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BK or just quit paying on $120k on cards? US citizen living in Canada

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  • BK or just quit paying on $120k on cards? US citizen living in Canada

    Wife and I have $120,000 of US Credit Card debt on 9 cards (used to be more). We now live in Canada, are current on all 9 cards, but can no longer keep pace with the minimums and apparently need to either A) quit paying or file US BK ? Which would you recommend? I'm told that Canada will not count "written off debt / bad debt" as "income" but our nine US Cards may each send us a 1099 the delinquent debt, if we quit paying, creating a big US Tax issue. What should we do?

    Here's our key data points:
    - We are 1 US Citizen / new Canadian PermResident, and 1 Canadian Citizen, still with an active US Green card / SSN that also needs to be addressed
    - We have 2 new Canadian Credit cards, unrelated (unconnected?) with only $4000 total debts on it.
    - We own no property (used to own 10)
    - Have only one asset (an illiquid part of a building, housed in my Roth IRA). Paid $50,000 into it in 2006; it is currently worth maybe $15,000
    - All 9 US credit cards are current on payments
    - 4 cards ($70,000) are still open, at 10%-13% interest
    - 5 cards ($50,000) are closed, renogiated to 2-4% interest
    - We used to make a nice six-figure income (through 2009), own a $1.5m house, but in last three years more like $35,000, alongside health issues, market slides, sleep deprivation and unexpected multiples.
    - No savings
    - Only about $10,000 of borrowable capacity left
    - We may return to the US to live, but it is unclear when, 1-3 years?
    - In theory, it is OK if our US credit it trashed
    - no prior BK's, bad debts, or foreclosures, not even a single missed payment of any kind
    - We are a 3BR tenant, one-crappy-car, no cable, walk to public school family, with no lofty goal of new credit, new cars or buying a house; we just need temp relief from payments
    - some of the debt $50,000, goes all the way back to a 2007 kitchen remodel on a house that could not be sold, as it lost 700,000 in value.
    - we are both self-employed; there is no employer to garnish

    Our Preferred Solution Path
    We believe our earning potential will return to $200,000 / year but not for 3+ years. We would like to make good on these debts and believe we could pay them off in full even 3-5 years from now. But at the moment, we cannot support a house full of kids under 6 on $35,000 a year and make $2600/mo minimum payments. We have contacted each of our CC companies and several credit counseling / consolidation services. They are completely incapable of bringing a human level of calculation to our situation. Their only offer / program is to reduce the interest rate and put us on a 60 month repayment plan. We cannot meet these minimum payments with. I'd be willing to make 6% interest-only payments on the entire amount, or do no payment for 3 years, and then start payments in the 36th month, but they won't work with me. It is their way or the highway. So I have to plan which highway to take. Any recommendations? BK or should I just quit paying the cards?

  • #2
    Hi Max: Welcome to the Forum.

    In my opinion, I think you should stop paying the credit cards, AND file BK. If you simply stop paying on the cards without doing anything else, you will eventually be sued and can end up with potentially nine judgments against you. If you do, you won't be able to own anything such as a car, in your own name without running the risk that the judgment holder may be mean enough to seize it to try to satisfy the judgment.

    The CC debt is non-secured, and can be wiped out with a CH7.

    How all of this would work with Canadian Law, I have no idea.

    Since you are at this 'thinking stage', stop paying the CCs and save that money toward your BK attorney. You may be savvy enough to try filing yourself (pro se), but because you are an American living abroad, there may be other legal wrinkles involved.
    Last edited by AngelinaCat; 07-27-2013, 06:02 PM. Reason: ugh! grammar error.
    "To go bravely forward is to invite a miracle."

    "Worry is the darkroom where negatives are formed."

    Comment


    • #3
      I am no expert, especially when it comes to international law, but the first thought that comes to mind - you could do both. Just quit paying, and move on with your life until they sue. If they sue, then you could file for bk. If they don't sue - there is nothing you have to do.

      Comment


      • #4
        Another consideration, stop paying and wait to file BK if/when you are sued, which could be 2-3 yrs. and your credit is trashed, and you've delayed recovery/rebuilding for an additional 2-3 yrs. If your income increases as you expect it to, you COULD end up filing a 13 instead of a Chapter 7, which you may qualify for while your income is at rock bottom.

