qofcc
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Post by qofcc on Mar 21, 2020 9:19:02 GMT -5
Scenario: Husband owns small business in heavy hit area - construction subcontractor. Wife now earns enough to pay secured debt (mortgage, small payment on used business vehicle) all of their necessities, food, gas, insurance, etc. along with the business insurance overhead - everything but the unsecured credit card debt. They were using credit cards (in wife's name) to finance growing that business, trying another business that failed- lots of setbacks, investments in new equipment that has little resale value, paying living expenses and business overhead while business was slow. They have $5K emergency savings but $100K debt. They do not want to declare bankruptcy, earn too much for chapter 7, chapter 13 is too risky because of husband's unstable income. They already borrowed from their 401K, they are maxed out on the cards and they can't get more credit. They tried refinancing but even though they have never missed a payment their debt-to-available credit ratio and debt-to-income ratio is too high. Home equity loan is not an option since home is in husband's name and he has no income right now and showed a small business loss last year after depreciation. They are debating if they should pay the credit card minimum payments with their savings which would get through a couple of months but then they would have no savings and no guarantee of husband's work and who knows how long this virus will last. They own a modest home, drive crappy old cars, have 3 young adult children (1 still living at home and just lost his job as of today) who sometimes still need their financial help. They're worried another child and his GF might need to move in with them (he was an employee in the business and she just lost her job). Husband is sick with a bad cold and stomach virus - probably has a mild case of Covid-19 but no testing available. Everyone in their household has been mildly sick this week and staying at home so he can't go out and try to find other work right now.
I told them I remember back during the mortgage meltdown someone on here was recommending if you realized you were going to fail, you should "fail fast" - stop paying all unsecured debt at the same time and save what you can to negotiate settlement. Worst case scenario, credit card companies can get a judgement and garnish 10% of wife's pay (since debt is in her name). 10% of her pay is about 1/3 of the minimum payments they are paying now. Best case scenario they can negotiate a settlement and get a small business loan and/or sell anything they can spare to pay the settlement if they can't save up enough cash by the time the courts open up and the debt collections start. I remember during the mortgage meltdown when thousands of people were defaulting on their loans people who paid their remaining debts on time after defaulting were able to get credit again in a few years. I think they should notify all of their creditors they are affected and take advantage of any deferred mortgage payments to save as much cash as possible until we all get through these uncertain times. I also think they should stop using the cards before they miss a payment and start asking for help. It seems like when we get through this, the banks might be more forgiving because they'll be getting bailout money.
What do y'all think? Any other advise for them?
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thyme4change
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Post by thyme4change on Mar 21, 2020 10:05:07 GMT -5
Why is bankruptcy such a bad option?
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Gardening Grandma
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Post by Gardening Grandma on Mar 21, 2020 10:06:10 GMT -5
Agree with thyme
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qofcc
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Post by qofcc on Mar 21, 2020 13:17:12 GMT -5
Bankruptcy would be a bad option for them because she earns too much to qualify for chapter 7 and the only debt they can't pay is unsecured. She consulted a bankruptcy lawyer a couple of years ago but the lawyer did some worksheet and the amount she'd be required to pay for 5 years on the debts after the budgeted allowance would be much more than the 10% of her pay that could be garnished by a judgement. If she files alone, it was almost as much as the minimum payments they're already paying (some of the debt is at very low interest rates) and if they filed together because her husband's work is sporadic and seasonal (he might have revenue after payroll of $8,000 in August then $100 in January) they might end up with a minimum payment they can't meet and both of their credit would be trashed. She has to cover the business overhead when there is no money coming in but that can't be included in the budget unless they have the business file for bankruptcy too. Since the kids are no longer tax dependents they don't count as dependents for purposes of the worksheet even though they still depend on their parents especially the one who is employed by the company and doesn't get paid when there is no work.
She's really worried about that court mandated budget. All of their cars and 2 of their kids cars are crappy old junk worth <$500 KBB value each and they break down all the time. They rely on their vehicles to work. If they have no credit and the budget is so tight they can't save what happens the next time one of the vehicles suddenly needs another transmission? They haven't been able to buy reliable vehicles because they owe so much on credit cards but it seems like they're paying out more in vehicle repairs than a car payment.
