Should I claim chapter 7 bankruptcy? debt 110k

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Stock Investor
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Should I claim chapter 7 bankruptcy? debt 110k

Post by Stock Investor » Tue Feb 13, 2018 5:06 pm

Made a very stupid decision and decided to trade volatility and VIX. I had SVXY shares on margin and on February 5th, the price fell from $90 to $11 in 15 minutes after hours.

Tdameritrade closed out my positions the next day and now I have a negative $110,000 account balance with them because of the margin. I am yet to hear from them about the balance, but I assume they will have collection agents calling soon.

I've lost everything, completely wiped out close to 500k. I never thought something like this would happen, but I knew the risks and even studied them. I have no one to blame but myself here.

Here is my current financial situation now:

I will owe the IRS and state estimated about $20,000 in taxes for last years 2017 capital gains.
I will owe TDamiertrade $110,000 for my negative account balance.

I am in my 30's and currently have no job, and live with my parents. I have almost no assets except, around 15K cash in the bank right now. My car and almost all my other assets are so valueless that they will be exempt in chapter 7 bankruptcy and I will get to keep them.

The taxes I will owe unfortunately can not be discharged for 3 years so I will have to pay them. I can use my current cash to pay the taxes and will have almost no assets at all that can be taken from me in bankruptcy, I believe I am allowed to keep about 5K in cash.

I would like to know what you guys would do in my situation? Is it best to just claim the chapter 7 bankruptcy and move on with my life, especially considering I have no assets that can be taken from me? This is what I believe I will have to do at this point as paying back $110,000 will take me years if I find work again.

Please offer some advice. I know how I lost my money was stupid and don't need advice on that, I really need to know how to go forward with my life at this point. Should I claim bankruptcy?

Jags4186
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Jags4186 » Tue Feb 13, 2018 5:14 pm

Yes claim bankruptcy and consider seeing a therapist.

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willthrill81
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by willthrill81 » Tue Feb 13, 2018 5:17 pm

Bankruptcy is obviously an option, but I'm of the opinion that this is money that you justly owe. You knew the risks, and I think it's your responsibility to pay the money back rather than force someone else to suffer the consequences. I don't say this to be rude, condemnatory, or high minded. I've seen others who were also in really bad situations work their way out of it, repaying their debts, and they universally say that they are better for it now. Ultimately, I think that's the right thing to do.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by White Coat Investor » Tue Feb 13, 2018 5:19 pm

Wow.

I think I'd start with getting a job. Certainly no rush to declare bankruptcy. What are they going to take? I think I'd avoid it unless I were forced into it. You'll be justifiably proud to have paid off this debt and gotten back on your feet.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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StevieG72
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by StevieG72 » Tue Feb 13, 2018 5:19 pm

No advice on bankruptcy, however I did see this while looking up SVXY.

https://www.girardgibbs.com/proshares-s ... vcQAvD_BwE

May be worth following up on, due diligence of course.

You are young and can recover from this loss. You must of had some success last year with $20,000 due on capital gains. Just remember slow and steady wins the race.
Fools think their own way is right, but the wise listen to others.

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Pajamas
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Pajamas » Tue Feb 13, 2018 5:24 pm

You should first make an effort to work out a payment plan with the IRS and state department of revenue and TD Ameritrade. If you let them know your overall financial situation, I'm sure they will be willing to work out a plan. You might even get at least a partial reduction in what you owe, even from the IRS. Plenty of people post here with much greater debt, several multiples of your debt, from school, house, credit cards, etc., and manage to pay it off eventually.

Chapter 7 is a possibility but it will haunt you for a decade. That should be a last resort. On the other hand, you are probably not going to come out of this with a good credit history no matter what you do. If you do declare bankruptcy, take it as an opportunity not to just start over but to do things differently.

You should get a job now to earn income instead of trying to trade again. That might also give you some purpose and prevent your current devastation from turning into despondency and long-term depression.

It's an expensive lesson, don't let it go to waste. If you haven't already realized that trading is not a good way for you to make a living, then you should think about that some more. The loss of such a large amount of money should have been a big wake-up call for you. Go sit in front of a mirror and look yourself in the eye and confront yourself for a while. I mean that literally, go sit in a quiet room and look yourself in the eye in a mirror.

