House Repossessed...Now What?

Brain started his own business a few years ago and it failed. Now he is looking to get back on his feet.

QUESTION: Brian has a lot of debt from starting a business that quickly failed.  He’s had his cars and home repossessed.  He’s working now and will earn $80,000 this year.  He’s been advised to file bankruptcy to clear up his mess.  Is that good advice?

ANSWER: You’re not bankrupt.  You’re getting bad advice.  Until one of these lawsuits causes your wages to be garnished or keeps you from being able to eat, you are not bankrupt.  You need to explain your current situation to the people who call you threatening to sue.  Let them know that their money is coming, but if they garnishee your wages today, you’ll be forced into a financial situation you don’t want to be in. 

After your wages are back to where you know they’re going to be, you can contact these collectors and offer a lump sum settlement.  You should be able to settle all of these in full within a few months – just make sure you get any settlement deals in writing.