(Closed) Any bees willing to discuss bankruptcy experience?

posted 7 years ago in Money
Post # 17
Member
1344 posts
Bumble bee
  • Wedding: October 2013 - Vine Street Church

My parents have gone through bankruptcy, and all I can recommend is to speak to a bankruptcy lawyer IMMEDIATELY.

Post # 18
Member
106 posts
Blushing bee
  • Wedding: November 2010

Student loans can be discharged, however, it is VERY hard and has to be special circumstances (think totaly disabled, and even then sometimes it doesn’t get discharged).  Also, you need to condsider your pregnancy and surgery after- if you declare bankruptcy now, none of the bills you will incurr for those issues will be included in the discharge– you will be liable (you can’t claim future bills in bankruptcy).  If you have low income, you need to contact your student loan companies- see if you can get income based repayment, or defferement. 

As far as a house- that should be a distant thought.  Yes, you can get a mortgage a few years after discharge, but you won’t get the best rates, best course is to wait and work on your bills/credit file before a mortgage so that you get the best rates (the difference of 1% on a 100,000 mortgage over 30 years is $23,000– and chances are with a bankruptcy, you will have a much higher interest rate than just 1% higher).

Only you know what is best for your family, but make sure you are looking at the big picture- and the next 10 years.

Post # 19
Member
55 posts
Worker bee
  • Wedding: April 2012

@gpsp2B:  I have filed and here is what I’ve learned:

Debt counselors: many are NOT non-profit – meaning they are out to make money on your debt. They will not help your credit situation; they will not improve your credit situation. They *may* only lower what you will eventually pay back to your creditors. Do your research before signing up with this “service.”

Your credit is probably already in the tank given the amount of outstanding debt and your DH’s impending garnishment, so having to “rebuild” your credit after BK is not an issue as you’re going to have to do it anyway. You can either nickle and dime your way back to good credit by trying to pay everything off while saving for your futures or you can file for BK, drop a majority of your outstanding debt, and start off in a somewhat “better” situation.

You can only file for BK once every 8 years. Hopefully, one time will be it. All of my research shows many are repeat BK filers because they continue to make the same mistakes. Because you can only file once every 8 years, you need to time it correctly… after you’ve accumulated any additional debt coming down the line: future medical bills, baby expenses, etc. BUT do not go on a shopping spree thinking you can just rack up a bunch of debt to clear away in BK… that is considered FRAUD and it will land you in jail.

Filing is a very personal decision. It took me years to finally pull the trigger, but it was a very smart move for ME. I struggled making minimum payments on my debt for a long time while maintaining EXCELLENT credit that I did not want to ruin; nevermind the whole personal-responsibility guilt I had. Finally, due to a layoff, the decision was pretty much made for me. Chapter 7; no asset. Quick and easy. Filed in April, meeting was in May, and I was free and clear of my debt in July.

I learned a lot of great stuff on bkforum(dot)com – it truly is a great resource.

Interview multiple lawyers and find one that you like and trust. Good luck.

 

Post # 20
Member
3682 posts
Sugar bee
  • Wedding: August 2013

tracyann makes a good point — do you have a way to cover the costs of the delivery and your surgery? Do you have good health insurance? Even with insurance, the co-pays for both could be astronomical. If you really do plan on filing for bankruptcy, I wouldn’t do it before you incur all that additional debt.

Post # 23
Member
13842 posts
Honey Beekeeper
  • Wedding: November 1999

@gpsp2B:  I have never filed and have no suggestions on filing – BUT, I just want to point out, credit scores increase incredibly slowly.  Even if you can get a lender to give you a mortgage, you will be high risk, and therefore, have an enormous interest rate.  Right now, if you have a credit score below 700, a lot of lenders won’t even consider you (my lender made 740 their minimum for any mortgages they handle).  If you declare bankruptcy, you aren’t getting a “clean slate” – but rather, you’re getting a very damaged credit score to rebuild when a lot of creditors won’t extend you credit.

I wish you all the best in whatever you decide to do!