We calculated 10% of her pay for 10 years vs 5 years of the estimated amount the lawyer said she'd have to pay in the budget and the 10 year option was much less and would allow them to save a cushion for emergencies since they won't be able to use credit cards anymore. I googled the info and it said a judgement is for 10 years renewable for another 10 years at 9% interest on the amount owed (they live in NY). The 10% of pay won't cover 9% interest on the debt so it sounds like the money will be "owed" forever but not collectible after 20 years. They are in their 50's and worried about retirement and the article said they can't garnish Social Security or 401K withdrawals so they wouldn't need to pay the entire 20 years. They are hoping they'd be able to arrange a settlement with the card companies rather than a judgement or bankruptcy but looking at worst case scenarios.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 21, 2020 14:15:33 GMT -5
divorce?
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giramomma
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Post by giramomma on Mar 23, 2020 0:28:41 GMT -5
Well, if they don't want to declare bankruptcy, everyone needs to be out working as soon as they can. Including adult children and SOs...they should be turning over paychecks to mom and dad.
I live in a medium-sized city. Grocery stores are absolutely begging for help. My 15 year old son is getting paid $11/hour on Saturdays and $15.something to bag groceries. He's lasted at his job for 3 months...and gets a $100 bonus and the end of every 30 days of employment for the first three months. He also gets bonuses for recruiting new workers.
He's already gotten one raise in 3 months and is expecting another raise again after he's been there 6 months.
I'd also suggest that the GF look into being a nanny or something. Lots of people looking for childcare these days.
Maybe use this time for her husband to add some skills so he can put a couple of jobs together to make a decent living? I don't actually know anyone that just does seasonal work for a living full time.
While wildly unpopular here, I do think part of the equation is getting their children to be financially responsible for themselves. No doubt living on lower/entry level wages is not fun...and as a parent, I can see wanting to make my kids' lives easier..but, then there's the whole oxygen mask thing. As parents, we're also taught to put masks on ourselves first in case of an emergency...
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hoops902
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Post by hoops902 on Mar 23, 2020 8:05:16 GMT -5
I think the right advice likely depends on what the chances are this guy can even run a profitable business to begin with. There's a big difference between holding out in hopes that when this is over you will be back running a good business...and holding out hopes that in best-case scenarios you probably still shouldn't be running a business anyways.
It's also worth considering that being in a "hard hit" area might be better for small businesses. Similar to the idea of bankruptcy and "failing fast", it might be better to get hit hard and then recover soon for small businesses rather than limping along for months. So while we might want to flatten the curve for health reasons...getting smacked hard all at once might be the better scenario for businesses.
What I would NOT do, if I thought I had a chance at running a profitable business under normal circumstances...would be to pull the plug after a couple of weeks of hard times (particularly when we have no idea how long it might last). It might mean getting creative about what the business is doing in the short-term (i.e. working on taking over projects other companies have abandoned due to the pandemic, etc). If I thought I could make a real "go" of it, this is the time to push hard and hustle to be one of the fewer companies left standing on the other side. That said...there's nothing about the OP that gives me a great sense that this is a great business to begin with...I'm just saying if I thought I could make it work I wouldn't be packing up shop...I'd be trying to find anything possible to keep it going. If I was just in a bad business I probably shouldn't be in regardless...then yeah...fail fast and get out now. I just wouldn't be too quick to predict "I'm going to fail" if it hasn't actually happened yet. And a bad week or two is too early for that (IMO).
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 8:42:10 GMT -5
Well, if they don't want to declare bankruptcy, everyone needs to be out working as soon as they can. Including adult children and SOs...they should be turning over paychecks to mom and dad. This seems crazy - two of them don't even live there? did I miss something in OP? the one who does live there is out of work. And no one should ever be "turning over their paychecks" to anyone - no matter what the age or situation. Definitely cut off any help for those working/out of the house of course, and the out of work/living there one should try to find a job and pay some rent. But no - you don't turn over your check. And it's pretty unlikely getting a job now unless sought after skills that can be remote - which I doubt given scenario. But could be.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 8:52:01 GMT -5
Last year - the husband here had a loss on the business - he is the one who needs to get a job and turn over his check.
