Need Help Facing Daunting Subject of Bankruptcy

July 22, 2012 9:36 PM

I am seriously considering declaring bankrupcy. I have a few main questions: 1) Do I need to know each company I owe money to? My parents opened all kind of credit cards in my name years ago, and I don't know about the specifics, and would like to avoid speaking to them as they are not exactly trustworhty. 2) How do I actually start the process? Who specifically do I see to manage declaring bankruptcy, considering I have zero cash? 3) If I have a credit card in my name, for which my partner is the main holder, will I have to cancel my part of that card, which I hold only for emergencies?

I really want to start over, and think I can. I know it will cause problems, and I think I should have done it sooner, but even though I only owe about a thousand on my own card, with a little school loan debt (which I know can't be discharged), this parental card thing is killing me to the point of giving up and despair, and causing me to feel hopeless about the contamination of my credit by my mentally ill and desperate parents. Plus, I have a few minor medical bills, but being unemployed, I cant make a dent in them.

I think I have a good chance at being able to create good credit after this process is over, but I really need a clean break from disastrous figures in my life and their bad choices. I am willing to face the consequences in order to do this. I am a careful person, and I have people willing to cosign for me and be guarantors for key life necessities (rent, car payments, etc.) because they know me and my trustworthiness. Will this affect my current rental apartment, which usually does an instant lease renewal every year? That's where any money I can cobble together goes.

So, what am I in for, and who do I speak to in order to get this pretty-depressing, but hopefully rejuvenating, process started and finished. I am located in NYC currently. Is there anything obvious I am missing? Many thanks for any helpful information, or direction to other resources, would be deeply appreciated.

posted by asimplemouse to work & money (26 answers total)

Maybe this for a start? If you're not low income enough to qualify for their help, they will surely be able to redirect you.
posted by fingersandtoes at 9:40 PM on July 22, 2012 [1 favorite]

Write your parents and email and tell them that they opened the cards in your name fraudulently and that if they don't pay them immediately you will be forced to report them as fraud and go to the police if necessary. Before you do this get free credit reports from all three credit reporting companies; they will list all your creditors so you know who to call. If your parents don't pay them ASAP call the credit card companies and say that you didn't open the cards and that they're fraudulent and do what you need to do to prove it.

This is what I had to do. One company closed the account, it had been opened before I was even 18. Not sure if they did anything else. My mother paid off the other accounts even though it was a huge stretch for her.

Don't declare bankruptcy before you've at least tried this. Declaring bankruptcy with only 1k of actual debt is really extreme.

I totally sympathize with wanting to say "fuck it" and cut ties, but if you let your parents get away with this they'll just open new cards after you declare BK. You do get card offers soon after, with horrid interest rates, because they know you can't declare again anytime soon.
posted by the young rope-rider at 9:47 PM on July 22, 2012 [19 favorites]

Thanks for that recommendation, it seems extremely helpful.
posted by asimplemouse at 9:49 PM on July 22, 2012

IAAL, but IANYL. IANABA. If the unmanageable part of your "debt" is due to your parents' malfeasance, you may be able to get rid of it without declaring BK on your own. It would be a shame to use your once-every-seven-years bankruptcy to get rid of $1k of your own debt.

Out here, there are a number of organizations that run low-cost/free bankruptcy clinics. I'd look into that back in NY. However the clinics out here are often staffed by law students and baby attorneys (I know: I served at one myself!) If the first attorney you get is very focused on "this will be an easy BK, sign here" then it'd probably be worth signing up again, waiting for a few weeks, and talking to the next person. Or ask to speak with the attorney overseeing the clinic.

Good luck.
posted by spacewrench at 9:49 PM on July 22, 2012

Also, you might be surprised at how sympathetic and helpful people are when you tell them the truth about your parents and what happened. It's actually pretty common. My partner had to deal with it all the time when he was selling cell phones; kids would be 19 trying to get a cell phone and discover their parents had wrecked their credit.
posted by the young rope-rider at 9:50 PM on July 22, 2012 [5 favorites]

Here is the link to get your free annual report. This is the government site, so no charges.

IANAL, but fighting the charges seems like actually the best idea to me, too.
posted by annsunny at 9:52 PM on July 22, 2012

Not to thread-sit. but I just wanted to gently cut-off any suggestions of legal threats to my parents. They screwed up during a difficult time for them. They are both elderly and in very bad health. I simply wont create extra strife for them, although I know in many situations that may very well be the right thing to do. In this case, they wont repeat those old mistakes.
posted by asimplemouse at 9:53 PM on July 22, 2012

OBTW, speaking with debt collectors by phone is generally a losing proposition. Write to them if you must communicate, but you're better off talking to your own lawyer, even if you have to pay for it. As bad as lawyers (allegedly) are, debt collectors are worse.
posted by spacewrench at 9:55 PM on July 22, 2012

Talk to a lawyer!!!!!!