At least you didn't wreck your finances by speculating in cryptocurrency. You will have a more interesting story to tell when you are older.
Last edited by Pajamas on Tue Feb 13, 2018 5:32 pm, edited 3 times in total.

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Elsebet
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Elsebet » Tue Feb 13, 2018 5:25 pm

willthrill81 wrote:
Tue Feb 13, 2018 5:17 pm
Bankruptcy is obviously an option, but I'm of the opinion that this is money that you justly owe. You knew the risks, and I think it's your responsibility to pay the money back rather than force someone else to suffer the consequences. I don't say this to be rude, condemnatory, or high minded. I've seen others who were also in really bad situations work their way out of it, repaying their debts, and they universally say that they are better for it now. Ultimately, I think that's the right thing to do.
Have to agree here. Even if you can only pay a small amount on your debt per month it is better than bankruptcy. I worked myself out of an admittedly smaller but still substantial amount of credit card debt and it made me a better person who will not repeat that mistake.

Loik098
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Loik098 » Tue Feb 13, 2018 5:35 pm

Since you're financially dependent on your parents, what do they have to say about the matter? I believe their opinion counts, as long as you're living under their roof. Damaging your relationship with them would be far more costly than this debt.

Gill
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Gill » Tue Feb 13, 2018 5:38 pm

Unfortunately, I would have to come down on the side of recommending bankruptcy. Wipe the slate clean, start fresh and vow never to get yourself in such a mess again.
Gill

Doom&Gloom
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Doom&Gloom » Tue Feb 13, 2018 5:51 pm

I find it troubling that you present no plan of action for your financial future and are currently unemployed and living with your parents. I would not presume to offer advice about bankruptcy without knowing more details about your situation, plans, and expectations.

patrick
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by patrick » Tue Feb 13, 2018 6:00 pm

Why not file for bankruptcy? A brokerage that allows you to buy things like SVXY on margin deserves to lose $110k.

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jabberwockOG
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by jabberwockOG » Tue Feb 13, 2018 6:04 pm

My apologies in advance for being blunt. You are 30 years old living with your parents trying to make a killing with risky trading and got badly burned in the process. Now you are considering the solution is to paying nothing of what you lost and honestly owe. I suggest you take a long moment to consider your life, your priorities, and your moral and ethical compass. I'd get a job and work out a payment plan with the folks that whom you owe money and work to make it right. Or declare bankruptcy, shirk what you honestly owe, and move on to your next get rich scam/scheme.

JGoneRiding
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by JGoneRiding » Tue Feb 13, 2018 6:09 pm

I want to give the OP kudos for at least claiming responsibility for the action that led to huge loss. You have learned a very valuable lesson that there is no such thing as quick and safe. Hopefully you will never forget it.

Declare bankruptcy and move on. This is why it exists.

I hope what you really learnt is never borrow to "invest" and stick to reasonable risk return products

Raabe34
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Raabe34 » Tue Feb 13, 2018 6:12 pm

viewtopic.php?f=1&t=199102&p=3403547#p3403547

Please see this thread for more context, I knew I recognized the handle.

smitcat
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by smitcat » Tue Feb 13, 2018 6:17 pm

If you read the past posts of "Stock investor' it becomes clear that this is not the first risky trade he has made.
A list or risky trades, no earned income for years and hints about payments for unknown reasons does not a pretty picture paint.

Jags4186
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Jags4186 » Tue Feb 13, 2018 6:18 pm

I’m shocked that some posters are recommending the OP work out a payment plan. This is what bankruptcy is for—wiping the slate clean. I see no difference in this than people who were foreclosed on and banks held the bag. Really no different. The brokerage houses are big boys. TD Ameritrade was happy to loan the OP money, charging interest of course, and now they are going to get burned. That’s the name of the game. It’s not like he’s stiffing his parents $110k by declaring bankruptcy.