Perhaps people thought my divorce comment was facetious - and it was I suppose - but these "small business owners" who don't make any money and don't contribute to pay bills while their partners are paying everything kind of really annoy me. If you are taking a loss - that's a hobby, not a business - and with those working as contractors - usually it's indicative of an ego issue - they can't work for someone else and can't make a business profitable and they "play business" and have their partner pay the bills.
They can't even be honest about being supported by someone else - even as that person's pay is siphoned off to "invest" in this imagery business.
So - I consider this a form of financial abuse in a marriage.
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qofcc
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Post by qofcc on Mar 23, 2020 9:06:09 GMT -5
Hoops, yeah, that's the big question. Governor has classified their business as non-essential so they legally can't do that specific trade right now. They work year round but they make the majority of their profit May-Aug on projects contracted (by the companies they subcontract for) in March/April. Realistically I don't see how they could possibly make a profit this year. The husband is talking about changing the business model and scaling down and cutting overhead to do something related but different by himself instead of larger with a crew (and/or working as needed for his friends in who own similar businesses) but he won't be able to implement the new business until these restrictions are lifted - they're all out of work. Last night the governor said this could go on "4 months... 6 months... 9 months... whatever". And he has to be careful about even going out and looking for a job at a grocery store or something because the wife who is now the sole breadwinner is considered high risk with a pre-existing bronchial condition. They're scared and staying at home not even seeing the grandchildren. These are crazy times.
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giramomma
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Post by giramomma on Mar 23, 2020 9:17:21 GMT -5
Well, if they don't want to declare bankruptcy, everyone needs to be out working as soon as they can. Including adult children and SOs...they should be turning over paychecks to mom and dad. This seems crazy - two of them don't even live there? did I miss something in OP? the one who does live there is out of work. And no one should ever be "turning over their paychecks" to anyone - no matter what the age or situation. Definitely cut off any help for those working/out of the house of course, and the out of work/living there one should try to find a job and pay some rent. But no - you don't turn over your check. And it's pretty unlikely getting a job now unless sought after skills that can be remote - which I doubt given scenario. But could be. This is where we differ, R. And that's great. My kids know that even if they live at home as young adults, I will not provide everything 100% for them. They get a 6 month grace period to save, get an EF together (or not...adults and all) and then after that, they will have to financially contribute to the household-rent, utilities, food, netflix, etc. I understand that you are willing to not have your kids do that. I understand that you are fine easing your children into adulthood. That's not an appropriate choice for me. Honestly, I don't want to be in your situation. It's awesome that you are fine with it. I'm not wired to be like that. Kids turning over paychecks to parents while the kids are living at home isn't something new. That's been around forever. Let's face it. OP paints a picture of a family in financial distress. Maybe you don't interpret the situation one of financial distress? I do. Goodness, my children, who are all still minors, understand that in times of distress, that it's all hands on deck. They just don't get to sit and watch Disney+ while they watch DH and I do everything for them to make their lives as easy as possible. In my world, it just doesn't work like that. I'd literally never sleep. And I don't think that's a good trade off. I know drastic measures and all that. But, that's what needs to happen. Clearly this family is beyond "Well, post your budget so we can help you figure out how to make a Hills and valleys account so you set money aside for when you don't bring anything in your seasonal job."
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giramomma
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Post by giramomma on Mar 23, 2020 9:27:47 GMT -5
How much home equity do they have?