Bankruptcy isn't that big of a deal in an honest situation requiring it, really, but it seems you have other legal outlets - use them!!!!

I had credit fraud and a resulting judgement. I tried every avenue to resolve honorably, even though the debt was not mine. I never regret telling that predatory credit collections agency they got NOTHING, vs whatever monies they would have collected if they had just settled with me via the attorney I hired.

Your situation is not mine. But a good attorney will help you navigate the ups and downs.

Lawyer.

Lawyer.
posted by jbenben at 9:56 PM on July 22, 2012

BTW2, if your parents are in danger of dying any time soon, clear this up (one way or another) now. It'll only get worse if you don't.
posted by spacewrench at 9:57 PM on July 22, 2012

But getting my parents charged with fraud while they are both so sick and living on a small fixed income, seems like a very cruel thing to do. If they can no longer have their car lease, ever rent an apartment again, and everything else destroyed credit and legal recourse result in, the responsibility will fall to me, as the only child, considering I would never let them live in a gutter, espcially since one of them was utterly kind to me growing up, and barely participated in this fraud. Is there a way to declare them fraudulent, but not destroy their lives at all? They are in no danger of dying soon, and can drag on in this decrepid manner for decades.
posted by asimplemouse at 10:04 PM on July 22, 2012

In my experience, if you talk to the credit card companies and explain the situation, they might let the debt go without requiring a police report. It happened in one case of mine. They might also let your parents assume responsibility for the debt, again, without involving the police. Your parents can then declare bankruptcy themselves.

If you don't want to do it, fine! It is totally up to you. I just want to make sure you know what the options are.
posted by the young rope-rider at 10:07 PM on July 22, 2012 [4 favorites]

Take spacewrench's advice, talk to a lawyer.
posted by annsunny at 10:08 PM on July 22, 2012

Your update is exactly why you you need to talk to a few lawyers and get their opinions to weigh - not ours.

You are being foolish by not seeking good legal council. Metafilter can not solve your (moral) issue with so few details.

Sorry.,
posted by jbenben at 10:09 PM on July 22, 2012 [2 favorites]

time to lawyer up
posted by facetious at 10:15 PM on July 22, 2012

Talk to a lawyer, but: were these cards opened in your name while you were a minor, legally underage and unable to sign a contract? Then quite possibly --- even without bringing your parents into the whole mess --- you aren't responsible for the debt. But talk to a lawyer!
posted by easily confused at 10:17 PM on July 22, 2012 [2 favorites]

If you are really against making a fuss about this over your parents, bankruptcy isn't the end of the world even so. If they're elderly (and not going to be harming you this way again), and if you're generally not looking to accumulate more debt... yes, it's a hit, but you might consider it worth the trouble. You're the only one who can make that call, with your partner.

If you are being supported by your partner, you guys should really consider this a joint endeavor towards your collective financial stability, as far as paying for a bankruptcy attorney, etc. If your partner doesn't have the funds to help with that, either, you may qualify for assistance through Legal Aid. My local branch does a lot of no-asset bankruptcies. Sometimes people get weeded out for being uncollectible... which is what you probably are, right now, if you're unemployed. Do not let this make you despair. If they do this (or if a bankruptcy attorney recommends this, if you see one), ask for what documents you'll need to have to file, and then go back as soon as you become employed.

Debt on paper is not the end of the world. If you have no income and no assets, they generally can't do anything but annoy you, and a bankruptcy attorney or Legal Aid should be able to give you advice on how to make them stop doing that, too, if there's not some other way to make this go away entirely (statute of limitations issue, etc).
posted by gracedissolved at 10:18 PM on July 22, 2012

There are some good answers here, but the most important answer is talk to a lawyer. Definitely, talk to a lawyer before talking to a creditor, or doing any of these more drastic steps like getting cops involved.

I know you obviously don't have money, but you should find the nearest legal aid attorney, or contact your state bar association and see if they have a pro bono/ modest means attorney referral service.

Even if you were to skip the lawyer and file bankruptcy on your own, there is a lot of paperwork, and there are filing fees. Heck, the law firm I clerked for that did bankruptcies had software specifically for consumer bankruptcies because there was so much data to be entered.

