The process of going bankrupt…

This is the type of post when I wonder should I write it or not? While I am a fairly open book on my blog and in real life as I have said before even I have my limits to what I will share, but in the past few days as I prepared for the Spousal Unit and I to meet with an attorney about our financial situation, I realized a few things that I suspect could be useful to someone else out there.

In the United States generally speaking when someone hears the word bankruptcy it strikes fear in their hearts, and some underlying assumptions that if someone files bankruptcy clearly they were a poor money manager. After all if one files bankruptcy clearly they were using credit cards to fund a lavish lifestyle! Turns out though that statistically what really brings folks to the brink of bankruptcy is job loss, illness, and the type of shit that frankly is hard to avoid.

A few weeks ago, I had started calculating out debts, but this weekend I had to finish in preparation for our meeting with attorney #1 yesterday. While the end number scared me, it was when I broke down the amounts I realized oh! Drum roll, our total debt load is….a whopping $243,560.52! Almost half of that are my student loans, ponder that for second. Needless to say like many I do think the education bubble is coming and coming soon. The other parts of our debt broke down to back taxes from the early years of the Spousal Unit’s self employment when to be honest we didn’t have a handle on managing the ebbs and flow of self employment. The remaining debt broke down to credit cards and medical bills. Honestly, I was surprised at the number of medical bills I had, a few larger ones but a great deal of smaller ones, things that weren’t covered by our paltry insurance plan. Yet they start adding up and once again I am reminded of why ultimately we need true health insurance reform in this country.

I was also surprised to learn that I haven’t used a credit card since 2007; I had not realized it had been that long as was the attorney that we met with since most people who end up in her office are still struggling to wean themselves off the demon cards. In my case when I lost my teaching job in 2007, I stopped in an attempt to try and pay them off but it never quite happened though I simply cut the cards up and never looked back. Currently the man keeps one card for his business and my employer does provide me with one for work stuff, other than that we are cash and carry or shall I say debit and carry folks. That said, looking at our files we realized there were a fair number of debts we had made substantial progress on but sadly life happens.

While the process of meeting with a bankruptcy attorney is up there as far as nerve wracking shit, I will say that going in prepared with everything helps. It also seems to help that I can clearly identify what happens that keeps us from getting ahead. In the past decade as we uprooted ourselves to move 1100 miles away we lost our ability to create a nest egg and inevitably when shit happens, such as job loss, client loss in the case of the hubby or even the illness and death of my mother when I helped my folks out we had no true reserves. I am mentioning this because I know some of the modern day zealots of simple living downplay the need for a rainy day fund of even insurance and let me tell you having lived this way for the past decade, I say no. In almost every instance my financial crises could have been avoided if I had had a stash of money to tap into and replenish when times got better.

I must admit that in recent years my decision to work part time rather than full time has not helped since a full time job almost certainly would have come with some type of health insurance but I can only look ahead at this point. So off I go to prepare to meet with attorney #2 today and figure out which chapter of the bankruptcy code would best work for us. Right now we are meeting with attorneys and weighing our options as how to best to deal with this debt and get to the point we can move on and start saving for the future.

12 thoughts on “The process of going bankrupt…

  1. This was really brave of you to share. I’ve been through a bankruptcy myself and know how difficult it can be. I promise you, it gets easier. Best to you and your family.

  2. You don’t deserve this. Student loans are out of control and higher education is way to expensive. I can see that my own daughter is never going to get out from under hers. It is the best deal in town for banks because they are subsidized by our government there is no risk. If you are poor you can get a Perkins and incur even more debt than with just the Stafford. Does that mean that you will have greater earning ability – not likely because if you are poor to begin with you are less connected and that is where the best jobs come from. There should be grants and not loans at a certain economic level. My heart goes out to you because I know that it is stressful. You are bright, talented and clearly a survivor. You will make it through this.

  3. I too went through bankruptcy and I have been out from under bankruptcy about two years. And, I was a divorcee of one child. Child support, what is that? Those were some scary times for me. No, I did not enjoy going through the process of bankruptcy but, it was a relief on me financially.

    I thank God for his support, because without a belief in a higher power I do not know where I and my son would be today.
    One particular creditor began calling me at work. The guy simply did not want the amount of money I could afford to send his company. Therefore, I finally told him that I would file for bankruptcy. LOL, that guy made me think of Rumpelstiltskin stomping his foot through the floor.

    The financial road you two are on is rocky at the moment; however, with better financial skills your road will be smoother. Have a yard sale. Sell on ebay. Eat out less. Cooking for yourself can be healthier. Get a parttime job so that you two can rebuild your emergency fund. Write a budget and stick to it. You already know you do not need all of those credit cards, good for you.

    Many of us have to realize that we simply do not have the finances like Trump and others…So stop pretending you have access money when you do not.

    I pray that God will give you two wisdom.

    I survived and so will the two of you. At midnight, I turn on my radio and listen to this financial announcer named Dave Ramsey and he has good ideas about financial matters. Dave is always talking about building yourself an emergency fund. Dave is the type who will tell you what you need to know and not what you want to hear.
    I like people like that.

    I wish you two well and it is going to be OK.

  4. We are planning a yard sale for this summer but have long e-bayed anything of any significant value. Due to the nature of our work with highly erratic schedules, part time jobs are not an option. As the director of a non profit my schedule is not set in stone and with the hubby his workload varies from week to week. I technically am paid for a part time position but the truth is I put in a lot more hours, also we have no childcare costs because with our jobs we have been able to tag team with our child. In my area sitters start at $10 an hour yet a mall job pays $8 an hour so in most cases a part time job with sky high gas prices is not cost effective.

    Currently we are fine with the day to day stuff, we actually live pretty below the standard American family. Having met with two attorneys now both were impressed at where we are financially and what we have accomplished debt wise as far as paying things off.