Post # 24
Member
1220 posts
Bumble bee
  • Wedding: September 2015

@gpsp2B:  I filed in 2009 at age 25..It was the right choice for me. I had about 25k in debt not including student loans. I started out paying minimums on all my cards but the balances weren’t going anywhere. Like a PP n my credit was great because I never had late payments, I just paid the min on everything. Finally I just couldn’t take it anymore..couldn’t get a part time job which would have helped and my overtime at my real job was eliminated so I was stuck. A friend of mine had mentioned that she went through BK the year before and I just decided to talk to a few attorneys.  The first one I spoke to told me that I shouldn’t file. He said I should get rid of my car and buy a $1000 car so I wouldn’t have payments, but if I didn’t have money to pay bills where was I getting money to buy another car? Anyway I found another attorney who was a bit more realistic and helped me. Within 3 months of getting the discharge, I had a credit card offer in the mail, which after much hesitation, i applied and was approved for $300 at like 18% interest.  I used that card for 2 years but in january, my credit union offered me a new card at 8% with a $1000 limit. I kept my car despite my BK and never missed a payment. last year though, I decided that it might be a good idea to see what kind of car loan i could get so I applied and was approved for a 5% loan and I took that. My credit union refinanced my loan in January so now I have a 3% loan. All this after only 3 years. My score is just below 700..my credit has taken a hit because I’m back in school and I’ve got new loans left and right.

i do not understand the stigma of bankruptcy. things happen and people need help. It’s not like I would file again, but I got help when I needed it. I have 0 regrets. In your case it seems like you have a good case, but I’d definitely wait until the baby comes and after your surgery. Might as well wrap it all up in there. Good luck!i hope everything goes well with your baby!

Post # 25
Member
7884 posts
Bumble Beekeeper
  • Wedding: October 2010

I thought about posting anon- but whatever.  A couple years after my divorce, my ex husband just stopped paying his portion of the mortgage on the house that we owned together.  Because of the tank in the real estate market, our house was worth almost $100K less than we bought it for and we could not sell it- after 4 years of trying/attempting short sales etc.  I met with a lawyer who basically said in my circumstances I had few choices and I filed for chapter 13.  It was perferable for me because I did pay off all of my other debts- car payment, credit card, personal loan- and it is supposedly less of a hit on your credit than chapter 7.  So basically it discharged the debt of the house.  It was not a fun process- all my financials were scrutinized- I felt like I couldnt buy a cup of coffee without thinking twice.  But now- I am so glad I did it.  My Darling Husband already owned his house- so I can’t speak to buying a new home.  But the thing that stuck with me is what my lawyer told me: “Hope is not a strategy- you have to take action”.  Hope my story helps. 

Post # 26
Member
3460 posts
Sugar bee
  • Wedding: May 2012

I haven’t, but know someone who did (well, parents of a high school friend declared bankruptcy).  They had to rent a home for years after it cleared off their record – and were lucky to be able to do that – while trying to rebuild their credit.  It’s a tough hit.  I personally think it’s warranted though, because people should do absolutely everything they can before being permitted to walk away from debt they incurred, it’s a moral obligation to me.

Honestly, I had more debt than you at your age (all school debt though), so I don’t think it’s really that crazy.  A lot of people have high debt, particularly when young, and figure it out.

Have you figured out how not to get in the same situation again?  Have you figured out what lifestyle changes to make?

Post # 27
Member
1542 posts
Bumble bee
  • Wedding: June 2013

If I were you I would do everything possible to avoid it at such a young age. You don’t have too much debt, you have too little income and you don’t have control over it. (I have double that debt and a small income) check out daveramsey.com he has some good budgetting forms to help you. Budget out your expenses. Budget is key. Write down every single bill you have on paper (listing minimum payments first) Then apply whatever you can extra to that medical bill to get it paid… sell stuff, get a second job (well for him since ur pregnant) Do whatever you have to do but get that medical bill paid off. If you pay them, they won’t garnish your wages. Sell the car and get a cheaper one if you can. Avoid it at all costs. Even 7 years after bankruptcy its still going to take time to rebuild your credit for a house so you are going to be renting for probably a good 10 years unless you get a good paying job and can afford a house based on your income/credit alone.

