Filing Chapter 7 in a few weeks

[JTaek]

Hi, I have to file Chapter 7 in Los Angeles County soon and wanted to run this by you guys to see if there will be problems.

I've been unemployed for around 3 years now. I live at home and getting support from my mother for about $300 a month, which I'm supposed to pay back but it's getting unlikely now. I pay utilities and for my food and have about $75 of disposible income. I have no car or assets to speak of. No bank accounts. I've continued to file tax returns, because I knew filing for Chapter 7 was a possiblity. I defaulted about 5 years ago on about $100k in credit card debt, so by now, the debt is a lot bigger. I have 2 judgements against me.

I wanted to know given my unemployed status and living at home with no income or assets, do you see any problems with filing? What will the Trustee think? I heard underemployment can be grounds for finding abuse. I gave up looking for work a few years ago and have no excuses. My situation isn't getting any better, so might as well file soon. Also, I hear if any creditor writes off the debt, I'll owe taxes and will most likely get a IRS lien against me. So I'm going for it by the end of the month. Can anyone forsee any problems, like not being able to document income (loan from family)? Thanks!

[keepmine]

Nothing unique about longterm unemployemnt and, getting by with help from family.
Just list your mother as a creditor.
As to taxes, if you receive a 1099C, all you need do is attach IRS form 982 to your return. Debts discharged in bk have no tax liability.
Your big problem isn't debt but lack of income. You need to find something-anything and get a paycheck rolling in.

[df04527]

Why not wait to file? What's the rush? With no income and no assets seems to be a waste to file now as it sounds like your untouchable. Wait until you have a job?

[Drazil65]

Hi, whether you file soon or not you obviously need a plan for your future in addition to the possibility of filing. I guess some questions need to be asked, what is the reason you have not looked for work? What is your age range and do you have a limit in mind for living with your mother and having her support you? I think these would be the harder questions to come to terms with. I have to agree with the above poster, you have nothing right now so they can not come after you really (garnishment, repo etc.) so why not wait. Alot of your situation comes from not working obviously so that might be your starting point for a fresh start even if you have to work 2 jobs to make it work. Good luck!

[keepsmiling]

Agree with above. Your worries re tax lien are unfounded unless you have a massive 401K. Insolvency will prevent taxation on the forgiven debt.
Others will disagree as they believe the fresh start has psychological benefits that will make finding work easier. They are right as well. The longer you remain unemployed, the harder it will be to find work.

[JTaek]

Thanks for all of your replies. I was out of date with the info about the debt being subject to taxes. I haven't looked at this in about 3 years or maybe longer. So I'm relieved that there's no possibility of taxes on the debt.

But I still want to file soon and get this over with. It's going to have to be done eventually. If I had filed 5 years ago, there'd only be 5 years left, until it dropped off my credit report. Now I'm at the full 10 years from any future discharge date. I need to make some changes to my life and I think this will jump start things in the right direction. I'm wasting my life away right now. I'm not accomplishing anything. I'm thinking clean up my finances with the Chapter 7. Get everything on my credit report discharged and get the 2 judgements off my credit report, once the debt is discharged. Get a bank account again and start over. I've been hiding out using cash only long enough. I think waiting will just drag this out more. There's no reason not to take the plunge. I also think it will help to get a job for the places that run credit checks. Right now my credit report is a disaster area. But if everything on it says discharged in bankruptcy, hopefully that will help, if they follow the law and don't hold it against me. I'm mid 30s now and not getting any younger. And I agree, the longer I'm out of work, the harder it's going to be to get someone to hire me.