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 9:30:19 GMT -5
This seems crazy - two of them don't even live there? did I miss something in OP? the one who does live there is out of work. And no one should ever be "turning over their paychecks" to anyone - no matter what the age or situation. Definitely cut off any help for those working/out of the house of course, and the out of work/living there one should try to find a job and pay some rent. But no - you don't turn over your check. And it's pretty unlikely getting a job now unless sought after skills that can be remote - which I doubt given scenario. But could be. This is where we differ, R. And that's great. My kids know that even if they live at home as young adults, I will not provide everything 100% for them. They get a 6 month grace period to save, get an EF together (or not...adults and all) and then after that, they will have to financially contribute to the household-rent, utilities, food, netflix, etc. I understand that you are willing to not have your kids do that. I understand that you are fine easing your children into adulthood. That's not an appropriate choice for me. Honestly, I don't want to be in your situation. It's awesome that you are fine with it. I'm not wired to be like that. Kids turning over paychecks to parents while the kids are living at home isn't something new. That's been around forever. Let's face it. OP paints a picture of a family in financial distress. Maybe you don't interpret the situation one of financial distress? I do. Goodness, my children, who are all still minors, understand that in times of distress, that it's all hands on deck. They just don't get to sit and watch Disney+ while they watch DH and I do everything for them to make their lives as easy as possible. In my world, it just doesn't work like that. I'd literally never sleep. And I don't think that's a good trade off. I know drastic measures and all that. But, that's what needs to happen. Clearly this family is beyond "Well, post your budget so we can help you figure out how to make a Hills and valleys account so you set money aside for when you don't bring anything in your seasonal job." No - I am talking about "turning over the paycheck" specifically. - that is incredibly juvenilizing for the adult child and arrogant on the part of parents who feel entitled to someone else's paycheck. By all means charge them rent - up to actual market value. But "turning over the paycheck" is specifically what I am objecting to. Not paying rent or room and board - that is totally fine. You don't rent out a room in your house to others and expect them to turn over their paycheck. no. you charge a set rate based on market value.
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giramomma
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Post by giramomma on Mar 23, 2020 9:36:04 GMT -5
I was just skimming what the Federal Reserve is doing to try to prevent the economy from getting worse.
The Fed is launching something called a "Main Street Business Lending Program." Maybe that would have some promise?
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hoops902
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Post by hoops902 on Mar 23, 2020 9:41:53 GMT -5
It's not up to the kids to help finance mom and dad's business decisions. It might be appropriate to charge them some rent, utilities, food, etc...they should get jobs and pay their own way. There's no reason for them to just "turn over their paychecks" though. These kids likely still have their own bills (hopefully they have their own bills) to pay too.
I'm also just generally of the opinion that pretty much nobody should just "turn over their paycheck" to anyone else. Minor children wouldn't be taught financial skills if that's what they did. Even married people shouldn't be doing it with that kind of cavalier attitude even if the spouse handles all the finances.
There's opportunity for children living at home to pay their own way...and there's even opportunity for them to pitch in extra to help out a family member in a bind...but that's not the same as just turning your check over to someone else to fund their choices.
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Deleted
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Post by Deleted on Mar 23, 2020 9:42:42 GMT -5
I was just skimming what the Federal Reserve is doing to try to prevent the economy from getting worse. The Fed is launching something called a "Main Street Business Lending Program." Maybe that would have some promise? I think it's freaking insanity to even consider taking on ANY debt at this point, especially for a small business that's not profitable. That's the WORST option for so many small businesses who now have no customers and may not for a very long time. Talk about stop digging the hole...
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qofcc
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Post by qofcc on Mar 23, 2020 9:55:15 GMT -5
How much home equity do they have? IDK. Looking at zillow, probably $15-20K. Nowhere near enough to refinance the cards (but maybe enough to make dent in a settlement later). No bank in their right mind would extend these folks more credit right now.
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qofcc
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Post by qofcc on Mar 23, 2020 9:59:12 GMT -5
I was just skimming what the Federal Reserve is doing to try to prevent the economy from getting worse. The Fed is launching something called a "Main Street Business Lending Program." Maybe that would have some promise? Yeah, I think that could also be something they could use later to refinance or settle the unsecured debt after the crisis is over but I don't think they should be going into more debt right now to keep paying minimum payments on unsecured debt they may have to default on if this goes on too long.
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qofcc
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Post by qofcc on Mar 23, 2020 10:09:20 GMT -5
Well, if they don't want to declare bankruptcy, everyone needs to be out working as soon as they can. Including adult children and SOs...they should be turning over paychecks to mom and dad. Even if they were willing to as the teenage college student living at home who just lost his job to turn over his unemployment check (which I'm sure they won't because then he couldn't pay his car payment and insurance) it wouldn't make a dent in the minimum card payments they owe.