You have to make a lifestyle change or you’ll just end up right back where you are. My sister declared bankruptcy when the economy went down. They had a huge house and her husband was out of work for over a year. When he finally got another job he wasn’t making near as much so they couldn’t afford the mortgage and their attempt at a short sale didn’t work so they were forced to foreclose and declare bankruptcy.  Where are they now. Still broke, just living in a small apartment instead. They didn’t get control of their money. When my mom sent them money to help, she had to make the check out to their daughter because they werent allowed to recieve any financial gifts. For my sister it was necessary. For your fiance it might be or might not be – that depends on his income. (if you do decide its necessary, he should definitely be the only one to file. and do so before you are married) Because your credit wont be affected so you could still get separate loans/mortgage if you have the income to qualify.

Post # 28
Member
1019 posts
Bumble bee
  • Wedding: August 2014

I filed in Canada at the age of 25 and was just recently discharged after 9 months of not being allowed to gross more than $1900/m (50% of what I made over that amount went towards my bankruptcy and up to a certain amount, I would have it extended another 9 months) plus having to pay $1800 to file + 2 counseling sessions. I do not have regrets about doing so. I DO regret racking up all that debt but I found myself going deeper and deeper into the mess whenever I tried “do the right thing” and to pay it down. Even living at home with minimal expenses I didn’t have enough to get ahead. 

I stopped paying my debts for a few months to save up for my bankruptcy (yeah, lol, I saved up for bankruptcy) and wasn’t going to bother paying minimums when I was planning on filing anyway. I was able to pay the $1800 filing fee and had a small rainy day fund before filing and losing my income. 

I don’t really feel all that bad about it either. I received a gross amount of credit from banks when I was still in school (I had access to $60k of credit not including student loans, without so much as a part-time job) and they decided to take that risk on me, hoping to get a 5%-19% return on their risk. I would automatically get a credit limit increase every few months from one bank or another Sorry, bank lost on this gamble. 

Consumer proposal was an option (a legal bankruptcy alternative where you offer creditors to pay % of your debts over a certain amount of years) but the hit on your credit is about the same as filing bakruptcy, and you pay MUCH more than in bankruptcy. In 6 years I can request to have my bankruptcy removed from my credit history and I will have credit similar to a 16 year old – blank. In a couple years I’ll start with a secured credit card and work my way up from there. 

I do think bankruptcy is a last resort decision but unlike PP’s, my view is that your age puts you at an adanvtage rather than a disadvantage. As long as you can learn from your mistakes and ensure you don’t get into this kind of mess again, you really do have lots of time to start over with a clean slate and rebuild your credit. It would be more devastating in my eyes if you had a bunch of assets to lose in the bankruptcy with children who need to be supported and a job you can’t get to because your vehicle has been seized. 

 

Post # 29
Member
6117 posts
Bee Keeper
  • Wedding: August 2012

I know this is an older post, but my omom once had a major ear surgery and my parents did not have health insurance at the time.  They had a $20k medical bill.  My dad made a deal with them – if he sold his motorcycle for $4k for cash, would they call the deal good?  And they did.  They knew they were not going to get all $20k for them, so he bargained and it worked.  This was also like 1989.

My dad later filed Chapter 13 (Chapter 7 would have made him lose the family house).  He hired a lawyer for that.  He paid pennies on the dollar.  He had to pay $500/mo until he turned 53.  This is for someone who had $200k in debt!

I have a cousin who filed CHapter 7 after a really bad divorce and that left her with alot of debt (like $100k).  I think she was relieved to get rid of it because it was tied to her nasty ex and it really weighed her down.  She later remarried someone with good credit and they got a house.

Post # 30
Member
552 posts
Busy bee
  • Wedding: March 2014

hi! i know this is an old post…

i’m 27 and filed for bankruptcy 3 years ago. since it has been 2 years, i CAN get a mortgage. my credit score has INCREASED.  i still have student loans, but that’s it! i had about $30,000 in credit card debt. the company i worked for ended up having special benefits where i was able to get a bankruptcy attorney for almost nothing! i think i paid $500 out of pocket? (at the time it was about $2,500 normally). 

as much as i hated doing it, it was a HUGE weight off of my shoulders. i cannot tell you how not having that uphill battle changed me. i highly recommend it as a last resort. just LEARN from mistakes and use it as a fresh start! i NEVER want to be where i used to be!!!

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