Hammerhead
05-06-2009, 08:33 PM
I'm asking this question not for me, but for my uncle, because I've always gotten great advice from my fellow BOTLs in times past and was hoping that I could rely on that same wisdom now.
The situation is this. My uncle is now 78 years old, has had a very poor income record in his latter working years, and has an advanced case of prostate cancer that's metastasized and is now bone cancer. Obviously, the prognosis is not sunny. Though it's under treatment, he's run up about $10 grand in credit card debt over the past couple years or so between travel, medical and other living expenses.
Because the laws have changed in recent times, he's asking for some advice and/or strategy on whether or not a bankruptcy is feasible for him, and if so, under what conditions and what strategy he might pursue to minimize the impact.
Here are the particulars:
No real assets to speak of:
$20k total retirement portfolio in CD(s) maturing the end of this month
$1500 equity in a modest car (04 Ford Focus - $3G owed, worth $4500 if he's lucky)
$0 real estate
$0 investment vehicles (no investments of any sort other than the CDs)
$0 jewels or other personal assets
$10k owed on credit card(s)
* Factoid: Though he has $20k in retirement money left, he'll likely need that to cover significantly increased medical expenses that he will undoubtedly be incurring very soon.
* Factoid: Given his advanced age and medical concerns, any negative impact on his credit rating is a non-issue. He's not in a position to even remotely consider applying for any loans for real estate, cars, or other such major purchases so a hit on his credit rating is irrelevant.
So the question is this. With the change in the laws in the past couple years, does it even make sense to declare bankruptcy, given that the courts are 'harder' on repayment terms and the impact that escalated legal costs for an attorney to handle such a proceeding will cost him?
IOW, if he's going to have to repay half of the money anyway, plus $3 grand for a lawyer to take care of it, would it not make sense to just pull out 10 grand and pay the bill anyway?
Though this sounds dishonest, given the context of the medical condition and upcoming bills, you'll understand the next question. Should he be finding a place to 'hide' the $20k he has with a friend or family member so that it's no longer 'his' asset for the purposes of a bankruptcy? Would that recipient be responsible for any tax liability, and if so, again - does the accumulated incremental costs of migrating the small portfolio plus legal fees plus any court mandated repayment negate any reason for going through it?
I'm rather on the fence about this myself and feel awkward about asking the question, but hope that y'all will understand the unfortunate situation he's in and will offer the best advice you can given the circumstances.
Thanks!
The situation is this. My uncle is now 78 years old, has had a very poor income record in his latter working years, and has an advanced case of prostate cancer that's metastasized and is now bone cancer. Obviously, the prognosis is not sunny. Though it's under treatment, he's run up about $10 grand in credit card debt over the past couple years or so between travel, medical and other living expenses.
Because the laws have changed in recent times, he's asking for some advice and/or strategy on whether or not a bankruptcy is feasible for him, and if so, under what conditions and what strategy he might pursue to minimize the impact.
Here are the particulars:
No real assets to speak of:
$20k total retirement portfolio in CD(s) maturing the end of this month
$1500 equity in a modest car (04 Ford Focus - $3G owed, worth $4500 if he's lucky)
$0 real estate
$0 investment vehicles (no investments of any sort other than the CDs)
$0 jewels or other personal assets
$10k owed on credit card(s)
* Factoid: Though he has $20k in retirement money left, he'll likely need that to cover significantly increased medical expenses that he will undoubtedly be incurring very soon.
* Factoid: Given his advanced age and medical concerns, any negative impact on his credit rating is a non-issue. He's not in a position to even remotely consider applying for any loans for real estate, cars, or other such major purchases so a hit on his credit rating is irrelevant.
So the question is this. With the change in the laws in the past couple years, does it even make sense to declare bankruptcy, given that the courts are 'harder' on repayment terms and the impact that escalated legal costs for an attorney to handle such a proceeding will cost him?
IOW, if he's going to have to repay half of the money anyway, plus $3 grand for a lawyer to take care of it, would it not make sense to just pull out 10 grand and pay the bill anyway?
Though this sounds dishonest, given the context of the medical condition and upcoming bills, you'll understand the next question. Should he be finding a place to 'hide' the $20k he has with a friend or family member so that it's no longer 'his' asset for the purposes of a bankruptcy? Would that recipient be responsible for any tax liability, and if so, again - does the accumulated incremental costs of migrating the small portfolio plus legal fees plus any court mandated repayment negate any reason for going through it?
I'm rather on the fence about this myself and feel awkward about asking the question, but hope that y'all will understand the unfortunate situation he's in and will offer the best advice you can given the circumstances.
Thanks!