With God as my witness, I am NOT filing bankruptcy, and by the grace of God do not have any financial troubles. I am also not asking advice for a friend, but merely curious based on a guy that I know.
This gentleman has a wife and three kids and he filed Chapter 7 about 6 years ago and it was discharged 3-4 months later. He was a sales guy who probably made about $150K and like many salespeople, lived like he had another 0 at the end of all of his checks. I did not know him at the time, but I do know he foreclosed on his house around this same time. It was a typical "sand state" situation (FL, NV, AZ, CA) where his home was "worth" $800K at one point in 2006, only to decrease to around half of that. The house was bought for around $300K, so the mortgage couldn't have been that high. To the best of my knowledge, there were no major medical bills or anything catostrophic other than a few months out of work and a decreased salary.
My questions are as follows:
1. What kind of debt to asset ratio must he have had? Could he have really gotten in this deep off of a mortgage, auto loan, and credit cards?
2. Is it likely that he took out a second mortgage against all of the appreciation and when the bottom dropped out, he was left holding the bag?
3. How does Chapter 7 work? Did he truly just get to walk away from all of his debts and leave the creditors out to dry?
4. Do you have to liquidate things such as 401K, IRA, etc to pay the creditors?
He and his wife certainly live more modestly these days, but don't seem to be struggling by any means. It seems a bit bothersome that folks can just walk away (if that's what BK allows you to do).
I obviously don't want to walk up to him and say "tell me about your financial collapse," so I'm curious if anybody here might have some insight. Thanks in advance,
This gentleman has a wife and three kids and he filed Chapter 7 about 6 years ago and it was discharged 3-4 months later. He was a sales guy who probably made about $150K and like many salespeople, lived like he had another 0 at the end of all of his checks. I did not know him at the time, but I do know he foreclosed on his house around this same time. It was a typical "sand state" situation (FL, NV, AZ, CA) where his home was "worth" $800K at one point in 2006, only to decrease to around half of that. The house was bought for around $300K, so the mortgage couldn't have been that high. To the best of my knowledge, there were no major medical bills or anything catostrophic other than a few months out of work and a decreased salary.
My questions are as follows:
1. What kind of debt to asset ratio must he have had? Could he have really gotten in this deep off of a mortgage, auto loan, and credit cards?
2. Is it likely that he took out a second mortgage against all of the appreciation and when the bottom dropped out, he was left holding the bag?
3. How does Chapter 7 work? Did he truly just get to walk away from all of his debts and leave the creditors out to dry?
4. Do you have to liquidate things such as 401K, IRA, etc to pay the creditors?
He and his wife certainly live more modestly these days, but don't seem to be struggling by any means. It seems a bit bothersome that folks can just walk away (if that's what BK allows you to do).
I obviously don't want to walk up to him and say "tell me about your financial collapse," so I'm curious if anybody here might have some insight. Thanks in advance,