        Since you have US/Canada issues, it will take probably take you longer to find a good attorney that can handle this. I would start attorney shopping now. Initial consults are usually free, and even if you decide to wait at least you will have an attorney selected if you need to file quickly.

        I'm not an expert, just things I was thinking of. Things are a little slow on the forum on weekends, but I'm sure the experts will along soon. (I should say MORE experts, I see AngelinaCat posted.)

        Comment


        • #5
          I appreciate the replies. Great suggestions. I probably will have to burn through a few initial consults to find someone competent to handle the US/Cdn angle which probably offers unknowns to me in this process. Thanks again.

          Comment


          • #6
            I saw this thread after responding to your other question. Since you are not a resident of the U.S. and do not own any property or business in the U.S., I don't think you can file BK here. I'd consult with an attorney in Canada to find out if U.S. creditors can pursue you there. If not, then stop paying the debts and consider filing BK when you move back to the U.S.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


            • #7
              you can file in canada and wipe everything out completely from the us. OR you can just let it go and the us debt will leave you in approx 10 years after leaving the country, the us creditors will have no recourse.
              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

              Comment


              • #8
                Originally posted by tobee43 View Post
                you can file in canada and wipe everything out completely from the us.
                Do you have some authority for that? I don't think Canadian courts have jurisdiction to discharge U.S. Debt and prevent creditors from collecting in the U.S. They may be able to keep U.S. creditors from collecting from a Canadian resident, but I think the US creditors will still be able to collect if the OP moves back to the U.S. which she said is possible in the next 1 to 3 years.

                OR you can just let it go and the us debt will leave you in approx 10 years after leaving the country, the us creditors will have no recourse.
                Don't count on it. If you leave the country, the statute of limitations is often tolled while you are gone. Also, a creditor can get a default judgment against you while you are out of the country. In Washington, judgments are good for 10 years and can be renewed once for another 10 years. In California, where the OP lived for a while, a judgment is good for 10 years and can be renewed indefinitely.
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                Comment


                • #9
                  All of this discussion about doing 'nothing' and letting the creditors sue and get judgments, is exactly why I am saying Max and possibly his wife need to file BK.

                  With a successful BK Discharge, those nine potential lawsuits and judgments go away. And the poster and his wife are then free to enjoy their children, and live their lives, free and clear of any debt, unless they are foolish enough to run the CCs up again.
                  "To go bravely forward is to invite a miracle."

                  "Worry is the darkroom where negatives are formed."

                  Comment


                  • #10
                    Originally posted by AngelinaCat View Post
                    All of this discussion about doing 'nothing' and letting the creditors sue and get judgments, is exactly why I am saying Max and possibly his wife need to file BK.

                    With a successful BK Discharge, those nine potential lawsuits and judgments go away. And the poster and his wife are then free to enjoy their children, and live their lives, free and clear of any debt, unless they are foolish enough to run the CCs up again.
                    I agree that filing BK would be great. But, the debt is in the U.S. and the debtor is in Canada with no property or business in the U.S. Based on the information provided, the debtor probably can't file BK in the U.S. and a Canadian BK discharge won't help the debtor when she moves back to the U.S. I am pretty sure that the U.S. creditors can't even collect against the debtor while in Canada, so a Canadian BK would probably be pointless anyway. Doing nothing may be the only option until she moves back to the U.S. [ETA: See the links in my post in the following thread to see why I don't think a U.S. BK is an option right now: http://www.bkforum.com/showthread.ph...-situ-not-easy]

                    MaxedExpat, I encourage you to consult with BK/debtor attorneys in both Canada and the U.S. to discuss your options. For your initial purposes, it probably really doesn't matter which state the U.S. attorney is in. Try telephone consultations with attorneys in both California and Washington.
                    Last edited by LadyInTheRed; 07-27-2013, 09:31 PM.
                    LadyInTheRed is in the black!
                    Filed Chap 13 April 2010. Discharged May 2015.
                    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                    Comment

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