I truly feel sorry for you, OP, and I hope you can get your life together. I really think you should see a therapist because you didn’t lose $110k, you lost $500k nearly over night from what I am reading. You should focus on getting a job, becoming independent from your parents, learn to really invest, and move forward. This is a mistake that doesn’t have to follow you.

TravelGeek
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by TravelGeek » Tue Feb 13, 2018 6:20 pm

Consider it an expensive education. Get a job, start paying for the education.

mouses
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by mouses » Tue Feb 13, 2018 6:27 pm

You need some help presumably from a therapist to get your life in order, as someone noted with the link to the other thread. You're living with your parents when you're in your thirties, and trying to make money gambling instead of actually, you know, working.

Go ahead and declare bankruptcy, but do so planning on a 180 degree turn in how you're living your life.

The only good thing about this is apparently you haven't dragged your parents' finances into this and ruined them financially.

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corn18
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by corn18 » Tue Feb 13, 2018 6:29 pm

You had $300k to invest last June that you apparently put all in SPY. Now you lost $500k. Where did the extra $200k come from? Just get more from that source and pay off your debt.

And you haven't had any income, so how can you owe $20k in taxes?

None of this makes any sense.
Last edited by corn18 on Tue Feb 13, 2018 6:39 pm, edited 2 times in total.

Double_A
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Double_A » Tue Feb 13, 2018 6:31 pm

I understand some posters' ideology that you will be a better person in the long run by gutting it out and working for possibly a decade or more to pay this debt back, and that it should be thought of as morally wrong to declare bankruptcy and not pay a debt back that you rightfully owe. I would take a slightly different mindset however.

You entered into a business contract with your creditors, and it should be treated as such; strictly business. You should do what is best for you and your personal "business". Your creditors are very sophisticated companies and fully understood the risks and possible negative as well as positive outcomes of extending you credit. They did not do it out of the goodness of their heart, they did it to make money. It's not like you are running a ponzi scheme and defrauding grandma here. If you were running your own personal company, you would have a fiduciary duty to your shareholders (you) to act wholly in their (your) best interest. I would not treat this situation any differently. If it is in your best interest to declare bankruptcy, then that's what you should do. If it's in your best interest to avoid bankruptcy, then that's what you should do.

You also owe it to your "shareholders" (you) to digest and fully understand this situation, the decisions and emotions that led you to where you are, and learn as much as you possibly can about yourself as well as the mistakes that were made so you can build a more successful financial future going forward. You are not in this situation due to "bad luck" and if you don't do things differently going forward you will find yourself in perpetually deeper and deeper problems in the future.

hookemhorns
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by hookemhorns » Tue Feb 13, 2018 6:42 pm

How did you manage to get a margin account with such a risk allowance? Fibbing on the initial brokerage application about your income and assets?

Chris K Jones
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Chris K Jones » Tue Feb 13, 2018 6:49 pm

Sorry for the hard times. I would suggest that finding a job comes first. What do you mean "if I can find a job"? You are in your 30s. Unless you have a mental or physical disability, you need a job! Get a job and figure out the bankruptcy later. And straighten things out with the IRS. They will make your life miserable if you dont. Good luck to you. Also, therapy might help.

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Pajamas
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Pajamas » Tue Feb 13, 2018 6:52 pm

Raabe34 wrote:
Tue Feb 13, 2018 6:12 pm
viewtopic.php?f=1&t=199102&p=3403547#p3403547

Please see this thread for more context, I knew I recognized the handle.
You certainly came a long way in eighteen months or so, from not understanding how a fill of a simple sale of stock works as far as pricing, to playing around with options even though you admitted it was stupid, and now losing hundreds of thousands of dollars in a single trade.

Medical issues are off-topic on Bogleheads but you should seek appropriate treatment. Your real problem is not financial.

If you haven't told your parents about this yet, do so tonight.

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tuningfork
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by tuningfork » Tue Feb 13, 2018 6:58 pm

If you go chapter 7, is anything really going to change? Or are you going to say "thank gawd the debt collectors are off my back" and do the exact same thing as soon as you get some more money? I suggest it's time to become a responsible adult, work out a plan to pay your debts and taxes, and stay away from all forms of speculation and gambling.

