topic Re: How to decide? in Bankruptcy

How to decide?

Math_Rocks — Mon, 19 Mar 2012 22:14:47 GMT

For those of you who have filed BK, how did you know it was the right decision for you? We are really struggling with this decision. We have paid $20000 in debt in the past two years but the DMP payments are almost a $1000 and that is about what our budget is under every month and we have been forgoing taking care of legitimate needs (e.g. clothing) for quite a while. I feel like BK (Ch. 13) would allow us to have a reasonable budget that we could make every month and start taking care of other expenses that we can anticipate but never seem to be able to save for so they become "emergencies". But, having everyone know, having our names in the paper would be humiliating. And would it be wrong for our unsecured creditors to not get anything more on the debts that we owe them? And we know that credit-wise, there will be long-term repercussions but that is actually the least of our worries. We just really want to be able to make ends meet and not worry ALL the time about money. If you are willing, please share what went into your decision to file.

Re: How to decide?

Anonymous — Mon, 19 Mar 2012 23:54:31 GMT

My husband had been suggesting bankruptcy for awhile, but I was reluctant and kept hoping things would get better. We stuck it out when we both lost work, then I got a job just over minimum wage and was just making the minimum payments on everything. But, two months later I was laid off, just 2 days before Christmas. State gave me the runaround on unemployment and 9 weeks later I hadn't gotten my first check. We were to the point where we were driving around nicer neighborhoods on trash day and reselling things on craigslist that had been thrown out. I had connections in the area as I grew up here, but there were simply no jobs. When I filed, I had never missed a single payment, but my bank was overdrafted $800 in fees and at that point there was no recovery possible. Every day my bank added another $30 in fees and unemployment was only going to be $250 a week whenever it finally came in. I would have had $210 per week in fees, would've taken 80 weeks to catch up with the overdrafts which would never have happened.

When it was finally a no win situation, the decision was easy. Even though I know that was the only possible decision for me, I still get a lot of criticism from relatives. Most people don't read the paper, but I told my close friends about it anyways.

Re: How to decide?

steve23111 — Tue, 20 Mar 2012 15:27:27 GMT

I filed my Chapter 7 back in 2002 due to my own irresponsible spending on credit cards. I had about $20,000 in credit card debt and was working a retail job that paid about $15,000/year. Because of my work schedule, I did not have the time to find or work a second job. I found myself buying everything on credit cards just so I would have enough money free in the bank account to pay the minimums. I realized I was stuck in a vicious cycle but didn't know how to end it. The stress was very high, and I'm not the type to ask family or friends for money... especially knowing I might very well not be able to repay it. Of course, that's what I was doing to the credit card companies, but that didn't matter as much as doing it to family. Anyway, several credit-related events happened, most notably my denial for a new credit card because of the high balances on my others. That was the final warning sign that I was approaching collapse.

Simultaneously, a co-worker had just recently filed bankruptcy due to medical bills. He explained how the process was fairly painless and referred me to his bankruptcy attorney. I weighed my options, met with the attorney, and decided (on my own) that Chapter 7 was the best route.

At the time I had never missed a payment and was under my limits-- barely-- but I couldn't get out of that cycle.

Life after bankruptcy isn't that bad. I've still been able to get new credit cards (and am even back in with all but one of the creditors I burned in the bankruptcy, even with the BK still showing on my reports for another month and a half). I was able to finance a car, but at a high interest rate-- around 9% in 2005-- through Capital One, which had been included in my BK about three years prior and had since offered me a fresh unsecured card. Lessons have been learned, life has moved on. I'm smarter about my finances and am in a much better position for the future. Looking back, I don't regret the decision one bit, and I am looking forward to it falling off my records in May!

Re: How to decide?

Anonymous — Tue, 20 Mar 2012 18:20:00 GMT

Where do you live that they publish bankruptcy filers in the paper? I guess living in a city of 4 million+, it would have to have it's own section. When I went to my creditors meeting, there were a number of people there for the same reason, and I am sure it is like that everyday.

