topic Re: I am a prime example of WHAT NOT TO DO in General Credit Topics

I am a prime example of WHAT NOT TO DO

mattmix36 — Tue, 03 Jan 2017 03:43:56 GMT

Hey guys,

I started off building my credit when I was 18...I got my first credit card through FNBO with a 300 credit limit and over time had a solid credit score and was in outstanding financial shape. At 20yo I had a networth of about 50k with zero loans. I came to this website in search of the perfect credit score, and I litterally jumped off the deep end. As you can see by my signature line, I ammased a freaking awesome display of plastic...I had this huge wallet that would hold all of my cards, I would pay with my RITZ card any chance that I had to see the face of the clerk as he felt the weight of the card.

Fast forward a few years. I'm 27yo with zero active credit cards, with $116,000 in debt (105k credit card debt), a credit score in the 500s (if I'm lucky). I make 96k a year, and I'm dead broke.

Credit is serious business--I thought I understood that a few years ago, but head knowledge is only 20%...habbit is the 80% that matters. I have nothing against anyone who has or uses credit cards...I have nothing against anyone who uses this site (obviously, because I use it)...I'm just saying "be carefull".

I'm filing chapter 13 bankruptcy this week. I will be paying $2100 a month for five years in order to pay off my debts (becuase of my income, I do not qualify for a chapter 7 discharge).

Stay classy, and be real. I was irresponsible--now I'm making up for it on the ramsey plan. No more loans. No more FICO score. Hopefully forever.

Feel free to follow me in the bankruptcy section from now on

Re: I am a prime example of WHAT NOT TO DO

myjourney — Tue, 03 Jan 2017 03:49:25 GMT

Thanks for being honest and in that you may help someone

Good luck keep your head up and start your build

You will learn and become a better person as a result

Re: I am a prime example of WHAT NOT TO DO

buildingcreditfromnothing — Tue, 03 Jan 2017 04:00:30 GMT

OP: I'm curious as to why you'll be paying $2100 per month. Did you propose to pay off 100% of your unsecured creditors in your Chapter 13 plan? The reason I'm asking is that creditors treat a bankruptcy the same way (blacklisting) regardless of the amount they're repaid in a bankruptcy.

Maybe you should ask your attorney to recalculate and see if you can pay less per month.

I wish you the best of luck.

Re: I am a prime example of WHAT NOT TO DO

mattmix36 — Tue, 03 Jan 2017 04:11:00 GMT

Due to the view of my state's bankruptcy court, if you can repay 100%...then you must. Otherwise your repayment plan will not be approved. It's a pain in the butt for sure, but I'm not too worried about it. Paying the 2100 a month will effectively reduce my "usable income" to 75k per year. I already live well below my means so this will not be an issue. I'm GAZELLE INTENSE!!!!

Re: I am a prime example of WHAT NOT TO DO

mattmix36 — Tue, 03 Jan 2017 04:17:50 GMT

Also, not too worried about being blacklisted...I seriously have no intention of ever being in any kind of debt again. I most defenitly won't ever have another credit card. The only future loan that I see as a possibility would be a mortgage; however, even that is possible without a credit score as long as you can find a good company that knows how to manual underwrite.

I've come to the conclusion that a FICO score is quite pointless. When I was 80k in debt and making 50k a year, I had an excellent credit rating. Post BK I will have extreme cash flow and a substantial savings account...however a poor FICO score. FICO scores are not a good measure of financial fitness...just a good measure of how well you have paid credit companies. *w/ the caveat of paying credit card bills every month--however, it's still a bad habit and a dumb premise in my personal opinion.

Re: I am a prime example of WHAT NOT TO DO

Anonymous — Tue, 03 Jan 2017 04:28:01 GMT

Refreshing!

Too often on the forums I read of only the biggest and baddest new CLs...your post was a great piece of advise and one I am so pleased you had enough transparency to post.

