Three years after bankruptcy–from the depths of despair to building a retirement home.
I love being a bankruptcy lawyer, because I can help almost everyone I see.
Just before the July 4 Holiday, while I was rushing to wrap up some work, this email came from a a friend I’ll call John Blackstone.
I love being a bankruptcy lawyer, because I can help almost everyone I see. John Blackstone encouraged me to share his after-bankruptcy experiences with you.
He encouraged me to share it with you.
Mr Weed,
I would like to give you a brief update on events since my Chapter 7 in March 2011 and the Short Sale on the house a year later.
While I don’t believe many people want to “go broke”, the fact is that it does give you a fresh start the same way businesses do when they declare Chapter 11 when sales do not meet expectations and they can’t pay their creditors.
I have been given a fresh start and have made the best of it.
I have rebuilt my credit score to near 700 on all three credit bureau’s. I pay my bills on time – always! I would rather go without food (for a short time) than let a bill be late.
I have applied for and received several credit cards with a combined limit near $10K. I don’t really need more than that and don’t want it. You have to go through a short time with “Secured” credit cards but if you keep your record clean and pay on time you will transition to unsecured in about a year to year and a half. Credit Unions (esp Navy Federal) are good at this. Capital One and Merrick Bank are two others.
I bought a new car and then sold it and bought a slightly used one with no problems or excessive finance charges.
I sold my underwater house at short sale. I highly recommend this versus Foreclosure or Deed In Lieu.
By the way, if your client is a vet I highly recommend Veterans United. They specialize in VA loans and are pretty good about working with you to get a mortgage even with less than stellar credit.
When I sold the house, Chase paid me an incentive for both 1st and 2nd mortgages to do a Short Sale instead of Foreclosure. I never received a 1099 from Chase. Remember I asked you about this a year or so ago. I asked the settlement attorney at the time and they said it was on the settlement sheet and would not be taxable, since it was proceeds from the sale of the house.
This year I was audited on my 2012 Return. I had not included that fee as income because I believed and the settlement attorney told me it was “proceeds from the sale of the house”, a reasonable assumption. However, I was prepared to have to pay back taxes rather then get involved with the IRS.
As I was preparing the write the check I decided to call them and ask why their website wouldn’t let me pay online. Well, this was the best call I made all year. They said firstly that they hadn’t sent me a bill but a proposed tax and penalty and I shouldn’t pay it until all remedies had been exhausted. I said do I need a lawyer and they suggested that yes that might be prudent. They then ASKED ME why I hadn’t included all my income. I disingenuously asked where this unreported income had come from and they told me Chase. I then told them what I said above – that I thought it was “proceeds from the sale of my principle residence”, it was on the settlement sheet and I never received a 1099. She said hold on and put me on hold. About 5 minutes later she came back and said all was fine, I owed no tax and that was it. I received the letter from the IRS a few days ago confirming that I owed $0 in tax for 2012. What a relief.
I’m not sure everyone would get that treatment. I think Chase screwed up and these incentive payments are still an iffy matter. I think I may have been very lucky. I’m wondering if any of your other clients have had similar situations and what was the outcome.
I have been pre-approved by 2 different lenders for a zero down VA loan and also a Construction loan for $300+K. I am building a small log cabin in a gated community in the Carolina Mountains where I will retire next summer.
So from the depths of despair where you see nothing but the sides of the hole you’ve dug for yourself to a clear mind and a fresh perspective on the future, free from debt and looking forward to the next chapter of life. Thank you Robert Weed for tossing that rope ladder down the hole. I used it and climbed out and I learned some valuable lessons about biting off more than you can chew.
Kind regards,
John Blackstone
Comments