pre filing bk jam..

[adkid22]

well, I ran into an interesting predicament this weekend.

I filled out all the paperwork (was planning on filing this past monday). Took the debtor education course , received my certificate and went to eat.

Stopped by the casino just for a few moments and ended up winning a significant jackpot (~40k).

Now, I am almost 100% sure that ruins my bankruptcy chances since i haven't filed yet and this could pay off a significant portion of my debts, unless I can somehow exempt it. I received a 1099 for it and they did take out federal/state taxes.

I have not deposited into my bank account yet. I wish this would have happened after my discharge so I could really get off to a fresh start, but I can't really complain.

Most of my debt is interest charged because of judgments. (3800 judgment turned into 12k garnishment) and debt that isn't listed on my credit report.

What should I do? DO you guys have any options? I figured I can start calling my creditors and trying to offer 50% of what I owe to pay it off and then get a secured credit card?

Anyway I can exempt this money and get my dream fresh start?

[LadyInTheRed]

Wow, what a time to get lucky!

I looked at your other posts and see you are filing pro se and have the following debts:

70k in student loan
17k in judgements (apt, car) - currently being garnished from my check
other debt- around 10k(credit cards, hospital, etc)

It sounds to me like you were just handed a path out of BK. I'm sure you didn't net enough to pay off everything 100%, but you seem to have plenty to negotiate settlements and perhaps even cover the income taxes on forgiven debt. The student loan won't be discharged anyway.

Another possibility is to put your winnings in an IRA. I would consult with an attorney about that first.

[keepsmiling]

Wow, talk about mixed blessings. Congrats on your win! Hopefully you have begun a streak of new good luck.
No idea how much you can exempt in Ohio but I doubt it's 40K unless you are married, have little equity in anything, and can stack exemptions.
Just FYI, I just now received an offer of 15% on Chase account. So, 50% may be higher than necessary.

[DebtHater]

First off, congrats on your new found winnings.

It appears if you take the winnings and run you should have enough to pay off the judgement and other debt. This will leave you with only the student debt. In many cases you can not discharge student debt so it wouldn't be a big deal as far as I'm concerned. By going this route you would avoid BK and the consequences it would have on your credit report.

Now on to the what do we do next... Write up and follow a strict budget (no eating out, no casino visits) and get the student loans paid off. With out taking this the wrong way but this means limiting your casino visits. Someone about to file BK doesn't have any business in casinos (unless they are working there) but I am glad it worked out for you this time. Getting out of debt is not a matter of filing BK but it's more about financial behavior.

[df04527]

Amen

[adkid22]

thanks everyone. it was a blessing and cursing all wrapped up into one. I dont usually go to the casino cause I am not a gambler, but the place we ate at was inside the one downtown and everyone got 5 dollars free slot play for getting a gamers card and the rest is history.. I almost let my uncle take the jackpot but I didn't want to risk getting into trouble.

I will try to get the lowest offer on paying back. It would have all went to student loans had this be post filing winnings, it would have been nice to be down to 30k in loans as my only debt.

Does anyone know of any sites that helps craft letters or give pointers on how to negotiate debts. If it isn't listed on my credit reports, should I not stir the hornets nest?

[SunshineGal]

Be REALLY careful about those debt settlements. If they 1099 you you're going to have to pay taxes on your income, plus winnings, plus forgiven debt, meaning your tax bracket will be a LOT higher than it will with just the income and winnings. Take some of that money and go see an asset planning attorney, it will be moneyy well spent.

Congrats on the win and good luck.

[SunshineGal]

You may also want to ask a BK attorney, a free consult should help you get the answers you need.

[adkid22]

You may also want to ask a BK attorney, a free consult should help you get the answers you need.

thanks for the info, i will check out both of those options

that would suck to get stuck with a tax bill for paying a portion of my debts. luckily they did take out federal and state taxes out of the winnings at the casino. I wasn't going to mess around with the irs on that portion.

[daylate]

I wouldn't worry about the taxes on the debt settlements-to make the math easy it looks like you owe about 30k exclusive of the student loans. lets say you get settled for 60% (which is probably high) thats 18 k-leaving 12k of income on the forgiven debt -even at the highest tax rates of 35% and say 7% for state thats another 5k or so. So you wipe out 30k of debt for 23 and still have 7k left over. To me that's a much better scenario than filing bk and living with it for 7 or 8 years

[jetsfan2010]

thats incredible!

[sunshinepa]

Congratulations on the win. One thing, don't settle for 50%, shoot for more. Citibank offered me 20% at one point, I think you can get it down. Put any remaining on the student loans and you are on your way.

Wonderful!!!!!

[SunshineGal]

I wouldn't worry about the taxes on the debt settlements-to make the math easy it looks like you owe about 30k exclusive of the student loans. lets say you get settled for 60% (which is probably high) thats 18 k-leaving 12k of income on the forgiven debt -even at the highest tax rates of 35% and say 7% for state thats another 5k or so. So you wipe out 30k of debt for 23 and still have 7k left over. To me that's a much better scenario than filing bk and living with it for 7 or 8 years

I would. Because not only are you now paying that 35% rate on the 12K of debt forgivness, you are also paying it on the entire amount of income earned and won.

[dman]

Ok, in addition to the disclaimer in my signature...you have the money for an attorney now. Get one.

How old are your debts? And...I think I read elsewhere that you are in PA now? The SOL on debts in PA is 4 years. How that 4 years is counted (would it start from the actual last date of delinquency, or from the date you moved to PA), I don't know (ask your lawyer!).

I'm just sayin', if the debts are nearing the SOL, and this windfall is keeping you out of bankruptcy...if it was me I'd be asking my lawyer if there's any downside to just throwing that 40k (or what's left of it) at your student loans. It's not like you're trying to hide assets...you're just choosing to pay down a certain debt before others.

[Photomom]

What is SOL?