Petitioner filing for bankruptcy during AOS period

[bizbee 0]

Hey there fellow VJ-ers,

I have a question regarding bankruptcy and how it will affect the AOS outcome. I have just entered the US on a K1 visa and am in the process of filing for AOS. However my USC husband has encountered some financial problems and is planning to file for bankruptcy. Intuitively it seems like a bad idea and we worry it might result in denial of the green card. Unfortunately he can't postpone filing for bankruptcy either. We're now stuck in this sticky situation and we hope someone here with experience and knowledge about financial issues and the AOS process will be able to advise us on what to expect.

Just so you have a clearer idea of the problem. These are the details. My husband is divorced and his name is still tied to a house he bought with his ex wife many years ago. He had an agreement with her that she would stay in the house and continue the payments and when the real estate market picks up, they would sell the property and split the profit in half. Recently he began receiving levy's on the property and found out that she had not been making payments. Apparently she had lost her job and so she plans to file for bankruptcy. So after a discussion they agreed to both file for bankruptcy and allow the bank to take back the house. He decided to do this so that he could be free of this problem once and for all. He doesn't want to have any ties to her or the property. So if she files for bankruptcy and he doesn't and there's a foreclosure of the house, it would be worse for him. Since foreclosure is imminent they both have to file for bankruptcy quickly.

Now as far as our financial situation is concerned, he's still earning the same and it's more than enough to support the two of us. He just doesn't want to be involved in the mess with that property.

I would like to know what would happen in this case? Would they deny the green card application based on the fact that he's my sponsor and he has filed for bankruptcy? Would they consider that he still earns the same salary and can still support me? It scares us to think that this could result in me being asked to leave the USA.

We are happily married and this problem is worrying us. Please help if you have any experience with this sort of thing. Thanks!

[Housni&Marie 7]

I don't have an answer to how filing for bankruptcy would affect AOS, however I would like to offer an alternative to filing bankruptcy to deal with this situation. When I lost my job a few years ago and was facing foreclosure, I contacted an investment company that "flips" houses. It took about two weeks from the time I first contacted them until the closing, and even though they bought it at way under market value, I walked away with a small profit, and avoided having a foreclosure or bankruptcy on my record. Just something to consider. Maybe your husband and his ex-wife could look into this option.

Good luck to you.

[Anh map 2,098]

Your spouse's bankruptcy will not be a problem for the adjustment of status.

[Fandango 1,439]

If you're going to file bankruptcy solely for the house matter, get a realtor and have that realtor sell the house as a short sale. It will give your credit score MUCH less of a hit than a foreclosure or a bankruptcy, and more often than not, when the bank agrees to sell the house short, they forgive the rest of the debt. And the bank will pay the realtor fees, not the homeowners.

My advice has nothing to do with AOS, but everthing to do with the house. I'm not only a realtor, but I have a short sale designation/qualification. I see this all the time. Get someone in your area who is an expert with short sales.

This is general advice and not specific to your situation, so get with an agent with all the needed documents, and see what that person can do for you, and whether the homeowners can qualify for a short sale. Trust me, bankruptcy is not the answer....selling it short will be.

If you don't know of anyone in your area who can help, I can find someone for you if you need it.

GOOD LUCK.

[bizbee 0]

I don't have an answer to how filing for bankruptcy would affect AOS, however I would like to offer an alternative to filing bankruptcy to deal with this situation. When I lost my job a few years ago and was facing foreclosure, I contacted an investment company that "flips" houses. It took about two weeks from the time I first contacted them until the closing, and even though they bought it at way under market value, I walked away with a small profit, and avoided having a foreclosure or bankruptcy on my record. Just something to consider. Maybe your husband and his ex-wife could look into this option.

Good luck to you.

Could you give me examples of those investment companies? We're probably gonna go ahead with bankruptcy but it's worth checking out i think.

[NigeriaorBust 4,087]

The forgiven part of the short sale becomes income to you at tax time for be ready to owe a LOT of taxes on the "forgiven" income.

[Fandango 1,439]

The forgiven part of the short sale becomes income to you at tax time for be ready to owe a LOT of taxes on the "forgiven" income.

Not necessarily.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

Sorry for the text, I tried to shrink it...

