topic Re: Did anyone find Chapter 13 improved their money management skills? in Bankruptcy

Did anyone find Chapter 13 improved their money management skills?

ProbsBroke — Mon, 08 May 2023 12:42:00 GMT

Kind of a strange question I know, but I feel like I have always had a bad relationship with money ever since I started college (now in early 50s). At this stage in my life, based on the amount I have earned, I should be very wealthy. Yet I have always spent more than I earned, now how matter how much I earned. I have been in debt 99% of the time, and any compounding has gone against me. I have had to sell assets in the past that I should be holding on to. And now here I am looking at Chapter 13.

Yet I think some positive could come from this. While it is going to be late in life for sure, it feels like being forced to live for 5 years only paying for basic essentials will be a good lesson in money management. Has anyone else been through BK and found themselves changed at the end of it and just better at handling their finances?

Re: Did anyone find Chapter 13 improved their money management skills?

CH-7-Mission-Accomplished — Mon, 08 May 2023 12:53:52 GMT

@ProbsBroke wrote:
Kind of a strange question I know, but I feel like I have always had a bad relationship with money ever since I started college (now in early 50s). At this stage in my life, based on the amount I have earned, I should be very wealthy. Yet I have always spent more than I earned, now how matter how much I earned. I have been in debt 99% of the time, and any compounding has gone against me. I have had to sell assets in the past that I should be holding on to. And now here I am looking at Chapter 13.

Yet I think some positive could come from this. While it is going to be late in life for sure, it feels like being forced to live for 5 years only paying for basic essentials will be a good lesson in money management. Has anyone else been through BK and found themselves changed at the end of it and just better at handling their finances?

I've read countless posts from people who have completed a chapter 13 and how it dramatically improved their ability to budget and live within their means. The fact that more than two out of three chapter 13s fail is a testament to those who are able to stick to the plan for 5 years and get a discharge.

Re: Did anyone find Chapter 13 improved their money management skills?

Horseshoez — Mon, 08 May 2023 13:19:46 GMT

@ProbsBroke wrote:
Kind of a strange question I know, but I feel like I have always had a bad relationship with money ever since I started college (now in early 50s). At this stage in my life, based on the amount I have earned, I should be very wealthy. Yet I have always spent more than I earned, now how matter how much I earned. I have been in debt 99% of the time, and any compounding has gone against me. I have had to sell assets in the past that I should be holding on to. And now here I am looking at Chapter 13.

Yet I think some positive could come from this. While it is going to be late in life for sure, it feels like being forced to live for 5 years only paying for basic essentials will be a good lesson in money management. Has anyone else been through BK and found themselves changed at the end of it and just better at handling their finances?

I'm probably more the exception than the rule when it comes to successfully completing a Chapter 13 in that the money spent which forced me into bankruptcy was spent by two small businesses, my wife's, and one I didn't know existed which was run by my (now former) business partner who had five lines of credit in my name I didn't know about. Left to my own devices I could have earned enough to cover the losses from my wife's business, but the more than a quarter of a million dollars my business partner ran up was too much to cover, hence Chapter 13.

I am now more than 8 years since I filed, and 10 years since filing became more of a "when" not "if" proposition; I don't manage my money any differently than I did before, but I am insulated from other types of losses as my wife is now effectively retired (she doesn't need to work, but may rejoin the workforce at some point), and I am no longer working for my own business.

With the above said, I have read numerous testimonials from other successful Chapter 13 folks who have learned new ways of money management and have stuck with them since their discharges.

Re: Did anyone find Chapter 13 improved their money management skills?

Lurker22 — Tue, 09 May 2023 22:09:20 GMT

@ProbsBroke wrote:

Yet I think some positive could come from this. While it is going to be late in life for sure, it feels like being forced to live for 5 years only paying for basic essentials will be a good lesson in money management. Has anyone else been through BK and found themselves changed at the end of it and just better at handling their finances?

there are times under the plan you're really scraping by to pay for basic essentials but that's not the entire time you're in the 13 either (life happens and throws us curveballs) but while in my 13 I had some very nice vacations as well - not as nice as some might have but still very nice in my opinion....a 13's purpose isn't to make you suffer, you can life a very nice life while under the plan

For myself - I'll echo what was said above, my ex wife ran up huge bills with a company we jointly owned but she ran while I had a full time job, I wasn't aware of the situation until it was too late - tried to pull up and out of the mess but it was just too great of a challenge - IMO I manage my finances the same way I did before except I do find myself paying off credit cards before the statement date for the Fico score boost versus waiting until the due date before

Re: Did anyone find Chapter 13 improved their money management skills?

masheenlaveen — Sat, 13 May 2023 17:23:21 GMT

Hi there!

