We also have a small business loan for $10k and loans from family members (which could possibly be forgiven). Should we go to a credit card counselor or consider bankruptcy.
We also have a home equitity on a second home we share with a family member, this is listed under our business.
We cannot pay off everything (we have gotten new jobs) but want to pay the home equity to protect our brothers credit and keep the home we share. Can we get the credit card debt reduced and agree to pay off the loans mentioned above?
What type of attorney, credit conselor should we use?
You might want to talk to a consumer law attorney, one who handles debt and contract issues as well as bankruptcy. You have a number of issues. First, the business's debts are not yours personally, unless you personally guaranteed them. If you did that, then whatever the business cannot pay, you must pay. Second, you do not need to hire anyone to settle your debt. You can contact your creditors and ask that they reduce interest rates and settle for less. Understand that they do not have to settle anything. If you do not pay, they can sue you and take whatever collection actions your state allows.
Bankruptcy could be an option, but you might have a problem keeping the second house. The reason is that your unsecured creditors would be harmed by your paying on it. Now if your co-owner is paying the mortgage and the expenses associated with it, then there is no need for you to keep your interest. As long as someone pays, the credit reports of co-owners will not be affected.
What you need to do is sort out what debts belong to the business, which ones belong to you, and which ones are both. For those debts that belong to the business, if the business can no longer operate profitably, you might want to consider shutting it down. For those debts that you are responsible for, talk to a consumer law attorney about options. Negotiating debt will affect your credit worthiness and it is not always effective. Bankruptcy may require a Chapter 13 reorganization plan or a Chapter 7 liquidation. Which one you file depends on your income and expenses, your assets, and how much of your debt is consumer versus business.
So much more information is needed about your situation before any specific information can be given.
[This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]
Many credit counseling and credit repair agencies, in the experience of my clients, in fact do more damage than good. Some, again in my experience through my clients, are outright fraudulent.
The only credit counseling that you should really investigate is through the agencies that are approved by the U.S. Justice Department. You can navigate to a list of approved agencies by going on to the website for the U.S. Bankruptcy Court in your jurisdiction. Then, find the page for the U.S. Trustee. They will have a tab guiding you to approved credit counseling.
Again, in my experience, through my clients, if something can be worked out, they will let you know and help you. If not, they will tell you that bankruptcy is appropriate.
At that point, retain experienced local bankruptcy counsel to guide you through the complexities of the bankruptcy law and procedure.
Finally, you should start sooner rather than later for many reasons not the least of which is that the interest rates on debt increase the debt rapidly. You should never take money out of 401K or other such accounts, which are exempt in a bankruptcy, for spiraling interest, and your new incomes may eventually disqualify you for chapter 7 bankruptcy.
I truly wish you the best
This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.
Start with your business attorney. Many Washington attorneys are doing debt relief work with clients informally. You may not need to do a bankruptcy or credit counseling. If you've managed to keep good credit, you want to keep that score in good shape. I would seriously investigate whether or not you can refinance things, first. Some, but not all the credit card companies may be willing to accept partial payoffs but this damages your credit score as well. With the two of you employed, and, believe it or not, the relatively small amount of outstanding debt, you may find that you have other options, especially once an attorney is helping you by making those outbound calls to the credit card companies to negotiate differenet terms.
