I'm a new grad TC 150k. Net Worth -3.3million (from my family debt, with 10% interest rate each year) what should I do I'm desperate.
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- Declare bankruptcy and start afresh. You’ll be paying that off for the rest of your life and the emotional baggage is just not worth it.
10% is crazy. It is literally going up by 300,000 every year?! It’s going to be $3.6M next year? Are you kidding me, you’ll never get out of this no matter what you do. Your TC is less than half of the interest in liquid cash.
The fuck man, I am stressed for you. You should seek legal advice for government provided lawyers and file for bankruptcy TODAY.
- Well break the problem down. One part is why your parents took it and that defines the formal/informal terms under which they took it. 2. Legal aspect, your family owes them money (you don’t) but you can solve this 100% by having them declare bankruptcy. 3. Their relationship with friends/relatives 4. Your relationship with relatives and with your parents.
Figure out which of the above is most important and optimize for those. You could pick max 2 of the above tho history would advise you to pick 1. Under no circumstance should you pick more than 2.
- because my parents are kind of stupid they borrow the money to invest in their restaurant together with a friend of them, and the restaurant has been making negative profit in 4 years and the friend was sneaky af he scamed my parents in the contract making my parents bearing all the loss + the money borrowed. And they are my parents, so I have to help them pay the debt.
- Let me see if i grok this.
So your parents owe personal debts to other individuals closely intertwined in the community. Not credit card companies or banks. While bankruptcy is an option, it seems that that is a nuclear option that will result in them and you being disenfranchised from all your friends and families, and you will be social outcasts. And the friends will still be expecting money forever.
No one can legally compel you to pay. The friends/family can legally compel your parents to pay, and if they file bankruptcy, then the debts will be discharged under a set of court-mandated terms and encumbrances.
It sounds like you are being compelled to pay out of social duty. When you say you “have to pay,” is that what you mean?
Look, 3.3M is a lot. If you pay, you will be crippled with debt for decades that grows at a rate beyond what you can pay, and you will in turn rob your own children of a future, if you can even afford to have children which you likely will not. If you do not pay, it will cause a lot of pain amongst you and your family and you may essentially have to start a completely new life as a result of this.
I would not pay it. Bite the bullet, yank the bandaid now, make it clear to your parents and anyone who asks that it is not your debt to pay and you cannot bear it. You will likely be disowned for doing so. But if you agree to pay the debt, you will be disowning yourself from your own future and ruin your life, and still never pay the debt that grows at 10% this year.
- New flippyAssuming it's in a country with laws like the US, bankruptcy works like this:
A court appointed trustee audits everything they have and everything they owe. Values their house, savings, everything. Totals up all the debts they owe as well.
Then the trustee sells off all the assets and pays back the creditors as much as possible. Trustee figures out how to divide it. Creditors will only be getting part of what they are owed.
Then there may be an ongoing payment plan where the trustee looks at their actual income and figures out how much they can really afford to pay every month without starving to death. They will be ordered to pay that amount for a few years. How long depends on the country or state.
Then when that's all done all the debts are just erased and they get a fresh start, poor, but debt free. The creditors will not have gotten all their money back, only what can reasonably be paid, and the creditors will not be allowed to try to collect any more. It will all be over.
Usually a few assets are "protected from bankruptcy". You might not have to sell your home, or may be able to keep a pension. What is protected varies from state to state or country to country.
You would want to look into the exact rules in the country and state where they live.
- Declare bankruptcy.
Best way to get outta debt.
There's no way you can pay it off of the interest is 10% - it's gonna double every 7 years at that rate.
Sell everything you can sell, declare bankruptcy, become debt free, start new life.
Read The Art of The Deal about how to declare multiple bankruptcies to become prosperous.
- There is no such thing as family debt
You cannot declare bankruptcy if it’s not your debt
No one can provide good answers without more data from you.