I know it is public record so anyone can find out, but I had to come to grips that the only people that would find out were the ones that we decided to tell. My wife and I faced the same dilema of wanting to pay what we owed, but at some point you have to make the decision to file and "start over" or continue to pay creditors that most likely needed help themselves.Mine was the result of defaulting on a business loan. We offered everything except our kids and they would not accept any offer until we were willing to give our 401(k)'s. At that point we said enough was enough and filed after having two judgments against us. Well those judgements are gone but we have the BK "tag" stuck on us forever. I am more at peace now than I have been in years. We can actually save again. We have been operating on a cash basis for the past 2 years, so not having or needing credit is not new for us. We still would like to rebuild our credit though, and that is why we continue to be a part of the MyFico Community.

Re: How to decide?

Math_Rocks — Tue, 20 Mar 2012 22:04:48 GMT

Thank you, Jennifer, Steve & Comet. I appreciate you sharing your stories.

We have been looking into a debt consolidation loan but it doesn't seem like anyone is willing to take a $30000 risk on us which I think is understandable. So, our options at this point are to file Ch. 13 and get back on our feet or to take a loan from or cash out some of DH's retirement to keep going a few more months and hope that something happens to significantly increase our income, e.g. DH could get a promotion at work. But the latter plan is so iffy. We just have no guarantees and it may just be a case of kicking the can down the road only we'd have less in retirement. (Not like we have a lot in there but we are in our 40's and got a late start; we really want to leave it alone.)

It's looking more and more like BK is the right option for us but it breaks my heart to think of it. The thought of going to the creditor's meeting and having a trustee scrutinize every little thing in our budget just makes me feel ill. But I know we cannot keep living like we have been, worried about money ALL the time. This is such a hard decision and I know we have to make it soon. If we are going to do this, it seems like the best time is the next couple months, before I teach Summer sessions and it throws my income numbers out of whack. But that seems so strange since next month will be the first month that we don't pay our creditors. However, it looks like some of you were current right up until you filed so maybe it is not strange. This seems like it should be a numbers decision but there are so many emotions that come into play, aren't there?

Re: How to decide?

Anonymous — Tue, 20 Mar 2012 23:02:30 GMT

I know exactly what you mean about the emotion. I never would have thought we would ever file for bankruptcy. I am not sure about how the Ch. 13 creditors meeting works but the Ch. 7 creditors meeting was surprisingly simple. A little too simple to be true actually. I am not glorifying BK for us it was a way for us to get our financial orders back in check.

It is something that needs to be thought about carefully because it has long-term implications.

Re: How to decide?

Math_Rocks — Wed, 21 Mar 2012 00:08:55 GMT

Comet, when did you file? I noticed your scores and I am wondering if you were current when you filed or had your score already taken a big hit?

Re: How to decide?

steve23111 — Wed, 21 Mar 2012 01:10:36 GMT

@Anonymous wrote:
I know exactly what you mean about the emotion. I never would have thought we would ever file for bankruptcy. I am not sure about how the Ch. 13 creditors meeting works but the Ch. 7 creditors meeting was surprisingly simple. A little too simple to be true actually. I am not glorifying BK for us it was a way for us to get our financial orders back in check.

It is something that needs to be thought about carefully because it has long-term implications.

I'll agree to that. Things might have changed a bit since 2002 when I filed, but back then it was just a case of show up, wait your turn, swear that the information your lawyer submitted is correct and you'll follow the instructions of the court, and have a nice day. Done.

Re: How to decide?

Anonymous — Wed, 21 Mar 2012 02:27:35 GMT

Math_Rocks, I've been keeping up on your situation, and I have to say, if it is to keep your sanity and your relationship intact, do it.

I've come across dozens of couples who will BK just because they can. Many times, I know it'll be a couple that I will see in about 5 or 6 years again, because they truly never grasped the concept the first time around. I can tell, this is not your case. It just seems that at this point, no budget could repair the situation and pride is just prolonging the inevitable. I know it is a hard situation to face, but there are many on this board that will tell you about what their plight was like and how they recovered after it happened. I know you are a survivor and you will be reborn like a phoenix from its ashes if you do decide to embark on that journey.

Yes, it's a tough decision to make, but sometimes the right decisions are the toughest ones to make.

Good luck.

Re: How to decide?

steve23111 — Wed, 21 Mar 2012 02:39:28 GMT

@Anonymous wrote:
Math_Rocks, I've been keeping up on your situation, and I have to say, if it is to keep your sanity and your relationship intact, do it.

