Well, things have gotten pretty dark for my family, namely that we have gotten to the point that bankruptcy is an option. I have spoken to a financial expert so I know at a very basic level what the financial ramifications are, but I am looking for personal experiences. Anything that happened that maybe you didn’t foresee or weren’t warned about? Obviously the credit rating is already pretty much toast, or we wouldn’t be thinking about this. Any bankers, creditors, salespeople etc are also welcome to reply…
Well, perhaps this isn’t a great idea to advertise, but after my divorce I declared personal bankruptcy. It was scary how easy it was to do. I didn’t own property, so I paid a lawyer, he wrote it all up, I went to a “hearing” with about 100 other debtors and declared under oath that the form was correct and within weeks my debts were gone.
Of course, that was years ago- I was about 24. I’ve not checked my credit report lately, but I imagine it’s still a mess. I don’t use credit anyway, which puts me in the enviable postion at 32 of having no credit card debt. I pay cash for everything and have a check card for things I need a Visa for. I have a job where they ran a full background check on me and it was not an issue, nor has it been an issue for me in renting, YMMV.
It’s not the best option, but as a last resort it can be a lifesaver. It was for me. When my husband and I have purchased major items like a home (using an owner finance option) and cars (using a “buy here, pay here” place), we’ve not been denied anything, we just pay higher rates.
If you do declare it, you’ll be amazed- your mailbox will be flooded with credit card offers because the companies know you have no debt.
That’s my personal experience with it. I’ve really not suffered any major inconveniences with it, except that I sometimes want to take advantage of a “try it free for 3 months!” type of offer that is credit contingent and cannot. I live in a nice home and drive a late model car (paid off last month, in fact) and so far things are OK. I imagine in a few years it will be gone from my report or the effects greatly diminished- I’m not really sure how that works.
I’d also really appreciate it if people were share their personal stories – or stories about their friends/family/acquaintances/etc – about filing for Chapter 7. I’m taking a bankruptcy course right now… well, actually, the class is over and the final is next week, but I’d love to read about it as a means of procrastinating.
Before you do anything drastic, please consider giving Financial Peace: Revisited a read. It has very good information in it, it isn’t boring or difficult to follow. It was written by a man that had amassed $4 Million by age 26 and lost it all by age 30 (later he re-earned his wealth & kept it this time). It’s old-fashioned, simple advice that people had stopped following.
This book has completely changed my outlook on getting out of debt. Really. Like Zette, I have no credit cards and pay cash and save for things.
You can get out of this, there is hope. Please hang in there.
My wife and I were forced to file shortly after my mother in law passed away. The last year my MIL was alive, my wife had to take care of her and was unable to work. The out of pocket expenses my MIL had more that used up her social security money. We were scared to death but it is a very simple process. We lost nothing and within 2 years were almost back where we were. We had to pay higher interest rate when I needed another vehicle and when we bought our house, we had to settle for a fairly steep rate. It is not the end of the world if you do file and there is not the social stigma there once was. You would probably be surprise how many folks you know that have filed for bankruptcy in the past. The peace of mind that comes with suddenly being out of debt is worth the trouble.
IANAL, but I’ve been working in the bankruptcy field for, um, well, let’s just say “a while”, and leave it at that, 'kay?
Educate yourself, sure, but don’t- and I repeat, don’t- think it’d be better to file on your own (generic you, not you personally, natch). Hire an attorney.
Sure, it’ll cost ya, but let me tell you this: many things in bankruptcies don’t happen the way people anticipate. Most can be prevented, but very few can be cured.
Don’t misunderstand; many people (especially in this district) file without an attorney, and the majority of them pass through like pigs on ice. But the ones who go down wrong, go down hard. And without experienced legal advice, there’s no way to tell where the line falls until it’s too late to do anything about it.
**Smaft - ** Can you give me an idea what sort of pitfalls you are talking about? We would be going through with a credit counsellor, will that help?