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whodidntante
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by whodidntante » Tue Feb 13, 2018 7:03 pm

It seems to me that you are leaving before the casino has closed. I heard the market is going to go up this year. Surely you can scrounge together enough collateral for a futures contract, if IB or Schwab aren't mad at you.

I'm kidding. Or am I? :twisted: :happy

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slayed
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by slayed » Tue Feb 13, 2018 7:04 pm

hookemhorns wrote:
Tue Feb 13, 2018 6:42 pm
How did you manage to get a margin account with such a risk allowance? Fibbing on the initial brokerage application about your income and assets?
This. If you lied on your application in order to get the margin account that would be fraud and you might be in some legal trouble.

benway
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by benway » Tue Feb 13, 2018 7:06 pm

Stock investor,

I’m not going to pass judgement on you. I don’t know you, your background, circumstances, health, family situation or much of anything else. The facts are you made a very risky bet for reasons only you can answer, it didn’t pay off and now you need to weigh the best choices for you going forward. It sounds like there is no big hurry in your case to “fix” it immediately. Bankruptcy is an option but it’s one of several paths you could take. Seek out resources that can help you with whatever you are dealing with in life, including this situation. Take your time and get support along the way through an attorney and/or debt counselor. I think someone in your situation would need a lot of information from experts to make the right choice. Making a personal commitment to change and improvement in your life could be the best thing to come out of this. I wish you well.

F150HD
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by F150HD » Tue Feb 13, 2018 7:10 pm

JGoneRiding wrote:
Tue Feb 13, 2018 6:09 pm
I want to give the OP kudos for at least claiming responsibility for the action that led to huge loss.
unclear how losing $110,000, not paying it back and filing bankruptcy is 'claiming responsibility', more like avoiding responsibility?

SmallSaver
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by SmallSaver » Tue Feb 13, 2018 7:13 pm

I find the moralizing in this thread uncharacteristic of the forum.

Bankruptcy is a part of corporate and personal financial life. It is perfectly legal, with consequences codified in law and also applied by the market. Corporations file bankruptcy all the time. People file for bankruptcy all the time. It is cooked into our financial system and many of the largest players do not hesitate to use it when it's to their advantage.

OP, I don't have much experience here, but I'd sure be looking into it if I were you. Unless you make a reasonably large income it may very well be your best option.

Jags4186
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Jags4186 » Tue Feb 13, 2018 7:15 pm

F150HD wrote:
Tue Feb 13, 2018 7:10 pm
JGoneRiding wrote:
Tue Feb 13, 2018 6:09 pm
I want to give the OP kudos for at least claiming responsibility for the action that led to huge loss.
unclear how losing $110,000, not paying it back and filing bankruptcy is 'claiming responsibility', more like avoiding responsibility?
Avoiding responsibility is sticking your head in the sand. Claiming responsibility is being aware of the situation you are in and acting upon it to get the best possible outcome.

rob65
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by rob65 » Tue Feb 13, 2018 7:20 pm

You should consult an attorney who specializes in bankruptcy. Understand your legal options. Do what is best for you.

Some posters have raised the issue of potential fraud if you mislead your brokerage. Do not address that on a public forum. Consult an attorney.

bhsince87
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by bhsince87 » Tue Feb 13, 2018 7:26 pm

rob65 wrote:
Tue Feb 13, 2018 7:20 pm
You should consult an attorney who specializes in bankruptcy. Understand your legal options. Do what is best for you.

Some posters have raised the issue of potential fraud if you mislead your brokerage. Do not address that on a public forum. Consult an attorney.
I agree. Get a lawyer ASAP.
BH87

PFInterest
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by PFInterest » Tue Feb 13, 2018 7:35 pm

Doom&Gloom wrote:
Tue Feb 13, 2018 5:51 pm
I find it troubling that you present no plan of action for your financial future and are currently unemployed and living with your parents. I would not presume to offer advice about bankruptcy without knowing more details about your situation, plans, and expectations.
Only in America.

