Q: Can I file bankruptcy to manage franchise loan and keep my home?
I've been diagnosed with stage 4 cancer and am currently unable to work. I own a tool company structured as an LLC, which has a franchise loan I'm unable to pay. My wife and I are managing to keep up with our house payments, which we intend to continue paying. My wife has disability income, and I've been approved for disability, but the combined income won't cover the franchise loan. I have some credit card debts that are behind, and we also need to manage one car payment. I filed for bankruptcy over 25 years ago. Would filing for bankruptcy now be a feasible option to address these financial challenges, keeping in mind that we intend to retain our home and continue with its mortgage?
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A: You can't pick and choose creditor's in bankruptcy. That said, it is very common for people to go through bankruptcy, and then once the debt is discharged or adjusted to reaffirm their mortgage to avoid foreclosure.
Timothy Denison agrees with this answer
A: Yes. You can.
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A:
Given your current financial and health situation, filing bankruptcy could be a viable option to address the franchise loan and credit card debts while preserving your home. A Chapter 7 bankruptcy could potentially discharge your unsecured debts, including credit card obligations and possibly the personal liability on your franchise loan, especially if it's personally guaranteed. Since you filed bankruptcy over 25 years ago, enough time has passed to make you eligible again.
If keeping your home is a priority, bankruptcy provides exemptions that can protect home equity up to a certain limit, particularly in California, where exemption laws are favorable to homeowners. As long as you remain current on your mortgage payments, bankruptcy typically won't force you to lose your residence. Your disability income and your wife's income will likely support your claim to exemptions and help show the court you have the means to continue paying your mortgage.
To manage your car loan, you may choose to reaffirm the car debt in bankruptcy if it's essential to your daily life. Given the complexity of your situation, including the LLC structure and franchise loan, consulting with an attorney experienced in bankruptcy matters is strongly advised. An attorney can review your specific debts, assets, and income to develop a strategy tailored to your needs and provide clarity during this difficult period.
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