Should I claim chapter 7 bankruptcy? debt 110k

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

Post by Nearing_Destination » Tue Feb 13, 2018 8:40 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.

I’m definitely thinking TROLL :twisted:

- not employed, but somehow got (from previous thread ) a windfall of a few hundred thousand
- goes from zero stocks to FOMO and all in with leverage and then OPTIONS...
- somehow supposedly gets a margin account and goes full tilt to max it out (not even using a Martingale approach...(per MarketTimers classic thread))
....this from a supposedly late 30’s unknowledgeable “investor”... in this case a speculator
{the only thing not in there was “bitcoin “}

smells like TROLL to me

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

Post by inbox788 » Tue Feb 13, 2018 8:46 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.
Some progression from the previous threads:
Looking for safe ETFs for 200K cash sitting in brokerage accounts.
Wed Sep 07, 2016 11:28 pm

I decided to finally enter the S&P 500 through SPY ETF a couple of months ago ...I decided to go with 100% funds in SPY for the most aggressive returns
Sun Jun 11, 2017 1:05 pm

Need help about put option I sold!
Wed May 17, 2017 10:29 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.
Tue Feb 13, 2018 5:06 pm

Remember what Warren Buffet said:
In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
http://www.berkshirehathaway.com/letters/2002pdf.pdf

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

Post by weltschmerz » Tue Feb 13, 2018 8:46 pm

OP, You seem like a smart person who got burned by a low probability event, just like the guys at LTCM back in the '90s. I'm sure you'll be back on your feet in no time.

We have a poster named "market timer" who went through something similar. Basically, this guy got himself into trouble with margin, I think he lost WAY more than you did. He didn't declare bankruptcy; rather, he worked his a$$ off until he was back on the plus side, and now is quite well off. Now THAT's the way to do it.

Market timer's margin call
A different approach to asset allocation

From market timer's post:
"Summary: Econ grad student applies Mortgage Your Retirement theory at the top of the last bull market, starting around 2x leverage, loses $210K of borrowed money, and is forced is to sell what's left of his portfolio at S&P 821 in November 2008. The complete wipeout results in a reflective period where he recollects the circumstances that led him to adopt this strategy, some of which will be included in a book. He spends five weeks in Asia and begins writing about how risk and progress can be framed. Returning to the US, he slashes his expenses, finds several ways to increase income, earns 914% on the IRBLTG Fund, and pays off all his high interest credit card debt."

Now I have MAD RESPECT for what market timer did. If he had just wiped the debt away with a bankruptcy, not so much.
Last edited by weltschmerz on Tue Feb 13, 2018 8:52 pm, edited 1 time in total.

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

Post by sunny_socal » Tue Feb 13, 2018 8:51 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. 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
'Kudos' for claiming responsibility? And then declare BK? Those two mix about as well as oil and water.

OP obviously hasn't taken any responsiblity, still living w/ mom & pop.

Time to do this:
- Get a real job
- Move out
- Pay back the debt
- Eat ramen noodles and drive a junker for the next 5 years

You can do it. It's what the rest of us have done, except we saved up $100k for a down payment on a house instead of gambling it away.

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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 8:54 pm

inbox788 wrote:
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?
I don't. I specifically said "wreck".

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

Post by ColoRetiredGirl » Tue Feb 13, 2018 9:20 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 was my primary question. I always thought the broker checked out credit worthiness before approving a margin account but what do I know. :?:

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

Post by Doom&Gloom » Tue Feb 13, 2018 9:23 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?

If you had credit card debt, you could negotiate it down. Wouldn't know if that was possible with a brokerage margin account.
I'm not sure OP ever said he made $500k. My guess is that he either (a) had a large stake from his parents to trade in the stock market or (b) had a smaller stake from his parents ~15 years ago to play online poker and had some winnings which he used to stake himself in the stock market after online poker was made more difficult in the US.

Without a plan for his future, it doesn't seem to matter whether OP files bankruptcy or not.

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

Post by Chuffly » Tue Feb 13, 2018 9:31 pm

To all the folks automatically labeling the OP a troll, or telling him to just get a job, you may want to read his most recent posts. One of them notes that he received a $130k "settlement check".

Not a ton of details to go on, but given that he is in his thirties, lives at home with his parents, has no job, and has received at least one large settlement check, it's not unreasonable to attempt to connect all the dots. In other words, he might have suffered some sort of injury that left him with a major disability impairing his ability to hold a normal job.

That money that just went up in smoke in the leveraged SVXY position might have been the settlement money from this hypothetical injury, and if so, getting back on his feet may be no easy task from here. And if the OP had a disability that prevents him from getting a normal job, it's a least a little more understandable that he took some risks. This risky gambit might have been a (misguided) attempt to create an income stream to compensate for being unable to land a normal job.

