How to decide?

[Math_Rocks]

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.

[Anonymous]

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.

[steve23111]

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!

[Comet21]

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.

[Math_Rocks]

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?

[Comet21]

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.

[Math_Rocks]

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?

[steve23111]

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@Comet21 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.

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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.

[Anonymous]

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.

[steve23111]

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@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.

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