Being on the rebound after a ton of medical bills and choosing not to BK...I cherish every step of the journey. Your post hopefully will be a beacon for those that could easily stumble and have no recourse....but to weather the storm and know that 7 years is a long long haul. (Make payment arrangements and stick to them, it will keep many off your various boards...we sometimes only paid $50. a month, but the docs did not report us to collection agencies, we found being humble was only best presentation to those many we owed.)

Wishing you only the best and hope your circumstances improve in 2017....

Blessings to you and yours.

Re: I am a prime example of WHAT NOT TO DO

wasCB14 — Tue, 03 Jan 2017 04:28:30 GMT

Thanks for the report...it takes guts to share all that. You don't mention a job loss or health problem, and it's not mortgage or auto debt, so I'm assuming this was from just general overspending.

Do you feel like premium cards fueled your spending...either as part of some quest for rewards or trying to have a lifestyle appropriate for the cards? Or available credit on anything was a problem?

Re: I am a prime example of WHAT NOT TO DO

NYFan63 — Tue, 03 Jan 2017 04:31:05 GMT

Matt - I'm not sure which state you live in but I'm in NJ - I filed in Aug 2009, was making > $100k abs had less CC debt than you and I was able to file CH7 BK.

Just wanted to share my experience- maybe you can seek advice from another lawyer.

Best of luck!

Re: I am a prime example of WHAT NOT TO DO

Anonymous — Tue, 03 Jan 2017 04:46:46 GMT

Very brave of you to share your experience with complete rawness. I know it sucks right now, but many of us have been there (I almost thought I was reading my story until I got to the RITZ! I've never had one). The good news is you can come back from it. It might take awhile......and that's ok!

My BK was 5-2012 and just this past July I started rebuilding. Up until then, I was the cash queen. I didn't have any cc and didn't want any! But in today's world, at some point credit may become a necessity. So I started rebuilding.

Im happy that I'm smarter, more of a planner, and more cautious this time around. The most important chapter after rock bottom, is the knowledge of how climb back up and to avoid past mistakes.

I wish you much success! I look forward to following your journey!

Re: I am a prime example of WHAT NOT TO DO

mattmix36 — Tue, 03 Jan 2017 06:09:06 GMT

WasCB14,

I think it was like "man, I have arrived"..I have a solid job, a great credit score, they've opened up these credit lines to me--that must mean that I'm worthy to live this life style. I liked the rewards points, and I generally liked the feel of having the buying power involved with my cards. However, the debt was all brought about by overspending and being financially irresponsible in general sense.

Re: I am a prime example of WHAT NOT TO DO

mattmix36 — Tue, 03 Jan 2017 06:15:03 GMT

NYFan,

Unfortunately Wyoming is not as forgiving as NJ. I consulted with several attorneys before picking the one that I'm currently represented by. My situation is a bit unusual...I make good money, have a very small car loan (3k), and live in an apartment with rent that is well below average. I'm also single with no dependents.

Re: I am a prime example of WHAT NOT TO DO

rlx01 — Tue, 03 Jan 2017 07:30:13 GMT

How much of that debt was interest?

Re: I am a prime example of WHAT NOT TO DO

Gmood1 — Tue, 03 Jan 2017 07:33:31 GMT

As long as you continue to be honest with yourself. You will be fine. It's all temporary. I thought the same way for a long time. That I didn't need credit.
It could have worked 70 or more years ago. Today credit is worth more than cash itself. Don't give up on it just yet. You're young and have plenty of time to rebuild it.
The next time around you'll be more disciplined. Plant seeds now as you go through your BK. It will make the rebuild much faster. Good luck and keep pushing.

Re: I am a prime example of WHAT NOT TO DO

909 — Tue, 03 Jan 2017 12:31:31 GMT

can you describe the BK more? I'm not clear on the benefit of filing for it. Thanks.

