[JeGoof]

Apologies in advance for the long post, but I really need some advice regarding what to do / who to talk to about how to protect the monies from an inheritance.

I am a California resident, and had recently spoken with a bankruptcy attorney in preparation to file Chapter 7 bankruptcy, because I have about $25k in debt from a car accident back in 1994 & the ensuing frivolous medical bills (my auto insurance company really screwed me on this one).

The attorney told me that because of my meager income & lack of any assets that I am a perfect candidate for Chapter 7, and I should be able to get out from under this debt with no monies due. I have been trying for years to resolve all this, and the debts keep hanging around on my credit report, passed from one collector to another. I was hoping to finally be able to clear these debts & start with a clean slate, & it looked like with a Chapter 7 it might actually happen...

Then my father passed away, leaving me as the beneficiary of a small insurance policy & his belongings. The total value of this estate with the policy included may net me $40k - $50k at best (probably closer to $30k).

Speaking with the bankruptcy attorney today & telling him about the newfound inheritance, he told me that now the Chapter 7 filing may no longer be as easy as we originally planned. :(

Then he tells me that there might be a way to still have a happy ending, and that is to wait on filing the Chapter 7 for now, take the proceeds from the estate & insurance policy & invest it into something like real estate, and then file for the Chapter 7 after.

He said that doing this will prevent the debtors from being able to tap into my inheritance, and still allow me to file for the Chapter 7 down the road virtually unmolested. It sounds great, but it also sounds too good to be true.

So my questions for all of you out there are:

1) Does this sound feasible?
2) What are the dangers of taking this path?
3) What is the safest thing to invest the money into if not real estate?
4) Can you suggest a better method of getting out of these debts without dipping into the inheritance?

Also, on a completely unrelated subject, I am currently banking with Wells Fargo (just standard checking & savings accts), and the attorney told me that I need to get away from those guys immediately & bank with someone else. He didn't specify why, but it had something to do with how they could possibly affect / impact the filing of the Chapter 7.

Any ideas as to why he might give such advice?

Thank you in advance to all for any assistance you can provide.

[George_1950]

I suppose the question you are asking is, what are the exemptions you are entitiled to in California. Based upon the information provided, I would think you would look into a compromise and settlement with your creditors, at somewhere around a 50% payoff for complete satisfaction of your debt, assuming that you may, or may not, owe any of them after this long. You have mentioned that you have a checking and savings account. It is difficult to validate your attorney's advice without knowing the totality of your debts, income, and budget; and whether you are married and have other dependents. You may want to get the advice of another attorney as a second opinion.

[JeGoof]

There's not a lot to my situation really.

Single, no kids, no real assets to speak of, paycheck covers the rent / bills & that's about it. Just your typical working class schmo I guess.

Checking acct gets the paychecks deposited into it & then emptied out when the bills are due. Savings acct has a running balance of about $75 bucks I think.

Have 2 credit cards that rarely carry a balance (if ever) that are pretty much just used for emergencies, and I pay cash for everything. If I can't afford it, I just don't buy it.

I guess the thing I was hoping for is some way to still file the Chapter 7 & get out of these debts that have been hanging over my head for so long, and leave the inheritance untouched.

Guess I'm stuck paying for this crap. Really gets me that after all this time I'm going to have to pay for something that I refused to pay for all this time because I told them I wasn't going to be bullied by their BS tactics. Pisses me off that a hospital can have a guy's girlfriend panic & tell them to "do whatever you need to do", and that means they have carte-blanche to do a ton of super-expensive tests on a guy that has no insurance.

THREE ct scans & SIX SETS of x-rays, and all I had was a freakin concussion. Guess they saw a sucker coming...

The kicker is, I had finally given up & decided I was going to file the Chapter 7 last year, but I couldn't afford the up-front attorney costs. I finally find one that'll take payments, and then the inheritance thing happens. Don't know if it's a blessing or if it'll be just another experience in personal pain as I watch the whole thing go down the tubes.

[George_1950]

If you haven't paid these since 1994, why pay them now? Are the accounts on your credit report? Does anyone have a judgement against you?

[twinkiedooter]

George, you have brought up a lot of salient points here. If he has no judgment against him, why is he looking at a bankruptcy proceeding? I agree about that.

The problem I see with the scenerio that the attorney mapped out about putting the inheritance into real estate, etc. is the fact that you must disclose all assets and monies received within 6 months of filing the bankruptcy. The trustee is not going to allow this type of "hiding" of your assets. I have no idea what that attorney was thinking, but I have seen trustees turn down filings due to something along the lines that the attorney was mapping out for you to do.

If you haven't paid them since 1994, why are you in such a rush now to do anything about this? The worse case scenerio would be for you to offer them some of what you owe and them to take it and the matter be done and over with.

Back in the 1970's I went to the ER for smoke inhalation from a house fire. Some 4 hours later and my only treatment being given oxygen, I received a bill for $500. Back in 1975 that was a lot of money for oxygen. I never paid the bill and I'm not going to now.

In 1986 I had an accident that racked up well over $100,000 in medical bills, testing, treatment, hospitalization, etc. etc. I never paid what my auto insurance carrier didn't (as I could not afford to do so) and eventually it all came off my credit report. And believe me, it was a lot more than $25,000.

What sort of back and forth correspondence or conversation have you been having with these people? Have you paid anything towards the bill? When was the last payment? This will definitely be the deal breaker on this matter.

If they do not have a judgment against you or your paycheck garnished, etc. have they at least filed a lawsuit against you in court to recover any money or are you just answering the phone and putting up with their phone abuse?