There are also ramifications of filing bankrupcy, what it does to your credit, and how it bars future bankruptcy filings for x period of years. These are all the reasons that at least consulting with a lawyer (even if it's for one hour of time instead of to represent you in a bankruptcy) is a very smart move.
posted by Happydaz at 11:58 PM on July 22, 2012

I used to be a credit controller (IANYECC?). I'm not clear if there are balances on the cards your parents took out in your name, or if they've been transferred to a collection agency, or if it's just a swathe cut through your credit history or all of the above. I understand not wanting to find out the gory details, too. But you really have to - the amounts, ages, durations and ownership of money owed will make all the difference. Get a full credit report, then start writing letters. Try and get one person dealing with your case at each lender.

Your parents aren't by the sound of it going to be able to repay large outstanding balances, and if so that's dead money to the issuing lender. Returns on dead debt are pence in the dollar: there's a real and surprising amount of leeway for negotiation, particularly given the circumstances and the likelihood of bankruptcy relative to full repayment. If there was true fraud, you will probably need a lawyer, though - there's no negotiating a fraudulent debt.

Good luck!
posted by cromagnon at 12:24 AM on July 23, 2012

Thanks for all the answers, much appreciated. I knew the answer had to deal with lawyers, but I wasn't sure how to find one, especially considering my lack of money right now. You've given me some things to think about. Thanks again.
posted by asimplemouse at 4:32 AM on July 23, 2012

If you don't even know exactly what it is you owe, the first thing you need to do is go here and get your free annual credit report. it may be painful, but it is kind of silly to proceed any further with lawyers or what not without knowing where you stand.
posted by Rock Steady at 5:18 AM on July 23, 2012

The mefi wiki's Get A Lawyer page might be helpful. Also you might talk to the folks at NEDAP about your options - they might be able to point you towards legal resources..
posted by yarrow at 7:28 AM on July 23, 2012

nthing "get a lawyer". IANYL.

WHEN you talk to a legal aid or bankruptcy lawyer, it will be most helpful if you have as much information about the debts you owe and the debts your parents incurred on your behalf. It may be helpful for you to pull your credit reports first so you can see what's out there. Even without that, just making a list of the known debts (and communications from collections agencies, etc.) and the amounts will help set the framework for your discussion with the lawyer. Without that information, other than getting some (very valuable) general advice specific to your situation, the most likely result is that the lawyer is going to tell you to come back once you have made progress in gathering that information.

(Caveat: There's not enough information in your post for anyone to assess all of the possible timing concerns. Your receipt of certain types of communications from creditors may require faster action. The legal services intake people can help you assess whether immediate action of any sort is necessary.)

Also, FWIW, we have been renting out houses for several years now. My lease language states that a tenant filing for bankruptcy triggers a default under the lease (allowing me to evict). As a practical matter, FWIW, I personally don't pull credit or check for new bankruptcies when our leases are up for renewal. YMMV hugely depending on lease language, local laws, and individual landlord practices.

Finally, please be careful when dealing with collections agencies. It sounds like you are in particular danger of inadvertently acknowledging the validity of the debts your parents incurred in your name. Again, you should talk about that issue with a lawyer.

(This is not intended as specific legal advice and you are not my client. I am not licensed in New York and cannot give you legal advice.)
posted by QuantumMeruit at 8:32 AM on July 23, 2012

Lawyer, lawyer, lawyer.

Go to Legal Aid for advice. You may not need to file bankruptcy.

As for your parents. They don't get to ruin your credit and make your financial life miserable.

If they fraudulently used your name and incurred debt, then that is something they need to atone for.

Old and sick is sad, but saddling you with this burden is worse.

Get all three of your credit reports and see what's on there.

Then consult with your lawyer about the best recourse for you.
posted by Ruthless Bunny at 9:09 AM on July 23, 2012

Consumer Credit Counseling was a lifesaver for me when I assumed a large amount of debt during a divorce many years ago. At the very least, they can help you navigate the path to financial responsibility and will make excellent recommendations for your particular situation. In my cae, they communicated with the creditors, made (reduced) payments from my single monthly payment to them, and helped me negotiate reduced payoffs with several creditors. A Google search seems to indicate they're now called Money Management International. Good luck -- it's worth the effort!
posted by summerstorm at 10:37 AM on July 23, 2012

It would be a fine line to walk, but you may be able to pursue legal action without threatening your parents per se. Especially if you are committed to supporting them. Financially, would it better for you to declare bankruptcy or for them? The answer may depend on assets owned, etc.
posted by bq at 9:01 PM on July 23, 2012