- because my parents are kind of stupid they borrow the money to invest in their restaurant together with a friend of them, and the restaurant has been making negative profit in 4 years and the friend was sneaky af he scamed my parents in the contract making my parents bearing all the loss + the money borrowed. And they are my parents, so I have to help them pay the debt. They borrowed the money from friends and relatives (what kind of friends, fuck).
- New x3b5How much did they borrow initially? How many years ago? The interest alone is adding an extra $300k of debt this year, so the initial loan was what, $2.5 million?
“Friends and family” wouldn’t keep adding that type of interest into a failed business loan. What are the business assets worth? Can you sell them off for $2 mil and pay off most of the initial loan?
Have the friend cut the accumulated interest down from $800k to $200k and stop interest in exchange for their good faith effort to pay it back and have them work on paying back the remaining $700k over the next 10 years.
I mean if you really care that much about the relationship. Bankruptcy is totally an option since it was a business loan for a business that went south. Investors know full well they stand to lose money when lending. That’s literally the reason the interest rate was so high.
- Family debt? Sounds like bullshit to me. If it’s not legally your responsibility, there is nothing they can do to make you pay it.
- is that rupees? cause that is the only thing that makes sense to me. no way you could rack up 3.3MM USD in unsecured debt
- New / EngBlu3more—nvm didn’t read this was in China..
Idk if anyone mentioned this but before declaring bankruptcy, make sure all assets that aren’t associated or locked as collateral to the debt are transferred to you and/or someone else (maybe friends or relatives that don’t have legal protection to being compensated for their lending). Speak to a lawyer/accountant about transferring these assets/money in low denominations such that it’s categorized as a gift and you don’t have to report it for taxes.
Once their assets are removed, declare bankruptcy so that as much as possible isn’t scooped up by their lenders. I.e, if by some miracle their house doesn’t belong to the bank, it can be transferred to your name they won’t lose it in bankruptcy.
- Are they in the US? whats the liquidation value of the restaurant, hoping 3MM includes some real estate?? Cant just be build out of a single restaurant can it?
- They are in China. It's five years of continuous investment into the restaurant. They are kind of superstitious and they failed the business many times thinking maybe it's the structure of the restaurant, it's against the FengShui, and they remodelled the restaurant about every year which cost a shit ton of money which they borrowed
- You must be trolling to all blinders. 3.3 million rupees isn’t large amount. We all took loan to study here and paid it back.
- Guys, thank you for your advice, I'm seriously looking into letting them declare bankrupt right now
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- Amazon / Engsos567It depends on if you want to maintain relationship with those creditors (family and friends). I don’t see a viable way to repay it with that interest. You can negotiate with them to pay a part of it and no interest.
I know of a similar story in my family in india. One of my relative took $1M usd from another relative at 24% interest. He invested in real estate during boom. But due to local politics, land fell in court litigation and he couldn’t pay. He declared bankruptcy, paid 50% of originally amount. After years of asking him to repay, the creditors gave up and semi-happy that they got atleast half of original amount. Now he has less friends and nowhere to be seen. I don’t completely blame him as there is no way for him to pay with his low paying job and same time taking care of family
- Salesforce opEveryone giving bankruptcy advises as if China followed American law.
OP should check with Chinese lawyer what are the options there unless his parents already in the US as permanent residents.
Another thing is, these 3.3 mil are in private debt and sum is huge for China comparing to avg income. What's the chance for OP and his parents to live long enough to benefit from the bankruptcy? One can hire criminals for fraction of that debt to make life of OP's parents miserable or short enough that bankruptcy may simply not be an option.
- You are never going to be able to pay this off dude, you're screwed.
You shouldn't touch it or pay anything off. If this is legit ie. Creditors then tell your parents to pay it off or declare bankruptcy, not your problem. If this is family or non-institutional or whatever money if you pay then there are records of you and they will chase after you for the rest of your life so you should just skip town and cut them off forever unless you want to pretty much be slave labor the rest of your life.