I've come across dozens of couples who will BK just because they can. Many times, I know it'll be a couple that I will see in about 5 or 6 years again, because they truly never grasped the concept the first time around. I can tell, this is not your case. It just seems that at this point, no budget could repair the situation and pride is just prolonging the inevitable. I know it is a hard situation to face, but there are many on this board that will tell you about what their plight was like and how they recovered after it happened. I know you are a survivor and you will be reborn like a phoenix from its ashes if you do decide to embark on that journey.

Yes, it's a tough decision to make, but sometimes the right decisions are the toughest ones to make.

Good luck.

I agree... and to the OP, remember: we're all here to help you through the bankruptcy and rebuilding your credit afterwards!

Re: How to decide?

Anonymous — Wed, 21 Mar 2012 03:26:42 GMT

It has been 2 months since we filed 1/2012. Actually our scores when up because the damage had already been done. I applied for a Credit One Card on 3/9/2012 and it said my EQ was at 619. I guess since all of my balances reported at $0 including my mortgage and auto, both I reaffirmed. So hopefully I can get those back to reporting correctly so my scores will go back up an we can continue to build from there.

Re: How to decide?

Math_Rocks — Wed, 21 Mar 2012 05:03:12 GMT

Frugal, thank you so much for the encouragement. I think one thing that I feel pretty confident about is how much we have learned to live on a cash basis these last two years. If we file, that will really come in handy and that we are so used to making food at home while we watch everyone around us go out to eat all the time. It's Spring Break here and we had hoped to take the kids to the movies but decided we couldn't afford it. So, we got dollar candy, made home popped popcorn and watched a Redbox movie at home. This is the kind of stuff that we do most of the time. We have tried for so long to sacrifice and pay back what we owe but I think you are right, there is too much pride in it at this point and we need a healthy dose of realism.

DH is starting to find some peace about it which is ironic because I was the one who said we should talk to a BK attorney and started feeling some hope at the prospect while he was very reluctant and resistant to the idea. It's like we have swapped places. Maybe that is a normal part of the process and we will swap places a few more times before we come to a final decision. It's important to me that he doesn't feel like I forced us into this. If we do this, we do it together. I think such a big decision needs to be made soberly and with absolute agreement.

Re: How to decide?

MarineVietVet — Wed, 21 Mar 2012 05:30:18 GMT

I'll just toss in my 2 1/2 cents.

The final decision of course will have to be up to you and your husband. All you can do is make that decision based on the best information you have at the time. One advantage you will have over others (including myself all those years ago when we filed) if you do decide to file is the knowledge and advice you can tap into here to help you repair and rebuild.

Just like the vast majority of people who file for BK I went into the process blind and even after discharge did not have a clue how to go forward. This was in 1993 so of course nothing like myFICO even existed at the time.

I did however know that I was never going to repeat the mistakes that led to my BK and the only thing I knew about credit rebuilding at the time was to never be late on payments and to to my knowledge I've never been late on anything since that dark day in 1993. By the time I found myFICO all my negatives had long ago died of old age so I knew nothing of DV's, GW's, PFD's, etc. In my case ignorance was truly bliss.

I am neither ashamed nor proud of my BK. It's just part of my life that is not so happy but we made it through just fine. There were times it seemed the 10 years would never pass and other times it flew by.

I'll just close with this. If you decide to file don't second guess yourself and don't look back. Move forward.

Re: How to decide?

Math_Rocks — Wed, 21 Mar 2012 16:30:19 GMT

Thanks, Marine. That is excellent advice.

I am beginning to think that our decision is inevitable; it's just a matter of timing. We have to come up with $500 to file and we don't know what to do about DH's CC. He has a CC through his employer (for personal use). It's the only CC that we use but it has a $2000 balance and per the employee handbook, if the account is IIB, it is grounds for termination. The BK attorney assured us that Federal law supercedes it and we would have grounds to sue if they fired him for "exercising a legal right". But we are not sure that we want to take our chances, especially as DH may be able to get a promotion in a few months. But it would take months to pay off even if we don't pay our other creditors so it really is a pickle.

I really don't want to second guess ourselves as we move forward but I want to be sure that this is the right path for us. I am so thankful for all of you here who are willing to be transparent about your own experiences and encouraging about ours.