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Post by Deleted on Mar 23, 2020 10:14:57 GMT -5
My advice, based on personal history, would be to tell them to stop paying on the unsecured debt. The credit card companies can't do anything to you. Eventually, they can sell the bad debt and some slimy collection company can get a judgement or you can try to settle first, but it takes a year or more to get to that point.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 10:24:40 GMT -5
I was just skimming what the Federal Reserve is doing to try to prevent the economy from getting worse. The Fed is launching something called a "Main Street Business Lending Program." Maybe that would have some promise? I think it's freaking insanity to even consider taking on ANY debt at this point, especially for a small business that's not profitable. That's the WORST option for so many small businesses who now have no customers and may not for a very long time. Talk about stop digging the hole... Ok - for some real advice - the first step is to look at the financials on this business - maybe 3 years worth. If this business is running a loss consistently then it needs to be closed and try to find a way to sell of the equipment even it if the equipment doesn't fetch much. Even if the business was doing well at any recent point - which I doubt - but if it did previously but didn't last year and won't this year - close it down and stop paying insurance and other overhead. Having loaded up on credit card debt that is ONLY in the wife's name ? to finance this albatross of the husband's ego - while the only asset - house with equity - is only in the husband's name - (WTF?). Makes me want to vomit actually.
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hoops902
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Post by hoops902 on Mar 23, 2020 11:07:03 GMT -5
I think it's freaking insanity to even consider taking on ANY debt at this point, especially for a small business that's not profitable. That's the WORST option for so many small businesses who now have no customers and may not for a very long time. Talk about stop digging the hole... Ok - for some real advice - the first step is to look at the financials on this business - maybe 3 years worth. If this business is running a loss consistently then it needs to be closed and try to find a way to sell of the equipment even it if the equipment doesn't fetch much. Even if the business was doing well at any recent point - which I doubt - but if it did previously but didn't last year and won't this year - close it down and stop paying insurance and other overhead. Having loaded up on credit card debt that is ONLY in the wife's name ? to finance this albatross of the husband's ego - while the only asset - house with equity - is only in the husband's name - (WTF?). Makes me want to vomit actually. Agree that it needs to be multiple years. Part of the OP was about expanding the business, and about how they took a loss this year after depreciation. That doesn't really tell us a lot about the overall business. It's difficult/impossible to tell how a business is actually doing when you only know the bottom line after the accounting is done but without seeing line items. There's a huge difference between a business just running as normal and not actually making any money. The same business running as normal and making sure the books say they didn't make any money. And a business that is expanding and may take a big accounting hit due to that re-investment/expansion in a given year. "How the business is doing" can be deconstructed from the accounting of it, but not necessarily from a single number that is often intentionally manipulated to give a skewed view to outsiders like the IRS.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 11:07:25 GMT -5
This seems crazy - two of them don't even live there? did I miss something in OP? the one who does live there is out of work. And no one should ever be "turning over their paychecks" to anyone - no matter what the age or situation. Definitely cut off any help for those working/out of the house of course, and the out of work/living there one should try to find a job and pay some rent. But no - you don't turn over your check. And it's pretty unlikely getting a job now unless sought after skills that can be remote - which I doubt given scenario. But could be. This is where we differ, R. And that's great. My kids know that even if they live at home as young adults, I will not provide everything 100% for them. They get a 6 month grace period to save, get an EF together (or not...adults and all) and then after that, they will have to financially contribute to the household-rent, utilities, food, netflix, etc. I understand that you are willing to not have your kids do that. I understand that you are fine easing your children into adulthood. That's not an appropriate choice for me. Honestly, I don't want to be in your situation. It's awesome that you are fine with it. I'm not wired to be like that. Kids turning over paychecks to parents while the kids are living at home isn't something new. That's been around forever. Let's face it. OP paints a picture of a family in financial distress. Maybe you don't interpret the situation one of financial distress? I do. Goodness, my children, who are all still minors, understand that in times of distress, that it's all hands on deck. They just don't get to sit and watch Disney+ while they watch DH and I do everything for them to make their lives as easy as possible. In my world, it just doesn't work like that. I'd literally never sleep. And I don't think that's a good trade off. I know drastic measures and all that. But, that's what needs to happen. Clearly this family is beyond "Well, post your budget so we can help you figure out how to make a Hills and valleys account so you set money aside for when you don't bring anything in your seasonal job." I also don't know what you think you know about my household - but your extrapolations are incorrect. I typically don't share any information about my children because I was asked not to, maybe rarely I bulletpoint something as it relates to me, but I really consider only my information shareable. Sometimes others will ask information about them in response and I answer with minimal info and move on. Maybe I shouldn't even do that but lots of time there are just wild misconceptions and so I try not to let that go. So just for the record here 1 of mine is paying rent and the other lost their job recently. I interpret this a lot more strongly than others here. I consider this financial abuse. I would hazard a guess that the husband in this situation hasn't been able to face up to the fact that this business is a sham and wife is forced to pony up her available credit to keep him from having a complete meltdown. If not a complete fool, there is likely at least some subtle emotional abuse at play here as well. Who goes into 100k of unsecured debt for a no-money-making business? My response was in regards to you advising that adult children not living at home turn over their paychecks. Maybe you didn't read enough to see that some were out of the house - but instead of amending your response to take into account they have their own households to support, you decided to bring up my situation inaccurately and I'm not sure why.