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willthrill81
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by willthrill81 » Tue Feb 13, 2018 7:37 pm

Double_A wrote:
Tue Feb 13, 2018 6:31 pm
You entered into a business contract with your creditors, and it should be treated as such; strictly business. You should do what is best for you and your personal "business". Your creditors are very sophisticated companies and fully understood the risks and possible negative as well as positive outcomes of extending you credit. They did not do it out of the goodness of their heart, they did it to make money. It's not like you are running a ponzi scheme and defrauding grandma here. If you were running your own personal company, you would have a fiduciary duty to your shareholders (you) to act wholly in their (your) best interest. I would not treat this situation any differently. If it is in your best interest to declare bankruptcy, then that's what you should do. If it's in your best interest to avoid bankruptcy, then that's what you should do.

You also owe it to your "shareholders" (you) to digest and fully understand this situation, the decisions and emotions that led you to where you are, and learn as much as you possibly can about yourself as well as the mistakes that were made so you can build a more successful financial future going forward. You are not in this situation due to "bad luck" and if you don't do things differently going forward you will find yourself in perpetually deeper and deeper problems in the future.
SmallSaver wrote:
Tue Feb 13, 2018 7:13 pm
I find the moralizing in this thread uncharacteristic of the forum.

Bankruptcy is a part of corporate and personal financial life. It is perfectly legal, with consequences codified in law and also applied by the market. Corporations file bankruptcy all the time. People file for bankruptcy all the time. It is cooked into our financial system and many of the largest players do not hesitate to use it when it's to their advantage.

OP, I don't have much experience here, but I'd sure be looking into it if I were you. Unless you make a reasonably large income it may very well be your best option.
Just because something is legal does not automatically make it ethical or even best for you in the long run. The fact that he didn't borrow the money from a grandmother should not change the reality: he borrowed the money and promised to pay it back. Failure to do so is breaking your word, and that used to mean something. Certainly there are some situations where bankruptcy may be truly the only option, but a $110k debt in your 30s is not life-ending.

Further, the post below does a great job of illustrating an equally big issue at work here. In the same way that many consumers with spending problems have been burned after consolidating their loans only to repeat the situation, filing for bankruptcy may avoid the OP building the character that he may be in need of.
tuningfork wrote:
Tue Feb 13, 2018 6:58 pm
If you go chapter 7, is anything really going to change? Or are you going to say "thank gawd the debt collectors are off my back" and do the exact same thing as soon as you get some more money? I suggest it's time to become a responsible adult, work out a plan to pay your debts and taxes, and stay away from all forms of speculation and gambling.
:thumbsup :beer
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

uberdoc
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by uberdoc » Tue Feb 13, 2018 7:41 pm

Is this thread a troll? It hits all antiboglehead points.

JBTX
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by JBTX » Tue Feb 13, 2018 8:03 pm

Double_A wrote:
Tue Feb 13, 2018 6:31 pm
I understand some posters' ideology that you will be a better person in the long run by gutting it out and working for possibly a decade or more to pay this debt back, and that it should be thought of as morally wrong to declare bankruptcy and not pay a debt back that you rightfully owe. I would take a slightly different mindset however.

You entered into a business contract with your creditors, and it should be treated as such; strictly business. You should do what is best for you and your personal "business". Your creditors are very sophisticated companies and fully understood the risks and possible negative as well as positive outcomes of extending you credit. They did not do it out of the goodness of their heart, they did it to make money. It's not like you are running a ponzi scheme and defrauding grandma here. If you were running your own personal company, you would have a fiduciary duty to your shareholders (you) to act wholly in their (your) best interest. I would not treat this situation any differently. If it is in your best interest to declare bankruptcy, then that's what you should do. If it's in your best interest to avoid bankruptcy, then that's what you should do.

You also owe it to your "shareholders" (you) to digest and fully understand this situation, the decisions and emotions that led you to where you are, and learn as much as you possibly can about yourself as well as the mistakes that were made so you can build a more successful financial future going forward. You are not in this situation due to "bad luck" and if you don't do things differently going forward you will find yourself in perpetually deeper and deeper problems in the future.
This is kind of how I view things. Businesses utilize existing laws. Parties enter into transactions given contracts and laws. I would never be in this situation but if I thought bankruptcy were the best course of action I wouldn’t hesitate to utilize it.