**racer72 -**That’s good to hear, mostly because we would be looking a needing a new car in the next year, as the one we have borrowed for the time being is on it’s last legs.
**Slainte - **I will read the book, but it may already be too late, with me not working we need to prepare for the possiblity I may not get back to work, maning we have to survive on one income. Our debt load is just too high, going through two layoffs (one for each of us) a pregnancy and a new house was just too much this year. We have looked at other options (debt pooling, proposal), the stress of it all is really taking it’s toll on our little family, something has to give.
Zette - Than you so much for sharing, it’s stories like yours that give me hope there may be a light at the end of this very dark tunnel.
The book came out in December of last year (formerly titled ‘Financial Peace’) - your local library will probably have a copy of one or the other. Barnes & Noble-type stores will have it under Personal Finance. If you can’t find a copy, e-mail me and I will send you an extra copy that I have, gladly.
Even if you do file bankruptcy, give the book a read anyway.
Dave Ramsey is on Monday - Friday 2-5 EST on many AM stations. He also broadcasts his radio show online (for free) and there are archives of some recent shows.
I wish you all the best. Hug your husband often - you guys are both going through something very stressful - don’t forget to hold on to each other.
In general terms, not really. People make assumptions about what will and won’t happen, about how creditors will or won’t respond, about what the bankruptcy will and won’t affect, and about what they need to do to end up where they want to be.
Sometimes, some of these assumptions are wrong. Sometimes it doesn’t matter, but sometimes it does. So the question is: which of your assumptions (if any) are materially wrong? Whether your counsellor is in a position to answer that, I don’t know (Canada, right? I’m not up on legal advice laws there).
But as a (worst case) example, there was a woman who lost her house in her bankruptcy. No one else found this surprising, though; any attorney would have told her, given her situation, that that would surely happen. Bankruptcy was a poor choice for her- but no one told her that, because she never asked.
Although I’m sure it would be frivolous to declare bankruptcy for no reason, I’m very curious about these sudden credit card offers. After 15 years of cash on the barrelhead (including paying folding money for a new car) I have ZERO credit.
I’ve heard about the minor loan deal, but that didn’t seem to help me. Perhaps I could improve my snow-white virgin credit history by declaring bankruptcy. Oh, the ins and outs of financing in the modern world…
I was a teenager when my parents declared bankruptcy; I’m 24 years old now and they just, this year, stopped making bankruptcy payments. I don’t remember what kind of bankruptcy they declared, but I know that for awhile we had to park our new Nissan Maxima in front of my brother’s car so that nobody would repossess it til the bankruptcy “went through.” This freaked me out.
I remember wondering why, if we declared bankruptcy, we still had bills to pay.
They didn’t lose anything–the house, the car, the $20,000 piano, etc.–but they couldn’t buy a car til last year. (A friend of theirs sold them one of his cars five years ago, but no one would have financed a car for them so the late-model Explorer was just lucky.)They have only recently acquired a credit card again, and like I said, they just now paid off the bankruptcy, ten years later. And that’s b/c in Texas, bad credit/marks on your credit, etc. expire and vanish after seven years. Not every state does this.
The only thing I’d say about bankruptcy is that you don’t just get to wash your hands and walk away. It’s a long, tedious, painful process and the repercussions can last (what seems like) forever. And it’s worth noting that my parents hired a lawyer, as smaft advised, and that that may be why they didn’t lose anything.
As I understand it - we will not lose our house as we do not have enough equity in it, we are each allowed 1500.00 equity and are fine there (as we have been in the house just a year).
We will not lose our car as it’s just not worth it (89 Tempest).
The bankruptcy period will be about nine months, where we each have to pay 100.00 monthly, all of our GST cheques, and any income tax refund we may qualify for, for two years (if we end up owing that gets rolled into the bankruptcy).
We will still owe student loans.
After six years it’s supposed to be wiped off of our credit rating.