Edited July 10, 2011 by Anita Cocktail

[Fandango 1,439]

I want to add something...As an agent with a short sale designation, I understand the process and what needs to be done to market and sell the property, as well as convey to the sellers what forms they need. I am not, however, an attorney, nor a CPA. There are a lot of implications to consider in any choice - whether it's bankruptcy, foreclosure, short sale, etc. Because of this, I work in conjunction with an attorney, who is better qualified to handle and advise on matters of law.

The atty's fees are also usually paid by the bank, and seller gets much needed legal counsel. And I don't have the liability of anyone saying that they didn't understand what was happening.

I am not the only one who works like this, and I would assume that many short sale specialists do the same. So, if the seller can qualify for a ss, it really is the best option of all.

[Daniel&Theary 30]

Filing a bankruptcy should not change his income level. That is what they look at they do not pull a credit report that I have ever heard of. Otherwise my ex wife would have not gotten a green card before. I had filed a BK the year before and still owed ten thousand in back taxes (paid in full now)none of it was ever an issue. Sometimes filing BK helps your credit I know it did mine at the time but that was 8 years ago. Luckily now I am in better place now no taxes owed and my credit score is back over 700.

[bizbee 0]

Filing a bankruptcy should not change his income level. That is what they look at they do not pull a credit report that I have ever heard of. Otherwise my ex wife would have not gotten a green card before. I had filed a BK the year before and still owed ten thousand in back taxes (paid in full now)none of it was ever an issue. Sometimes filing BK helps your credit I know it did mine at the time but that was 8 years ago. Luckily now I am in better place now no taxes owed and my credit score is back over 700.

That's what my husband says too. He thinks filing for bankruptcy will help even though the credit score will suffer for a while. He'll get a clean slate and be able to start over and his credit score can improve as time goes on. There are some taxes owed too and levies on the house etc. It's a real mess and bankruptcy seems like a good way to proceed.

[Housni&Marie 7]

Could you give me examples of those investment companies? We're probably gonna go ahead with bankruptcy but it's worth checking out i think.

The name of the company I used is HomeVestors

www.homevestors.com

Be aware that they are out to make a profit so they will pay way below market value, so depending on how much is owed on the house it may not work for you. But if it's enough to pay off the existing mortgage and you can avoid backruptcy it may be worth it. I am certainly not an expert on these matters, I only know it worked for me. I had 2 mortgages on my house, but I got enough to pay off both and walk away with a little cash as well.

[bizbee 0]

I want to add something...As an agent with a short sale designation, I understand the process and what needs to be done to market and sell the property, as well as convey to the sellers what forms they need. I am not, however, an attorney, nor a CPA. There are a lot of implications to consider in any choice - whether it's bankruptcy, foreclosure, short sale, etc. Because of this, I work in conjunction with an attorney, who is better qualified to handle and advise on matters of law.

The atty's fees are also usually paid by the bank, and seller gets much needed legal counsel. And I don't have the liability of anyone saying that they didn't understand what was happening.

I am not the only one who works like this, and I would assume that many short sale specialists do the same. So, if the seller can qualify for a ss, it really is the best option of all.

Sorry the info wasn't accurate...he's filing for bankruptcy not only because of the house...there are taxes backed up and another loan etc. So yeah...bankruptcy seems like the best way to go right now. Thanks a lot for being so helpful though. :-)

[Adil & Jeanne 296]

first he should have signed house over to her taking his name off the mortgage. that not being done, they could have signed house over to the bank.

Bankrupcy will hurt you in so many ways. it was meant to get people back on their feet but now it stays on credit reports for 10 years. That said, if his income is good enough to support you, and any money he owes on college loans, IRS or ex wife (as these are not eligble for forgiveness), then you will be ok

good luck

[NigeriaorBust 4,087]

It stays on your report for 10 years but many forms ask if you have EVER filed. Even some jobs will inquire about it.

[VanessaTony 3,567]

I know we're talking about the US but I looked into bankruptcy in my home country (wondered about the long term impacts as a friend was considering it) and even though it is removed from your credit history after about 3 years (though it can be longer) it can have a lifetime impact. Turns out there are some jobs you aren't allowed to do if you've EVER been bankrupt: http://www.debtmediators.com.au/bankruptcy-and-employment/

Again that's for Australia but you should SERIOUSLY look into it before making such a decision.

Edited July 10, 2011 by Vanessa&Tony