Has anyone on this board (or know a “friend” who has) ever declared bankruptcy?
I know this is kind of a personal subject, but I’m just curious, because I’m about there myself.
Any advice?
I went through a few years ago.
I had a good lawyer. It is worth it to rustle up the cash for one (they may ask for a retainer in advance).
Of course, you have to list, in detail, your entire debt. Each debtor is contacted to let them know you are declaring bankruptcy. You can declare some debts exempt from the bankruptcy (say, your car if you are going to keep up they payments). Some debt is not eleigible for bankruptcy (like guaranteed student loans).
I had to list every piece of real property I owned and had to give it a value. I had to produce financial records for the year prior to the filing of the bankruptcy (like, every check I wrote, tax returns, pay stubs, etc.). I had to produce a list of my monthly expenses and compare it to my income. They do not like it if you spent over $1000 in the previous year (you have to say what each item is and why you bought it). They also do not like it if you appear to have run a big credit card debt just prior to declaring bankruptcy.
You have to appear in court, which was the scariest part for me…I was just sure someone was going to tell me what a worthless piece of crap I was. Your debtors may appear at this hearing, but it is unlikely. It was actually no big deal and not humiliating (huge relief).
After the court appearance, there was a wait (couple of months) then I received a letter in the mail saying that I had been given a discharge of my debt. After that, the world wanted to give me a credit card and sell me a car…LOTS of junk mail.
I recommend that you look up your state’s specific rules regarding bankruptcy, as the rules do vary from state to state and what kind of bankruptcy you qualify for.
Good luck. I know how difficult this is.
If you end up looking for counseling, I recommend Consumer Credit Counseling Service. It is a non-profit and they are the best. Can’t really help with mortgage stuff or student loan stuff, but can really help with credit cards and other unsecured debt.
Thanks, GraphicsGal. A friend of mine also recommended CCCS, she said they were a good company to deal with and didn’t charge any fees. As far as hiring a good lawyer, I have no money to do so, and no credit left on any of my cards. As far as any collateral, my car was repo’ed overnight so I don’t even have that.
When it rains, it absolutely pours.
Another huge thing to watch for is what creditors post on your credit report even afetr your debt to them has been disharged. I suggest getting a credit report post BR and checking to make sure the creditors dicharged arent still posting late status on your credit report. My credit report is a mess which is making the bankruptcy look even worse than it really is.
Read this book before you do anything drastic. You should be able to find it at the local library, possibly the last edition, Financial Peace. Or, if you can’t find it but would consider reading it, drop me an e-mail and I’ll send you a copy. Really. Give this book a read before you give up - it truly saved me from myself.
Best wishes to you.
Ardred is going through this right now. Any good bankruptcy lawyer will have a payment plan. He had to come up with $200 for a retainer that may be put toward court costs and paid back later.
Find a good lawyer and good luck.
My stepdad did in 1996. He was heavily (read: tens of millions) into BCCI (UK merchant bank which pulled an Enron in the mid-nineties) and lost virtually everything. I believe creditors are eventually recieving 4% of whatever went down with BCCI, payable as an annuity.
He pulled off some, er, creative accounting moves and managed to keep a few of his businesses. Don’t know the whole story because this was awhile before I met him.
No advice. Just good wishes.
One friend of mine went bankrupt twice. He planned it. Theoretically, you can’t do a lot of frivolous spending just before going broke, but he did. A trip to Vegas seems uncommonly imprudent for a guy with no money, but he did that.
If you’re buying a house, and you can’t make the payments, put it on the market. Tell the Realtor you want enough to pay the mortgage. You might take a bath on the price, but it won’t be as bad as if you let the lender take back the property.
Laws vary from state to state. Florida, for example, is very friendly to the bankrupt person. Some folks even move to Florida to go bankrupt. You get to keep your house and car.
I don’t recommend bankrupcy except in the most dire circumstances. It will screw up your financial life for years to come. It will force you to deal with the most predatory lenders and car dealers. The dreaded “Payday Loan” stores and even loan sharks will stand ready to get their claws into you.
Mr. Ujest has a cousin whose husband has declared banktuptcy three times. Three times in about 10 years. Just runs up the debt, declares banctrupcy and changes name. Lather, rinse, repeat.
He use to live in a double wide.
Drove a caddy.
Had all the latest techno gadgets and whistles. Many before the average joe could afford whatever the doo-hickey was. He had them. All.
Did 11 years of college & waitering before landing his first real job making $100k.
Nobody in his inlaw family likes him and his own family is fairly farked up.
Whenver we say things are not going well financially, someone jokes, " Well, you could always do a " Smith". "
Smith being a bankruptcy.
Good luck on turning your life around.
Two family members and a friend at work. Florida has some choices on filing. You can file the one where you pay back some/all creditors, but they can’t pester you, or you can file the “ain’t payin’ it back” kind. Yes, sometimes you can keep your car, but if it’s a '04 Mercedes it’s not as likely as if it is a 10-year old Isuzu. There’s a dollar value beyond which they can force you to sell the car. You can also convert from the first type of bankruptcy to the second kind if you find it’s not working out, or so I’m told.
It is not the end of the world if you have to file. You can borrow money again soon, and can even finance the purchase of a house after two years (my brother just did–he had to wait for the second anniversary to pass, couldn’t even do it one month shy of the anniversary.) You can finance a car within about a year, or sometimes even sooner.
However, this is NOT a step to be taken lightly. Most bankruptcy lawyers will give a free consultation, and most of the paperwork can be done by a paralegal, which is much, much cheaper than having the lawyer do it. I recommend getting that free consultation before you make ANY decisions.
Make sure you study up on the differences between Chapter 7 and Chapter 13 in your state. There is a ton of information online, but beware anyone who wants money for info.
Go to a lawyer, not a website for actually filing.