Bankruptcy was the right answer for my family

no_nameJuly 28, 2007

I just wanted to drop back in. I had requested some advice awhile back and received more than I expected, a bit of it quite hurtful. Everyone seemed to think I should kick my husband to the curb, which could be true, and that I should sell everything and that the bk judge would laugh at me because clearly we made more than enough money.

Well, we easily qualified for chapter 7 and received our discharge a couple months ago. For us, this was the right decision. We now have health insurance, both of us now have well paying jobs and were able to keep our homes and cars...and I never ever want a credit card again.

I posted this because I am worried that some people could be in the same boat that I was in and read those few threads and think bk is not an option or will be the end of the world. Its not, and it might be the best option.

I'm sure this will generate a lot spite, and I won't be back, but just wanted to let others know that there is hope and a way out. No one thinks anything when big companies go bankrupt, lay off employees, cancel contracts, disolve pensions, etc, but an individual declaring bk..OMG everyone just flips out.

I just wish I had not waited several years to file.

Best wishes!

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Well, a search of "no_name" does not yield any posts on the matter, so maybe they scrolled off. Or "no_name" is a new name. In any case ...

No one thinks anything when big companies go bankrupt, lay off employees, cancel contracts, disolve pensions, etc, but an individual declaring bk..OMG everyone just flips out.

I don't happen to agree that "no one thinks anything when big companies go bankrupt". It happens frequently enough that it has lost much of its stigma (kind of like divorce, which used to be almost taboo in the U.S.). But it still means that there are suppliers who were not paid for what they supplied and employees and retirees who generally lost big unless they sat in a fancy office (in which case they generally were rewarded handsomely for their efforts in guiding the company down this road to perdition). It is not a painless, victimless course of action.

In your case, you left several creditors holding the bag. By extension, you left the rest of us -- capable of managing our money or at least not considering bankruptcy a "get out of jail free" card -- paying off what you chose not to. If that rests well with you, you have my sympathies.

I know you said you weren't going to read this, and I don't expect that you will. But in case anyone reads this and thinks that Chapters 7, 11, or 13 are easy ways to get out of bad situations, they need to know that declaring bankruptcy hurts many people, some/most of whom you likely never intended to hurt. I believe it should remain an option for people and corporations, but I am not interested in making it any easier to stiff your fellow citizens.

    Bookmark   July 28, 2007 at 11:44AM
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steve_o, I was stiffed by the Delaware Bankruptcy court back in 1997. The airline I flew for, which should have been merged with another one, wasn't. I lost over $700,000
in "back-pay" which , according to our ALPA contract, I was legally entitled to.

I have bills to pay also. I was told by FEDERAL courts, that my presence in our aquiring airlines' cockpits would create animosity, I was denied a job, and have had to take jobs which pay a lot less. ( I recently filed an EEOC claim of age discrimination, and was told that I lost, because the employer, Mass Mutual, thought I would have "trouble taking direction for pedestrian tasks", given my background.) The salary from that job would have paid my bills quite nicely.

Right now, I'm barely making ends meet.I now have to work three jobs, seven days a week, to pay MY bills. I would not feel guilty about filing BK, since: 1) I have been ready, willing and able to get my old position back (denied by the Federal BK courts), 2) When I applied for another job, in another field, I was a victim of that HR person's paranoia about leaving for greener pastures. 3)
I was the victim of Corporate Bankruptcy myself, to the tune of losing my career, and losing contractual back pay (seven hundred thousand's worth!).

Perhaps bad circumstances might bite YOU in the rear. Then we'll see how YOU feel about people filing for bankruptcy.

    Bookmark   July 28, 2007 at 2:52PM
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"noname" first registered on Sat. July 28, so I'm not surprised that you saw no other posts, Steve.

Likely operated under another name, earlier, I guess ... so it looks as though "no name" is an alias.


It was a real rotten trick that your employer pulled on you. It must have been a substantial period that you worked after having received your last paycheque. Did some cheques bounce?

Some workers who thought that they had pension credits found that their company had raided their pension fund, prior to folding, and that it was empty. In some cases, the worker had contributed part of earlier-earned pay to that fund, so s/he not only lost her/his position ... she had some of his/her savings stolen, as well.

But ... two wrongs don't make a right.

My cousin's husband was a terrific sales person, and became sales manager for a major company, but when several of his good ideas were rejected by a board composed mostly of pretty well seniors, he left.

Started his own company ... selling snowmobiles. When there wasn't any snow.

About to go broke, he put a shotgun barrel into his mouth ....

My cousin tried to keep the company afloat and pay off their creditors, which she did, partially.

Now past 80, she has little assets, her son, a successful businessman, bought/leased her car.

I honour her for refusing to take the easier road of bankruptcy.

She was a smart woman.

She could have walked, started again, and become prosperous.

She was raised in a tradition where (middle-class people, anyway) fulfill their obligations ... pay their bills.

Our (Canadian) securities commissions rarely send corporate evildoers to jail ... they steal 20 million, and the Securites Commission figures they've done well, paid their debt ... if they return a solitary million.

Quite a few corporations ... have little conscience.

Some people ... the same.

At the same time ... I've heard that the largest cause by far for bankruptcy in the U.S. is heavy debts related to health care. It really is difficult when a person can't work, so income is interrupted ... but requires major medical service, that is hugely costly and in some parts of the world must be borne by the individual unfortunate enough to have less than ideal health.

ole joyful

    Bookmark   July 29, 2007 at 7:06AM
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tom418, there have been times in my life when I was down to the last few dollars in my bank account and payday was a long way down the road. I've also worked at companies in which an entire division was hauled into an auditorium and told none of us had jobs anymore. And I've worked at companies which declared bankruptcy (in fact, I'm supposed to be getting a pension from one of them -- an airline -- but I'm not counting on it now).

