Question:Is there a way out COLLAPSE Carl had a great job paying him over $150,0
ID: 2794413 • Letter: Q
Question
Question:Is there a way out
COLLAPSE
Carl had a great job paying him over $150,000 a year. But he also had a great life and enjoying spending money and having a great time. In fact, he had more than $60,000 in credit card debt. Recently Carl was laid off from his job. A week before he was laid off, Carl decided that he will start a business, so his girlfriend Sarah co-signed a loan for him to start this business. Two days after losing his job, Carl was approved for the loan and accepted the check.
Five months after the business is started, Carl realizes that the business needs more money than he can afford. In fact, it is in debt for over $100,000 including the loan he receives from the bank. He asks Sarah to apply for another loan this time on your own without including him. Sarah said no and the two argue and decides to split up.
Meantime, Carl has not been paying his bills. All of his creditors (and there are several) are calling him every day. But Carl pretends either they have an incorrect number or that he is someone else. One company that he owes after several unsuccessful attempts refers the account to a collections Agency-Sleazy collections agency. That company called Carl and made several threats about having him arrested and breaking his legs for not paying his bill. They also called his neighbors and asked them to deliver messages to him about the unpaid bills. In fact, one agent told his neighbor Jim everything about Carl outstanding debt and discusses the entire matter with Jim.
With debt mounting, Carl is served an eviction notice by his landlord since he has not paid rent in more than two months. Plus, he has racked up late fees associated with the nonpayment of rent. One-day Carl went out and when he returned the locks on the doors had been changed and his belongings were sitting on the curb
Advise Carl, Sarah and the landlord. Can Carl declare bankruptcy and which chapter? Can the landlord evict Carl. Is Sarah responsible for Carl's debt. Can the companies Carl owes take action against him including break his feet and discussing his financial problems with his neighbors.
Explanation / Answer
FACTS OF THE CASE:
Carl has started a business with his girlfriend after resigning his job. Later he discontinue the business because of conflicts between partners. So, Mr. Carl unable to repay the loan taken for his business and his personal debt.
ANALYSIS:
Individuals who reside, have a place of business, or own property in the United States may file for bankruptcy in a federal court under Chapter 7 ("straight bankruptcy", or liquidation). Chapter 7, as with other bankruptcy chapters, is not available to individuals who have had bankruptcy cases dismissed within the prior 180 days under specified circumstances
In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property. Most liens, however (such as real estate mortgages and security interests for car loans), survive. The value of property that can be claimed as exempt varies from state to state. Other assets, if any, are sold (liquidated) by the trustee to repay creditors. Many types of unsecured debt are legally discharged by the bankruptcy proceeding, but there are various types of debt that are not discharged in a Chapter 7.[2] Common exceptions to discharge include child support, income taxes less than 3 years old, property taxes, student loans (unless the debtor prevails in a difficult-to-win adversary proceeding brought to determine the discharge ability of the student loan), and fines and restitution imposed by a court for any crimes committed by the debtor. Spousal support is likewise not covered by a bankruptcy filing, nor are property settlements through divorce. Despite their potential non-discharge ability, all debts must be listed on bankruptcy schedules.
A chapter 7 bankruptcy stays on an individual's credit report for 10 years from the date of filing the chapter 7 petition. This contrasts with a chapter 13 bankruptcy, which stays on an individual's credit report for 7 years from the date of filing the chapter 13 petition. This may make credit less available or may make lending terms less favorable, although high debt can have the same effect. That must be balanced against the removal of actual debt from the filer's record by the bankruptcy, which tends to improve creditworthiness. Consumer credit and creditworthiness is a complex subject, however. Future ability to obtain credit is dependent on multiple factors and difficult to predict.
Another aspect to consider is whether the debtor can avoid a challenge by the United States Trustee to his or her Chapter 7 filing as abusive. One factor in considering whether the U.S. Trustee can prevail in a challenge to the debtor's Chapter 7 filing is whether the debtor can otherwise afford to repay some or all of his debts out of disposable income in the five year time frame provided by Chapter 13. If so, then the U.S. Trustee may succeed in preventing the debtor from receiving a discharge under Chapter 7, effectively forcing the debtor into Chapter 13.
Some bankruptcy practitioners assert that the U.S. Trustee has become more aggressive in recent times in pursuing (what the U.S. Trustee believes to be) abusive Chapter 7 filings. Through these activities the U.S. Trustee has achieved a regulatory system that Congress and most creditor-friendly commenters have consistently espoused, i.e., a formal means test for Chapter 7. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has clarified this area of concern by making changes to the U.S. Bankruptcy Code that include, along with many other reforms, language imposing a means test for Chapter 7 cases.
Creditworthiness and the likelihood of receiving a Chapter 7 discharge are some of the issues to be considered in determining whether to file bankruptcy. The importance of the effects of bankruptcy on creditworthiness is sometimes overemphasized because by the time many debtors are ready to file for bankruptcy, their credit score is already ruined. Also, new credit extended post-petition is not covered by the discharge, so creditors may offer new credit to the newly-bankrupt.
DECISION :
As per the above chapter Mr. Carl can declare the bankruptcy.
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