As to the OP situation, I’m not sure how to help him. He posts here so he clearly has an idea what he is supposed to do but yet does something different. Not sure how you read bogleheads and decide to speculate on the Vix on margin. This is a compulsive behavior no different than casino gambling and he needs to seek help in learning how to deal with it. I think bankruptcy is the way to go but until he deals with his core issue here it will just repeat itself.

inbox788
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by inbox788 » Tue Feb 13, 2018 8:05 pm

Stock Investor wrote:
Tue Feb 13, 2018 5:06 pm
I've lost everything, completely wiped out close to 500k. I never thought something like this would happen, but I knew the risks and even studied them. I have no one to blame but myself here.
How did you make $500k? Can you repeat it?

If you had credit card debt, you could negotiate it down. Wouldn't know if that was possible with a brokerage margin account.

TheDDC
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by TheDDC » Tue Feb 13, 2018 8:08 pm

inbox788 wrote:
Tue Feb 13, 2018 8:05 pm
Stock Investor wrote:
Tue Feb 13, 2018 5:06 pm
I've lost everything, completely wiped out close to 500k. I never thought something like this would happen, but I knew the risks and even studied them. I have no one to blame but myself here.
How did you make $500k? Can you repeat it?
My thoughts too. Just do it again, half as much this time!

-TheDDC

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DaftInvestor
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by DaftInvestor » Tue Feb 13, 2018 8:10 pm

Stock Investor wrote:
Tue Feb 13, 2018 5:06 pm

I would like to know what you guys would do in my situation?
Quite frankly it's very hard for many of us to answer this question as we have spent our lives avoiding getting into the type of situation you put yourself in with th massive gambles you made. You've been a member here for 2 years - don't head any advise from this site - and keep coming back with various situations.
I'd talk to a bankruptcy attorney (and a psychologist for the gambling bug you have).

inbox788
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by inbox788 » Tue Feb 13, 2018 8:12 pm

Pajamas wrote:
Tue Feb 13, 2018 5:24 pm
At least you didn't wreck your finances by speculating in cryptocurrency. You will have a more interesting story to tell when you are older.
How do you know OP didn't make his fortune (that he lost) on Bitcoin?

Nate79
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Nate79 » Tue Feb 13, 2018 8:16 pm

See a lawyer but bankruptcy is like dropping a nuke on your life for many years. If you think it is going to wipe the slate clean to start over, think again. The toll this will have on your future is extreme.

inbox788
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by inbox788 » Tue Feb 13, 2018 8:17 pm

hookemhorns wrote:
Tue Feb 13, 2018 6:42 pm
How did you manage to get a margin account with such a risk allowance? Fibbing on the initial brokerage application about your income and assets?
I'm guessing the margin is 50%, but the ETF lost 90%. Part of the reforms from the Great Depression was from 90% borrowed money, and even today, you can trade commodities or currencies with 10% in cash and the rest borrowed.

GraduateStudent
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by GraduateStudent » Tue Feb 13, 2018 8:18 pm

corn18 wrote:
Tue Feb 13, 2018 6:29 pm
You had $300k to invest last June that you apparently put all in SPY. Now you lost $500k. Where did the extra $200k come from? Just get more from that source and pay off your debt.

And you haven't had any income, so how can you owe $20k in taxes?

None of this makes any sense.
Are we being trolled?
Life after grad school is great.

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roymeo
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by roymeo » Tue Feb 13, 2018 8:19 pm

If a troll, he's playing a long game...asking normalish questions for quite a while.
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo

chw
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by chw » Tue Feb 13, 2018 8:23 pm

I agree with the following:
1) Get a Job
2) See a Therapist (addictive/compulsive behavior?)
3) When TDA comes calling, see if they will settle for a modest sum ($5,000?). I would explain your circumstances- they just may accept the lower sum vs. getting nothing. The settlement may take some time, and may be negotiated easier if you're able to visit a representative face to face at their office. While a settlement will still be a black mark on your credit, it will be far better than a bankruptcy. I think TDA has some responsibility in allowing you to have such a large margin account without proper collateral (or other assets that would indicate a large unsecured LOC). It seems that the margin account was poorly underwritten.

