Question about assuming new debt

assuming new debtWe are a self employed couple (22 years) in Maryland with nearly 200K in combined personal and business debt which we incurred when we moved our business to a renovated space on our property. The economy over the last 24 months has severely impacted our income and made servicing the total debt impossible. Despite many cost cutting measures we may be forced to file Chapter 7 for personal and possibly business debt.

We have met with one attorney so far and gotten a second opinion from a CPA who reviewed recent tax returns. We plan to meet a second attorney before making any final decisions. We have been advised by the first attorney that “by law” he can not advise us to assume any new debt prior to filing. We are in need of a vehicle and he knows that but has emphasized multiple times he can not advise us to take on new debt. Frankly his tone and his contract language beg us to read between the lines.

I have had a friend (also self employed) nearly file and they advise us to get a car loan before we file. Our credit is good, we are current on all loans and credit cards, but feel certain we are at risk of defaulting soon. If our personal debt alone is discharged our cash flow will allow us to continue our mortgage and other necessities as well as make a modest car payment.

My question is this, since we have applied for a mortgage modification as well, and our case is now in the hands of an agent, will applying for new credit before they determine our case be a big mistake? Does anyone else have thoughts on options? We do not own any assets of value that we could sell or we would have done it already.

We may or may not opt to file business bankruptcy as well. One of the businesses is owned 51/49 (woman owned) the other business is owned jointly. Both are S corps. The house and most of the credit cards are joint debt.

Thanks for your input.

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