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hoops902
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Post by hoops902 on Mar 23, 2020 11:16:12 GMT -5
This is where we differ, R. And that's great. My kids know that even if they live at home as young adults, I will not provide everything 100% for them. They get a 6 month grace period to save, get an EF together (or not...adults and all) and then after that, they will have to financially contribute to the household-rent, utilities, food, netflix, etc. I understand that you are willing to not have your kids do that. I understand that you are fine easing your children into adulthood. That's not an appropriate choice for me. Honestly, I don't want to be in your situation. It's awesome that you are fine with it. I'm not wired to be like that. Kids turning over paychecks to parents while the kids are living at home isn't something new. That's been around forever. Let's face it. OP paints a picture of a family in financial distress. Maybe you don't interpret the situation one of financial distress? I do. Goodness, my children, who are all still minors, understand that in times of distress, that it's all hands on deck. They just don't get to sit and watch Disney+ while they watch DH and I do everything for them to make their lives as easy as possible. In my world, it just doesn't work like that. I'd literally never sleep. And I don't think that's a good trade off. I know drastic measures and all that. But, that's what needs to happen. Clearly this family is beyond "Well, post your budget so we can help you figure out how to make a Hills and valleys account so you set money aside for when you don't bring anything in your seasonal job." I also don't know what you think you know about my household - but your extrapolations are incorrect. I typically don't share any information about my children because I was asked not to, maybe rarely I bulletpoint something as it relates to me, but I really consider only my information shareable. Sometimes others will ask information about them in response and I answer with minimal info and move on. Maybe I shouldn't even do that but lots of time there are just wild misconceptions and so I try not to let that go. So just for the record here 1 of mine is paying rent and the other lost their job recently. I interpret this a lot more strongly than others here. I consider this financial abuse. I would hazard a guess that the husband in this situation hasn't been able to face up to the fact that this business is a sham and wife is forced to pony up her available credit to keep him from having a complete meltdown. If not a complete fool, there is likely at least some subtle emotional abuse at play here as well. Who goes into 100k of unsecured debt for a no-money-making business? My response was in regards to you advising that adult children not living at home turn over their paychecks. Maybe you didn't read enough to see that some were out of the house - but instead of amending your response to take into account they have their own households to support, you decided to bring up my situation inaccurately and I'm not sure why. I think this is quite a leap given how little we know about the situation. 2 people getting together and making bad business decisions (we don't even know if they're bad business decisions yet) is difficult to label as one abusing the other.