I'm speculating quite a bit here, but then again, no more than a lot of the posts thus far. It probably would help if the OP would chime in. A lot of the advice thus far has sort of assumed that the OP is a lazy bum who needs to start looking for a job. If my working theory has legs, it would make that quite a bit more difficult, and as result, I'd think that it would significantly change the calculus of his Chapter 7 decision.

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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 9:38 pm

ColoRetiredGirl wrote:
Tue Feb 13, 2018 9:20 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 was my primary question. I always thought the broker checked out credit worthiness before approving a margin account but what do I know. :?:
The amount of margin depends on the value of the underlying collateral. Where it went wrong here is that the collateral turned out to be insufficient due to volatility. Since the broker holds the collateral and generally liquidates it before the account balance goes negative, the reliance on creditworthiness of the client is reduced to relatively unusual incidences such as this one with sudden changes in value. Similar situations could occur during market hours if trading is halted due to adverse news.

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

Post by Doom&Gloom » Tue Feb 13, 2018 9:43 pm

Chuffly wrote:
Tue Feb 13, 2018 9:31 pm
To all the folks automatically labeling the OP a troll, or telling him to just get a job, you may want to read his most recent posts. One of them notes that he received a $130k "settlement check".

Not a ton of details to go on, but given that he is in his thirties, lives at home with his parents, has no job, and has received at least one large settlement check, it's not unreasonable to attempt to connect all the dots. In other words, he might have suffered some sort of injury that left him with a major disability impairing his ability to hold a normal job.

That money that just went up in smoke in the leveraged SVXY position might have been the settlement money from this hypothetical injury, and if so, getting back on his feet may be no easy task from here. And if the OP had a disability that prevents him from getting a normal job, it's a least a little more understandable that he took some risks. This risky gambit might have been a (misguided) attempt to create an income stream to compensate for being unable to land a normal job.

I'm speculating quite a bit here, but then again, no more than a lot of the posts thus far. It probably would help if the OP would chime in. A lot of the advice thus far has sort of assumed that the OP is a lazy bum who needs to start looking for a job. If my working theory has legs, it would make that quite a bit more difficult, and as result, I'd think that it would significantly change the calculus of his Chapter 7 decision.
The most interesting to me is the first paragraph of the first post of the thread linked above: "I have right now 200K just sitting in two separate brokerage accounts. I'm in my mid 30's and don't need the money."

There is an awful lot that we don't know about OP's situation.

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

Post by ColoRetiredGirl » Tue Feb 13, 2018 9:58 pm

Pajamas wrote:
Tue Feb 13, 2018 9:38 pm
ColoRetiredGirl wrote:
Tue Feb 13, 2018 9:20 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 was my primary question. I always thought the broker checked out credit worthiness before approving a margin account but what do I know. :?:
The amount of margin depends on the value of the underlying collateral. Where it went wrong here is that the collateral turned out to be insufficient due to volatility. Since the broker holds the collateral and generally liquidates it before the account balance goes negative, the reliance on creditworthiness of the client is reduced to relatively unusual incidences such as this one with sudden changes in value. Similar situations could occur during market hours if trading is halted due to adverse news.
Thank you for the education!

z3r0c00l
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Re: Should I claim chapter 7 bankruptcy? debt 110k

Post by z3r0c00l » Tue Feb 13, 2018 10:36 pm

Absolutely wipe out the debt now if you can. The odds of paying off 110K are slim with no income. Bankruptcy today, find a job tomorrow, avoid stocks forever. Really, just work harder than you normally would have and save your money in a 5 year CD ladder.

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

Post by gsmith » Tue Feb 13, 2018 10:39 pm

SmallSaver wrote:
Tue Feb 13, 2018 7:13 pm
I find the moralizing in this thread uncharacteristic of the forum.
I agree with SmallSaver. The "moral hazard" argument has already bolted. Somehow OP's broker decided to give super-amplified casino chips, and OP blew up.

I'm just going to leave this image describing the standard of living causing confirmation bias of a turkey before Thanksgiving....


Image


Taleb also recommends against picking up pennies in front of steamrollers; sure it's unlikely the steamroller will get you, but it will have a sigificant impact on quality of life as OP is learning,

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

Post by LadyGeek » Tue Feb 13, 2018 10:44 pm

Thread locked for moderator review.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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

Post by LadyGeek » Thu Feb 15, 2018 4:29 pm

Upon further review, this thread will remain locked until the OP requests a moderator to unlock the thread (send a PM).
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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