I am going to phone the bankruptcy trustee tomorrow to confirm all of this, and I would like to cheque qith our lawyer to see how much he would charge. The financial advocacy group charges about 600.00.
It’s just nice to be able to tell the vill collectors when they call tomorrow “We are going through credit counselling right now, call this person…”
My aunt declared bankruptcy several years ago, and was still able to keep her credit card. She still kept up on her spending, and it didn’t seem to have any adverse effect on her, except that she took a part time job in addition to her full-time job and still has it. She recently refinanced her townhouse, since the bankruptcy was over and she could get normal rates.
Last fall I worked with a woman who had, at the ripe old age of 59, decided to end her career as a therapist and go to paralegal school. She incurred a ton of debt, and has been doing temp work since then; no benefits, lower pay than if she had a job of her own, bad job market so difficult to get a job, and is increasing her debt since she hasn’t been able to earn enough to pay her bills. Even if she had gotten a job right away, she wouldn’t have earned as much starting off as in her old career.
She blames the credit card company for forcing her into bankruptcy since she had a high interest card and couldn’t lower her debt. She apparently lived above her means prior to going back to school. I think she’d have ended up bankrupt anyway, but changing careers to something
Mr. Hand, I think bankruptcy would be an excellent career choice, since a lot of people are filing and will continue to file since the economy is in the doldrums. I wish I’d taken bankruptcy, but Noooo, I was lured by the glamour of another class and never did.
I assume you are Canadian. And I don’t think we have Chapter 7 and Chapter 13 declarations of bankruptcy in Canada. We may have something like them, but our laws are different. Maybe get a better Canadian perspective from someone here. I’m not an accountant or lawyer so I don’t know the exact filings of bankruptcies so sorry for the non-help. I just wanted to state that this is a Canadian bankruptcy scenario and that Canadian perspectives would be of better help and use to our Original Poster ** Poysyn **.
Sorry again for not being of great help, but just wanted to make sure that the following posts could be more helpful knowing that your instance is a Canadian declaration of bankruptcy.
Poysyn Please don’t take my light post above as disrespectful. I just wanted to say that I have assumed that your family has tried to negotiate directly with creditors. If you have the heart for it, that might be worth a try.
Additionally, I’m betting that in Canada you have something that protects you from phone calls. In the US, you have the right to require all discussion be by mail.
**j.c. - ** No disrepect felt, it’s a weird situation to be in, and I think I am numb to most things about it at this point, I’m happy for any contributions, light-hearted or not
we have tried to negotiate with the creditors, to no avail. They seem to think we have gobs of money sitting around and we are just refusing to give it to them. This is not their fault, I am sure they get lied to a hundred times a day. We borrowed the money, after all, with full intentions of payng it back, but sometimes life doesn’t work out the way you planned it
**Dragonstar -**Thank you for your observations. I think bankruptcy is like any tool, only as good as you make it. We have no intentions of going back into the “hole” once we are out. One of the stipulations is nine months worth of monthly budget sheets and attending two financial training sessions. Maybe that book Slainte suggested can help too. I’m going to give that radio show a listen tomorrow on the internet.
**Madawc - ** You bet, Canadian born and raised. I guess I was looking more for a personal point of view, form someone who went through it, no matter what country they live in, but thanks for clarifying, I lways forget how different our laws can be when it comes to some things.
Lastly, ** Audrey Levins - **Thank you so much for your perspective on this. I’m sorry it was such a scary experience for you. One good thing is that my daughter is too young to know what’s going on yet, and by the time she is six, it will be over :). I am not looking at it as a way out, more like a way through. Anything has to be better than living the way we are now, shoveling sand upstream.
I have spoken to a financial expert so I know at a very basic level what the financial ramifications are, but I am looking for personal experiences. Anything that happened that maybe you didn’t foresee or weren’t warned about? Obviously the credit rating is already pretty much toast, or we wouldn’t be thinking about this. Any bankers, creditors, salespeople etc are also welcome to reply…
