Bankruptcy Q&A

Do you regret going through the BK?

We are just about to go over the edge, and I think we will have no other choice, especially with the minimum payments just doubling! I just wondered if anyone wishes they hadn't done it, and had just stuck it out with the debt. If you do regret it why? And if you are glad you did it, why?

Thanks

Lori

No regrets. Been through Chapter 7 and Chapter 13.

In running debt repayment calculators it would have taken us approximately 40 years to repay the debt and that's if there was no more debt incurred.

Chapter 7 was due to debt. A lot of debt with increasing interest rates and swelling minimum payments which quickly outpaced our earnings (thanks to aggressive creditor debt practices -- jack up interest rates, drop credit limits to right below the amount owed, then add on interest charges which then puts you over limit which then incurs over limit fees and interest and the nonsense continues). Consumer Credit Counseling looked at our financial picture and said there was nothing they could do to help and suggested a bankruptcy attorney. We saved our house, our cars, our health and sanity with Chapter 7. The emotional relief changed our lives for the better.

Chapter 13 was about 4 years after Chapter 7 and it was due to litigation and one hellacious creditor. I had a very payback oriented person who filed lawsuit after lawsuit against me running me through 4 different court systems simultaneously. Hard to hold a full time job, meet with lawyers and make all required appearances all over the state. This person promised he was going to ruin me with litigation. Sure gave it a good try. My tax attorney advised the only way to immediately put a stop to the insanity was to file bankruptcy and name that person as a creditor. It takes years and tons of lawsuits to get a court to name such person as a vexacious litigant, so I filed Chapter 13 and this person is forever barred from suing me for anything that occurred in the past.

Regrets? Not a one. I relied on professional financial and legal advice and had excellent representation along the way. I also took advantage of the fresh start by educating myself in financial matters I had not delved in to before. Now I have savings, investments, retirement, pay on my son's university education, the bankruptcy saved my house (which I refinanced shortly after the bankruptcy discharge), I pay all my bills on time, and even bought a car outright with cash. This could have never happened 7 years ago. Impossible!

In retrospect I feel the decision to file bankruptcy was made for me. You can do the best you can to make ends meet, take care of needs and make situations work out. You can try debt management programs and consumer credit counseling. Then there are times when you try and try and try and matters get worse and worse. You don't have the money to pay all the bills, you can juggle enough, you stop sleeping through the night, you have headaches, your work is effected, your marriage is impacted, you don't like how you look, feel or react to life, and your health will certainly take a nose dive. That's when you hit the point where you start to look at other options.

Compare my life today with the picture of not filing bankruptcy? Ugh. I would still be 30 more years of struggling to pay off debt and would have probably had my wages garnished by now by the IRS and my state tax board.

There are a lot of myths and misconceptions about bankruptcy. Even the word sounds offensive to a lot of ears. But there are real people in difficult situations that need relief and a fresh start that bankruptcy offers. If you can read the archives you will find some great info and shared wisdom. And always feel free to post questions. It's a good group here, a lot of support and info.

Carolyn

Hi,
No regrets here. It reorganised my bills, making my payments what I can afford. I am in a chapter 13 and I was juggling and had been doing so for years. I put off a much needed surgery and medical treatments because I couldn't afford to pay for all of it. When it got to the point of affecting my ability to function at work and home, I had to get the surgery or I wouldn't be able to work anyway. So I had the surgery, and now feel better not only physically, but also because I am now in a debt repayment plan that is what I can afford. I'll give you an idea of how much debt I was in as opposed to what I could afford. I am paying TWO percent of the total. Anyone here will tell you that the payment plans the court puts you on are tight. Even allowing for that, I have more money left now than I did before. The big difference is that I deal in only cash now, and I know I must save for future car repairs and purchases, home repairs, clothing, etc. And now I know I will be done in a little under three years. Now when I miss a few hours of work, I don't have to spend a week refiguring the bills. I was up to date on all bills until I made the choice to file, so the things that were cut when money was short were groceries, or I would put it, or meds and tests on credit cards.
So no regrets here.

Kathy

Just wanted to add a little word about how plans work in case the OP is unfamiliar with the bankruptcy terminology or the process.

Chapter 13 is a debt repayment plan run by the court. Unlike debt repayment organizations you read about in the papers or in e-mail, the court is your advocate and protector. The court tells your creditors how much money they are getting and they have to accept it. Your creditors can not come after you: no more phone calls, harassing letters, bothering you day and night at work or home, etc. The amount of money the court determines your creditors will get is based on your income and basic expenses. It's a budget you submit to the court. The budget the court approves gives you money to cover your rent/mortgage, insurance, utilities, food, clothing, medical care, car maintenance, etc. Anything left over is what the creditors get. The court may look at you budget and income and compare it to your bills and approve your debt repayment plan at 8%. We would say you have an 8% plan. 8% means you pay 8 cents for every one dollar of debt. As an example let's say you owe $10,000 to CitiBank, then you would be paying $800 to CitiBank to satisfy your entire debt, the court would dole out a little amount to them every month over the course of 3 or more years and CitiBank would accept it.

Kathy is on a 2% plan, thus the court has her repaying 2 cents of every dollar she owes. Some people get 1% plans approved and others have 50% plans. Each person is different and the court knows that. The point is you will repay something with Chapter 13 over a period of 3 or more years. During that time you can get your personal finances in order and get back on your feet. Chapter 13 debt repayment plans do work. The court wants all of us to be successful. The beauty of Chapter 13 Bankruptcy is your creditors are stopped dead in their tracks - no repossessions in the middle of the night, no more harassing phone calls, no more law suits and you can even take care of old judgments in the process.

Just wanted to elaborate on what the percentage plans is about and how the number is arrived at.

I'm proud of you Kathy. There is a special place in heaven for people who have endured what you have endured with your grace and courage.

Carolyn

Thank you Carolyn for the kind words. It has been a really long road.

The biggest struggle for me was to go from maintaining "good credit" which I had all the way up till the day I stopped paying all the bills I was going to file on. I spent at least 6 months going back and forth trying to decide if there was any other way out of the debt other than filing. I enjoyed having good credit with the ability to get more if the need arose. The trouble came knowing I couldn't afford more credit and still maintain the payments I was making. The med bills, which were the only unknown factors I couldn't control even though I tried doing that too, were starting to become overwhelming. I didn't qualify for help from any place because my three jobs put me way over the income threshold. I couldn't get insurance because the problems I had made it way too expensive for a policy.

I didn't have just one place to pay and so able to keep up the payments. There would be the doctor, lab techician that did the testing, the lab that actually ran the testing, then there would be another bill for the doctor reading the tests. And then there would usually be a specialist or two to talk to. Oh and did I forget to mention the hospital where the test is done. Okay so you multiply this by many tests over time, and throw in the fact that being uninsured means no bargaining for a lower charge for the testing like insurance companies can get and so I always was charged the very highest rate for everything. (Just in case anyone doesn't know, there are different rates for the insured and uninsured. The uninsured are charged in many cases three times the rate that the insured are charged for the same tests.) Okay, so all of these constant tests and the fact that our "non profit" hospital has a policy of 90 days to pay or be turned in to collections, and it was just a matter of time before the house of cards came tumbing down. The funny thing is, is if I had had the surgery i "couldn't afford" to start with I wouldn't have had all the expensive testing over the years.

Wow, how did I get on my soapbox this early on a Sunday morning! Sorry, I just hope others can learn from my posting my experience.

Happy Sunday to you Carolyn,
Kathy