Re: How to decide?

Math_Rocks — Fri, 23 Mar 2012 16:08:33 GMT

Well, if I thought that things couldn't get more confusing...

There has been a big shake-up at DH's work. Three VP's let go in one day. This has opened up a bunch of positions above DH and we don't know if this makes it more likely that he will get a promotion. And, if he gets a promotion, we don't know if the accompanying raise will be enough to cover the deficit in our budget. In general, other than suddenly letting these people go, his company tends to move very slowly so it will be a matter of a couple months, probably, before we know anything. And, in the meantime, we can't pay our creditors. What does this all mean???

Re: How to decide?

steve23111 — Fri, 23 Mar 2012 18:27:51 GMT

And the plot thickens. If I were in your shoes, my head would be exploding right now. I don't know how you're keeping it together, so good job on that much!

Sure, the company policy is that including the company card in the BK is grounds for termination, but that's something I would ask a BK attorney about. It probably wouldn't hurt (and in fact, I think it could do you a lot of good) to meet with a BK attorney sometime very soon about the situation. Most offer a free initial consultation to review your situation and see what's best for you. That would be a prime opportunity to raise the question of whether an employer can take action based on the IIB of a company credit card, and whether your BK attorney is able/willing to assist with any adverse action the employer tries to take.

One thing that isn't clear right now is how many incomes you are working with-- just his or are both of you working? If you're both working and y'all file BK and the debts are discharged, would you then be able to manage-- at least for a few months-- on just your income, just in case his employer does try to pull something?

Re: How to decide?

Anonymous — Fri, 23 Mar 2012 18:34:39 GMT

For what it's worth, I wouldn't count on the "maybe".

Those positions could be filled up with DH being one, or they could never be filled up at all, or they might even do it externally.

You need to face the situation you are dealing with in the "now", because that's the only concrete information you have. If you wait and he doesn't get the promotion, then your summer income starts coming in... and then what.

I am not trying to push you into making a decision to file, I'm just trying to keep you realistic. Does he know the reasons why three VP's were let go?

Re: How to decide?

Math_Rocks — Fri, 23 Mar 2012 19:06:34 GMT

Steve, we talked to a BK attorney on Monday and he said that DH can't get fired for "exercising a legal right" but I am not sure if that means that he would help us if that were the case.

We both work. I am a Math professor (ironic, I know) at a small, private university and DH essentially works in mortgage collections. He used to work in the foreclosure department, is now in collections and one of the promotions that he is looking into is in the BK department (even more ironic!). We definitely need both incomes to make the budget even without paying our CC's anything. We really don't want to "test" his employer, especially as things may be on the verge of starting to do so much better for DH. Do you know if we would be allowed to reaffirm the debt? That may be the compromise in all of this. I also have a second job with an online tutoring company but I have been drastically cutting back my hours due to exhaustion and the demands of family and my primary job.

Frugal, I think you are right. We need to make the decision based on what we know now. But just as I was concerned about, DH and I have seemed to swap places again where I am feeling more confident that this is the right choice and he feels like the situation at work may be able to save us from this course of action. His employer did not explain why they let the VP's go but DH had worked under two of them and felt that they were inept. (This is one of the reasons why he left foreclosure and took his current position.) His employer met with everyone this morning to explain that the company is not in crisis and no one will be laid off and there are about 25 positions opening up for people to "move up". As you can imagine, foreclosure is a big business and DH's company has been doing really well since he was hired two and a half years ago. (In fact, I wish he had any interest in these boards because he could give a lot of helpful information to people about the bank side of things when it comes to mortgages and foreclosure and collections.)

Re: How to decide?

Math_Rocks — Fri, 23 Mar 2012 22:45:33 GMT

Picked up our tax return today and we owe $2200. (We knew this but it's more "real" when all typed up.) We owed $2800 last year and made payment arrangements but it doesn't look like we can do that this year. This may force our hand as we literally have nowhere we can get that money from.

Re: How to decide?

Anonymous — Mon, 26 Mar 2012 13:10:40 GMT

I'm sorry to hear that.

My advice would remain the same: Don't hope on a promotion. You might want to act before you start to regret non-action.

Good luck.