Currently 3 1/2 years into a Chapter 13. I'm somewhat in the same boat. I've always had a terrible relationship with credit. I'm in my late 40's and have wasted away much of my earnings. The reason for the bankruptcy was the same as others on here. A business I started didn't go so well. I have found that my spending habits have changed moderately. What I have noticed is that I can live on a much smaller budget than I thought. I think about the impacts of spending and debt differently than I used to. However, my wife has not learned anything. She actually can't wait to get out of bankruptcy so she can start using credit again.

Moral of the story; you have to want to change. If you don't, the bankruptcy won't do it for you.

Re: Did anyone find Chapter 13 improved their money management skills?

Lawns1 — Sun, 14 May 2023 02:16:45 GMT

I feel like I reconnected with my previous management of money. Part Chapter 13 and part divorce but I felt like it truly reset me financially to be responsible.

Re: Did anyone find Chapter 13 improved their money management skills?

Jeffster1 — Sun, 14 May 2023 03:20:52 GMT

@ProbsBroke wrote:
Kind of a strange question I know, but I feel like I have always had a bad relationship with money ever since I started college (now in early 50s). At this stage in my life, based on the amount I have earned, I should be very wealthy. Yet I have always spent more than I earned, now how matter how much I earned. I have been in debt 99% of the time, and any compounding has gone against me. I have had to sell assets in the past that I should be holding on to. And now here I am looking at Chapter 13.

Yet I think some positive could come from this. While it is going to be late in life for sure, it feels like being forced to live for 5 years only paying for basic essentials will be a good lesson in money management. Has anyone else been through BK and found themselves changed at the end of it and just better at handling their finances?

In my case, absolutely. In fact, in many ways, CH13 was the best decision I ever made.

I took it very seriously and remained focused on NOT becoming one of the CH 13s that failed. I challenged myself to learn to live solely on a cash basis. I resisted the urge to apply for credit (as many do) while in BK not just because I was doing my best to steer clear of any unnecessary trustee interaction, but because I realized I had to LEARN how to NOT rely on credit.

I lucked out in several ways...health remained excellent; I had solid (paid-off) transportation and I received a large raise. I was fortunate enough to be in a position to get my DC 1.5 years early.

I PIF. I carry no debt. I now hold substantial savings that will enable me to consider early retirement. And I don't cringe every time the phone rings, and I no longer avoid the mailbox. The year prior to my filing in 2017 was nothing but me treading water; living paycheck to paycheck and hating life.

Since my DC in January 2021, I have acquired around $150K in SLs. I closed my starter cards and now have a portfolio of which I can be proud. I'm gardening right now but will shortly begin going for CLIs. Just now letting everything age. I feel very free, and carrying no debt certainly helps.

I cannot even imagine what my life would be like right now without having filed when I did. It also helped that I had an amazing BK attorney.

I still live very well, but I now know the value of money. Impulse purchases are a thing of the past for me.

Re: Did anyone find Chapter 13 improved their money management skills?

ForwardLooking — Thu, 25 May 2023 00:21:10 GMT

I went through one years ago after a divorce. It did a lot to open my eyes and did have a positive impact on my money management. Fast forward several years to COVID. I lost my job, and had to survive 18 months doing what I could do to scrape by with freelance gigs and consulting -- but without steady income, my takehome was only about 1/3rd of what it was pre-COVID. Fortunetly, I had learned my leason, had a sizable nestegg to supliment my income, and survived financially those 18 months without too much damage. I did have to downsize my apartment and car so I could keep up with my child support obligations (I tried to get them modified but the courts were shut down during covid ). I almost filed again as I was reaching an end, but I finally found another full time job. For the past year I have been able to rebuild my nestegg and repair the little credit damage I did have from this and avoid another one.