How to decide?

[Math_Rocks]

We've decided to think about it through the end of the month, which I guess is Saturday. We have filled out all the information for the BK attorney and now just need to hear specifics from him about what our repayment would look like. This is a gut-wrenching decision and I am just demoralized about even considering it. We've worked so hard on the DMP, paid more that $20000 in debt in the past two years and now to be in the position where we can't continue and be debt-free in two years... it's just so sad. And the BK would certainly be 5 years because of our income so that would mean 5 more years. I really want to make sure this is our last resort, that we truly have considered every option available to us.

Frugal, have you ever filed? If not, does your occupation have something to do with BK? You sound very knowledgeable and I appreciate your encouragement and advice.

[Anonymous]

Math, I have never filed, but I've been surrounded by people who have had to either file due to personal irresponsibility or because of the hands that life has dealt since 2008.

I don't know what the process is like, to be honest, but the stigma surrounding bankruptcy has definitely changed.

I will tell you this, there is nothing to be embarassed about. I've had people cry on my shoulder because they had no other choice. I've had people vow to me that it would never happen again. I don't deal with them directly, but I do work at a financial institution and I have been usually the first one they talk to before they get on that road. I also worked previously at a non-profit financial institution that worked with debt consolidation. I had to stop working there after a while, the emotional toll was a little too much for me. It never got easier for me, which completely indicated to me that I had the wrong personality for the job.

And I say this, because it's important for you to understand, there are SO many other people in your position, and some times it's not easy NOW, but these forums are a testament to the AFTER.

There is hope AFTER. There is no shame in what you are doing and you can look back, proud because you TRIED. Sometimes, trying just isn't enough and we need to take the road that is laid before us, even if it's the bumpiest one. I have full and complete faith that you will recover from this, prevail and persevere.

And how do I most definitely know there is hope after BK?

I worked with two credit counselors, who because of unfortunate circumstances, had to file themselves, and they've kept their jobs and are better off for it now.

It happens to even those who counsel others.

[Comet21]

Is Chapter 13 your only option? We were able to file for Ch. 7 because our debt was mostly business debt. We would not have passed the Means Test otherwise. Our income was too high. I don't think your repayment has to be 5 years, I think the rule is that it cannot be longer than 5 years(60 Months). Plus you don't know how much of the remaining debt you are going to have to repay. The trustee is not going to allow you to sign of on a bankruptcy that you are not going to be able to meet the obligations, so most likely you will be in a more favorable repayment plan. You would much rather do it before your DH gets a promotion which will most likely cause you to repay more of the debt owed.

[SoulMaster]

Here is how to decide in 3 simple steps:

1. Read my post on why BK should be avoided AT ALL COSTS, found here: http://ficoforums.myfico.com/t5/Bankruptcy/Bankruptcy-amp-Credit-Scores/m-p/1259627#M8730

2. Buy Total Money Makeover by Dave Ramsey

3. Read it.

If after those three steps you still need to file:  Do it.  Nothing else really matters and you're costing yourself recovery time and money by postponing your decision.

Best of luck,

-SM

[Comet21]

Soul:

Your post is actually a better read than Dave Ramsey's view on BK because BK is not an option Dave would suggest at all. Even though he admits that he has filed, he still does not suggest that for anyone. At least you are saying make sure this is for the right reason like judgement, jail, forclosure, etc. I respect Dave Ramsey's FInancial Advice, but BK is not a cookie cutter decision, and he cannot make a blanket statement that no one should ever file. Things happen and they have this option for a reason.

[SoulMaster]

Thanks from the props Comet!

I guess I read that CH in Dave's book a little differently...  What I took out of it was "before you file BK, make sure you're really bankrupt, because it has major ramifications."  Note: I read his book after I filed my BK (and I still would have filed, even though I hate that I did).

-SM

[Comet21]

I too read it after I filed. Still would have made the same decision also. Ours was a failed business debt(Loan, Lease Contract, CC's) $500,000+. We made a number of offers to the bank with our loan and they rejected every offer. The landlord accepted our offer but we were fed up with paying rent for a location that they were able to release AFTER we came to a settlement. So they were double dipping and the bank loan was 85% insured by the SBA. They only ones left holding the bag was the CC companies but they probably received TARP to cover their loses. It was still a very hard decision that we have to live with for the rest of our lives, but it has been a great relief now that we are able to save once again.

[Math_Rocks]

Thanks for the advice, soulmaster. You make excellent points. I am thankful to feel fairly confident in my university position (coming up for tenure in the Fall) and I have very good medical insurance but there are many things that could happen that would make it sad that we filed now. It's definitely something to think about.

I have read Dave's books and I am a graduate of Financial Peace University (ironic, I know). I went through FPU right after we signed up for the DMP and it really made us question if that had been the right thing to do. One regret that I have is that we never were able to come up with the $1000 emergency fund because the DMP payments were just so high. That is one thing we will do ASAP if we do file now. I know Dave is against BK but I agree with comet that sometimes there really isn't another option. Right now, that is what we are trying to decide: are there any other options? If so, are we willing to accept the consequences of those options?

I guess we feel like, whatever happens, once we get on top of our credit card debt, we'll start instituting the rest of Dave's advice. I think he has a lot of great things to say and I know he really turned things around for good friends of ours. (But their financial situation is worlds apart from ours...) Right now, I can't imagine life without having to think about money ALL the time. But will it be the same way if we file? Every question answered begets another question. 

[Anonymous]

SoulMaster, out of curiosity, why can't you have a late show up post-BK?  And is this forever after you have already filed BK?  Thanks!

[Math_Rocks]

Just wanted to share some good news: found out yesterday that our son got a full ride for college. We are so proud of him and incredibly thankful. There wasn't a thing we could do for him to help with college expenses so this is a real answer to prayer. Feel like this has given me a brief reprieve thinking about BK all the time.