Q: Instead of Bankruptcy can I sell a Vacant lot I own and negotiate with my Creditors?
I am looking for an alternative to Bankruptcy. Chapter 13 doesn't work for me it seems to expensive. Chapter 7 seems like my only way. I do have a Bankruptcy Lawyer but looking for a second opinion. I own a Condo and a vacant lot. I don't have any other assets. Since Covid having problems finding work in the area I live. My idea is to sell this vacant lot which was basically worthless a year ago. Now selling at about 20000.
And negotiate myself with the Creditors. Many have sent letters in the past settling for less than half the amount owed. I am being sued by one Creditor now. But they cant seem to find me to serve the papers. They do have my correct address not trying to hide from them. Does this seem like a good idea? Or am I taking on too much? My goal was to have some money left over after negotiating these debts. Since I am basically broke and don't even have a car. And really need to move to a larger metro area where I can find work.
A:
Debt settlement may be OK but do not forget that you will get a 1099 tax form from each creditor that you settle with. Any reduction in debt or debt forgiveness will be treated as a "taxable event" and you will have to pay income tax next year on every penny that you save. In bankruptcy, no income tax is assessed. you tell me which sounds better to you.
Hire a good attorney and make your decision with knowledge not by listening to ads on tv or radio. If funds are limited then consider a Ch 13 with a small down payment.
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