    Our debts really are the result of some bad stuff happening and really underestimating what it meant to be self employed. It’s just that with this debt load, so much is going into it and we just aren’t making enough headway to get our from underneath it and get to the point of actually saving anything.

    I am familiar with Dave Ramsey, I read his stuff back in 07 when I lost my job and while he has some good ideas some is not practical for us but I have incorporated what I can.

    Oh, I know its going to be okay. I had been hoping to avoid this path but I can only do what I can do. :-)

  5. Hang in there, lady. I haven’t been through this myself, but we have come close. Some of my nearest and dearest have had to file bankruptcy and they all described feeling conflicted, like moral failures, etc. But once the process is complete – relief! And a resolve to avoid those financial pitfalls. It sounds like you’ve already established good money habits and it’s not a mystery to you how this situation came about, so it sounds like you’ll be okay. I hope this process gives you the breathing room to get ahead.

  6. This is, indeed, brave and helpful to share. I think the whole student loan system, and the college admissions process, are culpable in encouraging young people to take on debt without a real sense of what it means. Medical debts are accidental (although I have had wonderfully positive experiences with the financial support offices at the major hospitals where I received treatment). When 18yo are talked into huge loans, and middle class people accept the burden of enormous mortgages (both these prices being driven by the debt system itself, to the benefit of the banksters!), it sets a standard that is hard to escape. We never went bankrupt, but before we sold our house we felt very close to the financial line. As I grappled with that feeling, I found myself able to embrace that, if it happened, it would be what _needed_ to happen in my life right then, and good would come of it.

    I wish you the best!

  7. Wow. I can’t tell you how thankful I am that you shared your story. My story is so similar to yours. My husband and I are in a great deal of debt. We marrried at the age of 23 and 25. We did not have a wedding nor did he purchase wedding rings. We did not have any money and we started off with bad credit. We have been married 10 years and wedding rings still have not been purchased. (do, I sound bitter?, maybe.) When we married he was working and entry level job as was I. One day he looked up and realized that he wanted to start his own business and do real estate. He tried many businesses, and tried to get me to go along with him on all of them. I declined. After 3 years or so of being married he began to work on persuading me to agree to let him quit his job and just jump into doing real estate. He felt because we had a difficult time saving money that we would never do it and he would never get the opportunity to do real estate. His other reason was that he needed to get experience and the only way to do it was hands on. I was not going for it. He persisted and even began to make me feel guilty about not letting him persue his dream, so I gave in. I continued working while he did this full time. I know it wasn’t easy for him, but he still, no matter what he says did not have the same rules to go by as those maintaining a job in corporate america. He did this for 3 years. He did make some income, about 25K over 3 years, which really needed to go back into the business. We borrowed over 50K, 30K from his parents (which has yet to be paid back) and the rest if not more from others. The others we borrowed from friends and family which he told them were investments. Some have come looking to get their INVESTMENTS back. I had to work on getting him to go back to work a regular job. He did eventually, but he had trouble finding a good one. He’s afraid it will interfere with continuing to persue real estate. He is a large man who has had difficulty finding a job and he really struggles with staying in one. What’s crazy is that his is a graduate from one of the best private Universities in Tx, but he cannot get or stay in a job that pays well or decent for that matter. Digressing, back to the story I was telling…. when he went back to work, 1 yr later a back problem that he had previously in college reoccured. It’s really bad. He was out of commission and not able to work for 2-3 more years. He had to have surgery and it was tough for both of us. All the while, I was still working. I spiraled into Depression. I was a working depressed person. I fought so hard to be ok, but I wasn’t. All the while because I’m still working, I’m keeping the bills paid. Eventually he gets SS approved and that helps a bit more. While all of this is happening our friends and family are progressing and moving up in the world, I feel like we are falling behind. It felt like everyone was buying a house, having kids, going back to school, upgrading their educations, making more money. All the while, with us nothing is moving. Because our credit was not good, this was the time when you were able to get a house when your credit was not good. I did not want to pass up the opportunity (instead of taking care of our credit issues) and walked through that door. Well really it was not the worst decision, except this happened. I thought I could do it all by myself again, because I honestly had not truly been helped by my husband. (so I felt…so much is attached to that because he feels to this day that he was working really hard.) I felt my income was enough and it was for a while, but not enough to deal with a blow. Things at my job began to go south. My bonuses were being cut and the stress of it just overtook me and I didn’t know how to deal anymore and cope with the type of abuse I was recieving daily. I couldn’t do it anymore and I did not have an exit strategy. I had money saved in my 401 K, enough to get us by for 5 months. I didn’t want to use that, but I felt I had no choice. I looked for a job but it took me 9 months to find one, with the help of my husband’s friend. I was also supporting 2 car notes, eventough my husband could not really drive. I don’t know why we didn’t sell his car. That was almost repossessed. My car was repossessed. After 3 years of trying to work with multiple companies that our Mortage was sold to, they now have foreclosed. Now I have nothing, but a lump sum of debt, a husband who wants to have a child, who also has a great deal of debt (medical and personal) a foreclosed home, a repossessed car, a student loan, and a dead end job if I don’t make a change now. After reading this myself, I wonder how I’m still standing. Now, I considering filing for Bankruptcy to try and start over. The bright side of all of this is that I now have nothing to lose. I’ve lost it all.

  8. Kristine,

    As long as you have faith in God, you have not lost everything. At the moment a baby is the last person you two should want to bring into your present condition. Sure you can do a bankruptcy or you can sit down with a financial advisor and try to figure out what you can do to dig yourselves out of debt.
    No offense, I would also suggest that you stop following behind your husband because it is obvious the guy does not know what he is doing financially speaking. I wish you two well.

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