides, all this is public info and after they do the math they are going to ask you two things; why you sold a house 100K under value to a relative, or, where is the money you scored on the 100K profit if you sold it for full value? I would talk to an asset protection lawyer before doing any of this.

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Taxes will be a problem how much do you think you'll owe when you file? They have to be considered uncollectable after a certain period of time before you can bankruptcy them away. You said because your self employed you have no wages that can be garnished. You could still get a non-earnings garnishment which could be worse than wage garnishment especially if most of your work comes from one client. The amount of money your making will also determine if you can file chapter 7 or 13.

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6 hours ago, oldblue said:

Taxes will be a problem how much do you think you'll owe when you file? They have to be considered uncollectable after a certain period of time before you can bankruptcy them away. You said because your self employed you have no wages that can be garnished. You could still get a non-earnings garnishment which could be worse than wage garnishment especially if most of your work comes from one client. The amount of money your making will also determine if you can file chapter 7 or 13. 

I owe well over 100k in back taxes that I haven't even filed. And still making payments for the last year that I did file. They haven't said anything yet.

Don't want to be too specific but my money doesn't come from one client. Since I've lost my income producing investments last year I think I'll make about 40-50k for 2018 and probably about the same 2019.

 

EDIT: I think I would owe about 200k or so in capital gains tax for the crypto I had in January which I have literally 1% of it left due to market crashing and gambling the rest of it away with margin trading. But IRS doesn't know about it since it was mostly on overseas exchanges.

Edited by joenobody

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A BK is about the only way out here. All the fraudulent transfers that some have suggested will be undone anyway. The IRS will never go away, and upon filing you will have to catch up but the penalties and interest will be stopped. You are WAY in the hole, son, and really overthinking it. Go see an attorney or see several.

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I'm not familiar with filing taxes with your type of income but how can you lose everything and still show a profit?

 

You definitely need a lawyer, your situation is way to complex to even attempt anything on your own especially anything fraudulent. In addition that income you think uncle sam doesn't know about if they do find out kiss any chance of getting rid of your tax debt in bankruptcy good bye.

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