Re: I am a prime example of WHAT NOT TO DO

Anonymous — Tue, 03 Jan 2017 13:55:33 GMT

First and foremost, thank you so very much for being so open and honest - not only with us on this forum, but with yourself.

Someone here has a quote in their signature line that I always try to remember: Credit can be a wonderful servant, but a terrible master!

After over two years of being jobless and then followed by my divorce, I too decided to go all cash. Due to my ex trying to take me to the cleaners (financially), let's just say the lawyers made a killing!

I got myself out of debt with Dave Ramsey's snowball method. Although it may not have been the most efficient (APR-wise) it was the most effective (emotionally) in seeing real results fast! At that point, to me, Credit--->BAD! Cash-->GOOD Period. But I've learned that if you're disciplined and develop good spending habits, you can have credit AND still be debt free.

Dave Ramsey' method works until you find yourself in a situation when..well... Life happens. And when it does, it can often deal a blow that the best financial planning can't account for. Dave Ramsey's plan - and any plan for that matter - can't account for everything. It certainly did not account for a vindictive partner in a divorce or an 2-3 years jobless cycle. Now having hindsight, a little credit would have gone a long way in helping me to survive until I landed a job. In fact, I didn't need much to help to fill the financial gap (after tapping all sources), but not having that little help caused bigger problems (tax liens and almost a car repo among others). So in 2015, I realized that the ALL CASH method would probably work in an early 1990's world, but not in today's Apple pay and Google pay world.

Now, I have CCs but don't fear them as much as I realize I don't HAVE to carry a balance. I don't HAVE to be in debt. By only charging what I can PIF each month, I am basically living a CASH life but using it to build solid credit as well. Except for around the holidays, I pretty much don't go spend-crazy. I charge day to day living expenses and pay off those day to day living expenses EVERY SINGLE MONTH. I have a budget for every category and don't go over that budget (even with charging). Even during the holidays, though my spend may increase, my discipline stays in tact - that is PIF every month without question. I absolutely HATE paying CC interest and so I avoid it at all costs.

Although you may have gotten an ego boost from acquiring so many cards, as you mention, it was your basic lack of discipline that really got you into trouble. Been there. Done that! You are young still and no doubt, you will bounce back from this bankruptcy better than most! You sound like you have learned your lesson AND you have a job that pays well which will allow you to accomplish many financial and personal goals. I wish you all the best!

Again, thank you for sharing. These stories are just as important on this site as the "rebuild" and "I got approved" ones!

Re: I am a prime example of WHAT NOT TO DO

Revelate — Tue, 03 Jan 2017 14:19:51 GMT

@NYFan63 wrote:
Matt - I'm not sure which state you live in but I'm in NJ - I filed in Aug 2009, was making > $100k abs had less CC debt than you and I was able to file CH7 BK.

Just wanted to share my experience- maybe you can seek advice from another lawyer.

Best of luck!

Wow that is seriously generous . California line was 50k and change.

I looked into a 13 once as a way to force a payment plan on the IRS; A BK sucks from a credit perspective but ultimately you have to do what's right financially and if you can't afford your debts, streamline em.

@OP: I don't quite agree with the assertion that FICO is useless: unless your free cash flow can afford a house, just get a few cards once the BK finishes, and use them sparingly. $250 secured cards just fine, but in learning from your mistakes, don't go down the same path but don't leave a resource like a credit score on the floor forever even if you do wind up taking the wear the numbers off the debit card route.

For what it's worth in the modern economy, being a no file is just about as bad as having a BK for some things, really the only difference is it's a shorter walk to fix the no file but it's still a 6 month to year delay on a mortgage potentially.

In my opnion just all hangs around your spending habits when it comes down to it, good income, minimalist lifestyle, that's me too, and I don't carry around any debt on credit cards currently and only have 10K from an aborted school run on a HELOC besides my 240k in mortgage debt. Sure we're different people, but if you have the self control not to spend beyond your means which I think is the lesson you've learned here, you'll be fine with a couple small credit cards.