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thyme4change
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Post by thyme4change on Mar 23, 2020 11:17:47 GMT -5
I know a couple who divorced so the one who owned the business could go bankrupt, without taking the other one down. They lived apart for a bit (but still spent time together) and when everything was done, they resumed living together. They never remarried. And didn't tell many people. I **think** they had a pre-nup, so maybe splitting up the debt and assets in a way to maximize bankruptcy was easier. I'm not sure you can put all the assets in one name, and all the debt in another and get away with it. You would probably need a clever lawyer to figure it out. And it may not be possible.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 11:19:39 GMT -5
I also don't know what you think you know about my household - but your extrapolations are incorrect. I typically don't share any information about my children because I was asked not to, maybe rarely I bulletpoint something as it relates to me, but I really consider only my information shareable. Sometimes others will ask information about them in response and I answer with minimal info and move on. Maybe I shouldn't even do that but lots of time there are just wild misconceptions and so I try not to let that go. So just for the record here 1 of mine is paying rent and the other lost their job recently. I interpret this a lot more strongly than others here. I consider this financial abuse. I would hazard a guess that the husband in this situation hasn't been able to face up to the fact that this business is a sham and wife is forced to pony up her available credit to keep him from having a complete meltdown. If not a complete fool, there is likely at least some subtle emotional abuse at play here as well. Who goes into 100k of unsecured debt for a no-money-making business? My response was in regards to you advising that adult children not living at home turn over their paychecks. Maybe you didn't read enough to see that some were out of the house - but instead of amending your response to take into account they have their own households to support, you decided to bring up my situation inaccurately and I'm not sure why. I think this is quite a leap given how little we know about the situation. 2 people getting together and making bad business decisions (we don't even know if they're bad business decisions yet) is difficult to label as one abusing the other. why is the house - with equity - only in H's name - yet all the debt for this business on CCs only in wife's name?
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hoops902
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Post by hoops902 on Mar 23, 2020 11:31:58 GMT -5
I think this is quite a leap given how little we know about the situation. 2 people getting together and making bad business decisions (we don't even know if they're bad business decisions yet) is difficult to label as one abusing the other. why is the house - with equity - only in H's name - yet all the debt for this business on CCs only in wife's name? Well for the debt...she's the only one with provable income...so I'm not exactly surprised there. For the house...I have no idea if he owned the house before they got together, or if they're doing it in some attempt to shield it somehow, or if it's a family home he inherited, or what. I'm not saying it CAN'T be financial abuse...but I do think it's a leap to call it that based on what we know. Heck for all we know the wife is a go-getter type who is driving the whole "go start a business" thing. I don't know, and neither do you. You seem far more willing to be declarative about it than I think is reasonable given the lack of any real detail or explanation we have. Tons of people try to start businesses, accumulate debt, and fail. It's OFTEN a working partner who believes in the business who ends up financing it because they're the ones with documented income (or if not a working partner, a working parent, etc...someone who goes in with them while they are the "muscle" of the day-to-day).
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 11:45:05 GMT -5
why is the house - with equity - only in H's name - yet all the debt for this business on CCs only in wife's name? Well for the debt...she's the only one with provable income...so I'm not exactly surprised there. For the house...I have no idea if he owned the house before they got together, or if they're doing it in some attempt to shield it somehow, or if it's a family home he inherited, or what. I'm not saying it CAN'T be financial abuse...but I do think it's a leap to call it that based on what we know. Heck for all we know the wife is a go-getter type who is driving the whole "go start a business" thing. I don't know, and neither do you. You seem far more willing to be declarative about it than I think is reasonable given the lack of any real detail or explanation we have. Tons of people try to start businesses, accumulate debt, and fail. It's OFTEN a working partner who believes in the business who ends up financing it because they're the ones with documented income (or if not a working partner, a working parent, etc...someone who goes in with them while they are the "muscle" of the day-to-day). I wasn't clear on the OP - but I think the 100K is on credit cards. There is also the 401k draining - maybe that is included in the 100k - and that wouldn't be bad since the marke just tanked! IMO - you don't take on a bunch of credit card debt for a business unless those expenses are going to immediately lead to income that would at least pay back a good chunk of the money borrowed quickly - as in a signed LOA/contract and you just order what you need to be able to do the work. Even if the work on contract doesn't pay it all off - there may be the expectation of opening a new line of business that will pay it off eventually in the not too distant future and hopefully turn a profit. But spending 100k to set up house with nothing on the books to at least start paying that down? Ok - so the next question is what is the agreement between wife and the company? She used credit cards to pay for equipment with little resale value (sidebar: ??why no resale value - and why expensive if not??). Is there a loan agreement with interest (at least at the cc interest - but should be more) from the company to her?
