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113K brokerage account debt, have joint bank account with father, need help.

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  • 113K brokerage account debt, have joint bank account with father, need help.

    I owned stock with TDameritrade and I put some on margin for a short time because of stupidity. The stock fell from $100 to $12 in 15 minutes after hours and now I have a negative account balance of 113k because of the margin.

    This was a two weeks ago. Since then Tdameritrade closed my account and said I have a balance of 113K and to open the account back up I need to pay that. I have not heard from them since but I assume I will hear form them eventually.

    I'm in real bad shape as I am unemployed and only have around 15K cash.

    Bankruptcy would be an easy decision at this point but I may have a couple of issues.

    A few years ago my father got sick, and the day before he got hospitalized for a rare disease he put my name on his bank accounts for me to pay bills in case something happened, he thought at the time he was going to die so did this as I was living with him to pay bills. I have never touched these accounts, I didn't put any money in them, did not withdraw money from them. He is better now but my name is still on the account as a joint back account. My father also keeps all the statements which show that all his balances was his before my name was put on the account and all deposits were from his job and social security.

    In my NY state there seems to be an exception for "convenience accounts" which would protect joint accounts from bankruptcy or judgement but I'm not sure how it will all work out. You are supposed to label the accounts "For convenience only" but I believe this was not done when I opened the accounts. However, if you can prove it was opened for convenience they may be protected. These accounts were 100% opened for convenience and even were opened on the morning before he went to the emergency room and then was hospitalized.



    The other asset I have is an older car that held its value worth around 30K. I asked about this in a separate post but it may look like it will be part of my belongings.


    If anyone can give me advice on my situation. What should I do? I don't have the nerve to tell my father I lost all my money and then some with trading stocks and now put his money at risk.

    Is it possible I can maybe settle the debt with TDAmeritrade? I believe they have an arbitration clause for their stock accounts but with 113K of debt I am sure they will go after me.

    I'm currently in the process of looking for jobs but that will take a long time.

    How bad is my situation right now, especially with those joint accounts?

    Should I have my name removed from the joint accounts ASAP? I don't care if they come after me for judgement I just don't want my father to pay for my stupidity. I would rather remove my name from the accounts and at least give me the chance to prove they were opened for convenience then have them garnished and the money removed without a fight.



    Last edited by Lostall; 02-19-2018, 01:07 PM.

  • #2
    Your situation is about as bad as it gets. You should really be speaking with a bankruptcy attorney (at least obtaining 3-5 free consultations) immediately. Your joint account, as you speculate, could be problematic. You have to disclose that you're on the account. The problem isn't really the Trustee but if TD comes after you and finds that asset (the joint account). You would then need to prove that it's exempt at that time, probably after the bank already froze the funds in the account.

    I'm reluctant to give anything that resembles advice other than to seek help from a bankruptcy attorney. Schedule 3-5 free consultations this week. Don't try to change any title on the vehicle, or remove yourself as a joint account holder without obtaining professional advice.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      Thanks, I understand your point and will be seeking lawyers shortly.

      Do you think I have a fighting chance to keep the joint accounts out of the bankruptcy?

      I found this court case which describes more about a joint account for convenience and matches very closely my current joint account. Does this court case at least give me a fighting chance?

      https://www.leagle.com/decision/20061050340br7101988

      Comment


      • #4
        To me that joint account is not the problem you think it is. You may be on title but you do not have an equitable interest in the funds. Your name is on the account for estate planning purposes only. Discuss this with a local bk attny.

        Des.

        Comment


        • #5
          Originally posted by Lostall View Post
          I found this court case which describes more about a joint account for convenience and matches very closely my current joint account. Does this court case at least give me a fighting chance?
          No don't think it's an issue because you have not used the account. I was more worried about the account if you were sued by TD than by the bankruptcy disclosure. Des just wrote that it's not an issue (because it can be explained that it's not your account) in the bankruptcy.

          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • #6
            Thanks for the responses, very much appreciated.

            How should I go about this now? Should I wait for TDameritrade to contact me about the debt?

            Should I go to a lawyer straight away or wait until I hear back?

            Do you think TDameritrade will consider debt settlement, or is this not worth waiting for because of the joint account?