Thank you for sharing your story on the forum!

Re: I am a prime example of WHAT NOT TO DO

Credit_hawk — Tue, 03 Jan 2017 17:17:49 GMT

@NYFan63 wrote:
Matt - I'm not sure which state you live in but I'm in NJ - I filed in Aug 2009, was making > $100k abs had less CC debt than you and I was able to file CH7 BK.

Just wanted to share my experience- maybe you can seek advice from another lawyer.

Best of luck!

I am going to go out on a limb and assume OP lives in a far-right wing state. That's where you will find chapter 13 being strongly legislated. Republicans are the architects of chapter 13.

Re: I am a prime example of WHAT NOT TO DO

Credit_hawk — Tue, 03 Jan 2017 17:23:01 GMT

@mattmix36 wrote:
Hey guys,

I started off building my credit when I was 18...I got my first credit card through FNBO with a 300 credit limit and over time had a solid credit score and was in outstanding financial shape. At 20yo I had a networth of about 50k with zero loans. I came to this website in search of the perfect credit score, and I litterally jumped off the deep end. As you can see by my signature line, I ammased a freaking awesome display of plastic...I had this huge wallet that would hold all of my cards, I would pay with my RITZ card any chance that I had to see the face of the clerk as he felt the weight of the card.

Fast forward a few years. I'm 27yo with zero active credit cards, with $116,000 in debt (105k credit card debt), a credit score in the 500s (if I'm lucky). I make 96k a year, and I'm dead broke.

Credit is serious business--I thought I understood that a few years ago, but head knowledge is only 20%...habbit is the 80% that matters. I have nothing against anyone who has or uses credit cards...I have nothing against anyone who uses this site (obviously, because I use it)...I'm just saying "be carefull".

I'm filing chapter 13 bankruptcy this week. I will be paying $2100 a month for five years in order to pay off my debts (becuase of my income, I do not qualify for a chapter 7 discharge).

Stay classy, and be real. I was irresponsible--now I'm making up for it on the ramsey plan. No more loans. No more FICO score. Hopefully forever.

Feel free to follow me in the bankruptcy section from now on

Your honesty is refreshing. Your point of view of being cash poor but credit rich is welcomed and now you will be the opposite lol. I wish the best to you in your future. I wish you weren't being hammered as badly. If you're paying back 100% that's commendable and you shouldn't have to take a 7 year hit while those who burned everyone and peaced out only have to do slightly more time out. I will be following your progress!

Re: I am a prime example of WHAT NOT TO DO

Revelate — Tue, 03 Jan 2017 18:39:18 GMT

@Credit_hawk wrote:
@NYFan63 wrote:
Matt - I'm not sure which state you live in but I'm in NJ - I filed in Aug 2009, was making > $100k abs had less CC debt than you and I was able to file CH7 BK.

Just wanted to share my experience- maybe you can seek advice from another lawyer.

Best of luck!

I am going to go out on a limb and assume OP lives in a far-right wing state. That's where you will find chapter 13 being strongly legislated. Republicans are the architects of chapter 13.

Chapter 13 is simply an affordable payment plan imposed on all parties by the courts. Plenty of good reasons to use it, and come on, California is the ultimate blue state with a far more restrictive income limit for a chapter 7, so swiping at Republicans isn't appropriate (and politics aren't up for discussion on this forum anyway).

Re: I am a prime example of WHAT NOT TO DO

Anonymous — Tue, 03 Jan 2017 19:11:55 GMT

Thank you for sharing your story. It sounds like how I lived my early 20's. Thankfully I did not have to file BK, but did consolidate everything and was able to pay off my $40k plus of debt. I personally started my own "rebuild" after my house came out of foreclosure. I no longer use my credit card's like I once did, but I also realize, that for me, they are needed for every day life. I wish you all the luck! I will continue to follow your story.