I saw a poster(s) ask if you think you could replicate your winning streak to get back some of your losses- I hope this was tongue in cheek, and that you've learned a lesson from this experience. While the circumstances are difficult, life goes on, and you're still very young to recover from this event.

You have my best wishes...

Outafter20
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Outafter20 » Tue Feb 13, 2018 8:23 pm

GraduateStudent wrote:
Tue Feb 13, 2018 8:18 pm
corn18 wrote:
Tue Feb 13, 2018 6:29 pm
You had $300k to invest last June that you apparently put all in SPY. Now you lost $500k. Where did the extra $200k come from? Just get more from that source and pay off your debt.

And you haven't had any income, so how can you owe $20k in taxes?

None of this makes any sense.
Are we being trolled?
I am thinking the same thing.

inbox788
Posts: 4581
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by inbox788 » Tue Feb 13, 2018 8:27 pm

SmallSaver wrote:
Tue Feb 13, 2018 7:13 pm
Bankruptcy is a part of corporate and personal financial life. It is perfectly legal, with consequences codified in law and also applied by the market. Corporations file bankruptcy all the time. People file for bankruptcy all the time. It is cooked into our financial system and many of the largest players do not hesitate to use it when it's to their advantage.
If OP were a corporation operating at a loss, he'd have tax credits. Corporations get taken over for their tax loss credits. Don't know if there's an equivalent in personal finance. If OPs was operating a trading business, he could sell to another for some cash.

https://www.entrepreneur.com/article/236165

Having to pay IRS for income/profits in 2017 only to go broke in 2018 seems wrong. At the very least, there should be a way to discharge those 2017 taxes due. I'd say consult a CPA, but with no funds, that's going to be tough. How does a bankruptcy attorney get paid if a company or person has no cash?

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Kalo
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Kalo » Tue Feb 13, 2018 8:34 pm

I hope what I'm about to write will be taken at face value and be helpful to the OP.

In my opinion, whether you eventually pay the money back or declare bankruptcy do not have to be mutually exclusive decisions.

Jesse Livermore did both at one time and he later repaid all his debts. But he knew he had to first get the monkey off his back and so made a verbal promise to his creditors to pay them back but also explained that he would first have to declare bankruptcy. And he eventually fulfilled his promise. His life story is fascinating and worth reading. The book by Richard Smitten is the best in my opinion.

I am not recommending that anyone pattern their life on Jesse Livermore. But this is one aspect of his life that may be instructive.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.

Wolkenspiel
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by Wolkenspiel » Tue Feb 13, 2018 8:36 pm

Outafter20 wrote:
Tue Feb 13, 2018 8:23 pm
GraduateStudent wrote:
Tue Feb 13, 2018 8:18 pm
corn18 wrote:
Tue Feb 13, 2018 6:29 pm
You had $300k to invest last June that you apparently put all in SPY. Now you lost $500k. Where did the extra $200k come from? Just get more from that source and pay off your debt.

And you haven't had any income, so how can you owe $20k in taxes?

None of this makes any sense.
Are we being trolled?
I am thinking the same thing.
OP claimed in a thread from last year to have $200k, which at that time he put all in SPY. Selling SPY and then buying SVXY on margin in late summer/early fall could easily have led to a $500k balance as of a couple of weeks ago (and then -$110k shortly thereafter).

AZAttorney11
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by AZAttorney11 » Tue Feb 13, 2018 8:38 pm

Nate79 wrote:
Tue Feb 13, 2018 8:16 pm
See a lawyer but bankruptcy is like dropping a nuke on your life for many years. If you think it is going to wipe the slate clean to start over, think again. The toll this will have on your future is extreme.
No, it is not an extreme toll on one's future. Filing bankruptcy is far more common than many Bogleheads believe. It won't wreck the OP's future at all (and let's be clear, OP is in his 30's, living with his parents, and deeply in debt -- what future, exactly, are you worried about ruining?). OP will receive offers for new credit cards within months after completing his BK case. He can start to rebuild his credit in short order. He can have a respectable credit score within a couple of years.

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