Should we file for bankruptcy?

I filed in the late 90s. I did not have the business concerns, but I did have a house and two cars. Under that law (it has changed...you might want to Google NEW BANKRUPTCY LAW CHANGES) I kept the house and the cars. The debt was erased, and my credit was wiped out. Two years later, I was able to take out loans and rebuild (banks have changed their views on bankruptcy). I now have good, though not great, credit.

My advice would be for your parents to call their creditors and offer to pay a percentage of the debt. Have them explain the circumstances, and that if the creditor is unwilling to settle, they will be forced to declare Chapter 7. The banks DO NOT want to go to court...it takes their money and their time, and they end up receiving about 30 to 50 percent of the total amount owed. Each creditor is different, but I remember that some of my debts were settled for 30% of the total, or $300 rather than $1000. There are books out there that tell you how to do it. If you need titles, write back. Have them lowball their offer: 30 to 40 percent of the total. Then, once agreed upon, they'll want to write a letter stating exactly what was agreed upon and send, or fax it to the bank. I've seen some that asked for a signature. Others were delivered and signed for, and the receipt for the signed letter is proof that the party got the letter.

Of course, this will only work if they are able to pay 30+ percent of their debt...

Don't go to the Credit Fixers, even if they're government run. They all suck.

An attorney consultation may be the best way to get started.

***I AM NOT A BANKER, DO NOT WORK IN ANY FINANCIAL INDUSTRY, AND AM NOT AN EXPERT. Just to be clear. I have, however, had my own experience and have looked at other's in similar situations. There is a lot of info on the internet, so I read about it as well.

The bankruptcy law just changed, so make sure you understand it before moving forward.