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hoops902
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Post by hoops902 on Mar 23, 2020 11:56:51 GMT -5
Well for the debt...she's the only one with provable income...so I'm not exactly surprised there. For the house...I have no idea if he owned the house before they got together, or if they're doing it in some attempt to shield it somehow, or if it's a family home he inherited, or what. I'm not saying it CAN'T be financial abuse...but I do think it's a leap to call it that based on what we know. Heck for all we know the wife is a go-getter type who is driving the whole "go start a business" thing. I don't know, and neither do you. You seem far more willing to be declarative about it than I think is reasonable given the lack of any real detail or explanation we have. Tons of people try to start businesses, accumulate debt, and fail. It's OFTEN a working partner who believes in the business who ends up financing it because they're the ones with documented income (or if not a working partner, a working parent, etc...someone who goes in with them while they are the "muscle" of the day-to-day). I wasn't clear on the OP - but I think the 100K is on credit cards. There is also the 401k draining - maybe that is included in the 100k - and that wouldn't be bad since the marke just tanked! IMO - you don't take on a bunch of credit card debt for a business unless those expenses are going to immediately lead to income that would at least pay back a good chunk of the money borrowed quickly - as in a signed LOA/contract and you just order what you need to be able to do the work. Even if the work on contract doesn't pay it all off - there may be the expectation of opening a new line of business that will pay it off eventually in the not too distant future and hopefully turn a profit. But spending 100k to set up house with nothing on the books to at least start paying that down? Ok - so the next question is what is the agreement between wife and the company? She used credit cards to pay for equipment with little resale value (sidebar: ??why no resale value - and why expensive if not??). Is there a loan agreement with interest (at least at the cc interest - but should be more) from the company to her? I wasn't clear on where the 100k total is...and I'm also not clear on how much of that is for this particular business, vs another business they tried and failed, vs consumer debt. There's a big difference between spending $100k to start up a little plumbing company, and spending $80k on some other failed business and then $20k here to expand a growing business. That's what hard about evaluating anything when the category "They spent $X on 3 things, one of which was a failed business venture" because a failed business venture could be $1 or $1 billion...who knows? And there's also a big difference between "I spent $10k on advertising like getting my truck wrapped" and "I spent $10k on specialized tools now only worth $2k" in terms of sound business decisions. I'm not arguing it's necessarily a good business decision...but poor business decisions do not abuse make. To your point on the agreement between wife and company, we don't even know how the company is structured. Heck, if he is an employee of the company...it might be a fine business if he basically bought himself a job and his kids a job and he gets paid. Or they might have essentially no business setup other than him running it through his own name and she's a de-facto owner as marital property. We say "his business" because presumably he's running it, but for all we know it's basically "their" business legally. In terms of resale value...hard to say without knowing what it is. Buy new tools perhaps. You need to sell them you're going to take a big hit just like buying a new car and immediately trying to sell it. I also know lots of people who say "it has no value" when really...it has value...it just doesn't have the value of what you paid for it. Or it could just have no resale value NOW given what's going on with the economy (not a lot of people looking to buy new construction equipment if you can't do construction at the moment). Overall though, this just feels like VERY few definable data points to be making conclusions on.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 23, 2020 12:14:07 GMT -5
all good points hoops, and I do agree.
I've personally known a couple of women who were in this situation with a husband in the trades.
These were people who couldn't keep a job with anyone else, so set up their own business - funded by the wife's 9-5 job, as the wife was also paying the bills, taking care of the kids, doing all the housework, etc. The wives invariably got deeper and deeper in debt throughout a period of several years, and every attempt to not put more money into the husband's "business" led to fights and what I would consider emotional abuse - days of the silent treatment, accusing wife of not loving them, not believing in them, one accused wife of planning on leaving them and that is why they wouldn't pony up more money, etc. until the wife caved again....."one last time" and then again....and again.
After years, it invariably led to bankruptcy and divorce. In one case a house was lost that the wife had inherited free and clear.
This was always with contractors.
So - yes - my knowledge those situations may well be coloring my perceptions here.
I can't pick up on a single detail in the OP that is unlike those situations. But - yes - it may well be of different.
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