            Thanks

            Comment


            • #7
              I personally believe that you should be speaking to several attorneys at this point. There is no way to tell what TD will or will not do.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment


              • #8
                Just curious, what is the stock worth now? Was insider trading involved, as if we'll ever know? Further, what was the stock value at opening the next morning?

                Comment


                • #9
                  Originally posted by Maria80386 View Post
                  Just curious, what is the stock worth now? Was insider trading involved, as if we'll ever know? Further, what was the stock value at opening the next morning?
                  You can check for yourself, I was basically 130% in SVXY as I was using margin. Lost everything on February 5th of this year. They do talk about lawsuits but the risks were in the prospectus.

                  Once SVXY went from 80 to 12, TDameritrade closed out all my positions the next day as my account was negative. They screwed me by doing this because I had options which would have been worth 40-60K more just a couple of days later if they had not sold them for pennies on the dollar.

                  Me and everyone else who lost just never figured it would drop like it has and the only thing that would cause this would be a nuclear attack or something. They do talk about manipulation as it took only 10 minutes for the drop.

                  Comment


                  • #10
                    Originally posted by justbroke View Post
                    I personally believe that you should be speaking to several attorneys at this point. There is no way to tell what TD will or will not do.
                    Agreed. Can I assume that almost with 100% certainty that TDameritrade will come after me for that money? Or is there a possibility they may not?

                    Comment


                    • #11
                      Originally posted by Lostall View Post
                      Agreed. Can I assume that almost with 100% certainty that TDameritrade will come after me for that money? Or is there a possibility they may not?
                      I don't know. I have stayed away from trading on margin for the exact same issues presented here. It becomes almost as bad as gambling.

                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog


                      I am not an attorney. Any advice provided is not legal advice.

                      Comment


                      • #12
                        Originally posted by justbroke View Post
                        I don't know. I have stayed away from trading on margin for the exact same issues presented here. It becomes almost as bad as gambling.
                        To be honest I never traded on margin except for that one week when I got assigned puts unexpectedly and decided not to sell them. I was on margin for like a week or less, never even used it last year. But that is all it took to sink me.

                        Comment


                        • #13
                          I hear what you're saying Lostall. I have a friend that trades on margin and he does well, but is always enticing me to join in the fun. I have a brokerage account at Fidelity and they promoted my margin account to level 3 option trading. I was so scared that I never tried to do anything and left most of my stocks where they were (only moving some to my cash position a few times). My retirement account is also at Fidelity and that was quite scary because I could trade those shares as well (but a lower level).

                          It hits home.
                          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                          Status: (Auto) Discharged and Closed! 5/10
                          Visit My BKForum Blog: justbroke's Blog


                          I am not an attorney. Any advice provided is not legal advice.

                          Comment


                          • #14
                            I got into trading to be extremely safe. I only wanted to invest in S&P 500 or SPY because of the diversification. It would have been the smart move as even in a market crash I would only lose 10-40% and not go negative.

                            I then got into trading volatility and kept my position sizes very small at first. It was such a lucrative investment that I got a bit carried away with it. I made almost 100K last year in a few months of last year. I will also have to deal with an estimated 20K in taxes when I file this year . I figured worse case trading volatility it may fall 50% or so and I would just hold until it came back.

                            When this recent correction hit in the market it was unlike anything I've experienced and I thought it would be short lived because of the great market fundamentals. So did many others who traded volatility as I was constantly in contact with many people. When I started to lose a little at first, I decided to increase my position size a bit with margin, this was also partly because I took on shares from put options I sold that drove me into margin.

                            I was online and watching when it crashed from $90 to $20, I thought something was wrong at the time but I had a chance to sell out at least in the positive. But when you see your account going from 200K to 100K, to 0K, you think it was just an error and it will swing back. The way volatility worked it should have fallen to $20 and then bounced back quickly, but the security decided to halt trading.

                            All said and done I'm now 113K negative, lost all my capital. I'm now forced to get a 9 to 5 job.

                            I really didn't think I was gambling here, I really did lots of research in trading volatility also. I just never thought this would ever happen.

                            I know my father told me my grandfather lost his house gambling, betting race horses, and they were forced to move into a government subsidized apartment building. I wonder if I suffer from gambling. However, I really didn't think I was gambling. I lived in Vegas for 5 months and never once gambled, I don't like gambling at all. Go figure.

                            Comment

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