If you read my post more carefully, you would have seen that I agree that bankruptcy should be an option for people, but that it has its consequences, no matter whether it's an individual bankruptcy or corporate bankruptcy. Your situation is clear documentation of those effects.

You also would have seen that I criticized the "get-out-of-jail-free" aspect of bankruptcy. The way "no_name" posted ("I should sell everything and that the bk judge would laugh at me because clearly we made more than enough money" "[we] were able to keep our homes and cars [

    Bookmark   July 29, 2007 at 1:45PM
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No name, I haven't been on this board for very long so I was not here during your earlier posts. But, I tend to take Steve-o's view with regard to bankruptcy. It should be an option with consequences. And it should be an option of last resort, IMO.

As Joyfulguy pointed out, sometimes people get blind sided by ill health and huge medical bills. I feel a great deal of sympathy for those people when BK seems to be their only option.

I feel much less sympathy for able bodied, "just can't live without my coach handbag" folks who spend themselves into BK oblivion - trying to live like Paris Hilton without the money to pull it off. Can you imagine what would happen if we all did that? Shudder.

That said, being in overwhelming debt is no fun - so I can understand why you filed BK. I hope you learn from this experience and accept the consequences that come with it (inability to get credit, much higher interest rates when you do, etc.).

Good luck to you.

    Bookmark   July 29, 2007 at 3:42PM
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If the family has houses ... and cars ... maybe they don't have too great need of further credit.

On the other hand ... many who do ... have huge amounts of debt.

If they have more than one house, though, I doubt whether they'll get to keep the "surplus" in BK ...

... though she talked as though they may have.

And people wonder why ordinary folks get cynical.

Good wishes for a happy, healthy, prosperous week ahead.

ole joyful

    Bookmark   July 29, 2007 at 4:22PM
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I have zero experience with this, but:

Maybe one house/car is in her name. One house/car is in his name and they are legally separated pending divorce? Thus their bankruptcies are being treated as separate issues. I'm not sure that would fly in BK court or not.

    Bookmark   July 29, 2007 at 7:32PM
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I think bk should really be a last resort with consequences. It should not be a get out of jail free card. This is why laws have changed to make it harder to file bk. Have they really changed? I dont know. I have a friend who refuses to get a job, eats out at least 5x's a week, and wanted to file bk. She has alot of medical bills and she says she cant pay them. I have wasted too much energy trying to get her on a better path. She wants the easy life and i think that is unfair for the rest of us who really work hard in life. I have another friend who chooses to spend $ on everything but her bills. She is several years behind on property taxes. We were in the locker room at the local gym talking about how she is $7 short for morgage. I knew how bad they were with money but the next day i planned on offering her the $7. Before i offered it she came running in all excited about concert tickets she just bought. I asked "how can you afford them?" She said she just charged it. I never did offer the $7. I dont really know no names situation but i am tired on freeloaders in life using the get out of jail free card.

    Bookmark   July 30, 2007 at 12:42PM
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The fact is with smart money management you can do fine even if there is a devastating extraneous circumstance.

Some people are always looking for the easy route.

ninos-why didn't you ask her how she could afford her gym membership?

    Bookmark   July 30, 2007 at 2:49PM
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It's very hard not to be judgemental with bankruptcy situations. The original poster obviously reregistered under a different name so any previously stated facts will remain unknown... but I'm confident the situation was a considerable amount of reckless overspending, etc., as opposed to tom418 who is being victimized by circumstances beyond his control. And it may well be that the OP was fortunate in that particular case being heard by a sympathetic court... since I was lead to understand the BK laws had really tightened up and getting a complete dismissal of debt was pretty difficult now and most petitioners would be put on some kind of 5-year payment plan calculated on ability.

Like everybody knows, those of us who have been responsible with our finances will be picking up the tab in one way or another. There is always someone who will get a free pass and that seems to be the American Way. God help us if self directed investing in lieu of Social Security ever becomes a reality. Add another category of bail-outs for the schnooks who find a way not to participate or make bad choices. Oh well, that's another thread.

tom418, I sincerely hope you catch a break!

    Bookmark   July 30, 2007 at 7:07PM
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God helps those who help themselves! And I believe that we can count on the reality of "self directed investing in lieu of Social Security." Full SS benefits for my age group have already been pushed back to age 70. How long will it be until its 80 or 90? I hope SS will still be around for us when dh and I retire (we've certaintly paid into it), but I am really not counting on it. My guess is, dh and I will have "saved too much" and will somehow be ineligable for it even if SS is still around!

    Bookmark   August 2, 2007 at 5:56PM
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I don't know what the big deal is as long as it is within the rules, which bankruptcy clearly is.

If lenders are dumb enough to loan money to credit risks without collateral while knowing that there is a bankruptcy law then it is their problem, if they don't get their money back. Shouldn't have lent the money in the first place.

    Bookmark   August 16, 2007 at 12:53PM
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The problem, jrldh, is that bad debts affect the AVERAGE person in the form of higher prices and increased difficulty getting credit. Look at the sub-prime mortgage mess now -- people who would not contemplate the (very real) possibility that they would have to default on their mortgage have hurt people who today would like to get a loan and would be responsible in making payments, but now can't find a lender willing to lend. It's like shoplifting. Are people deluded that the costs to retailers of shoplifting are not passed right along to all of us in the form of higher prices?

Bring back some form of debtor's prison? Or wage garnishing? Of course, in cases where medical issues or advanced age come into play, that is not a serious suggestion. But for those like the woman at the gym with her concert tickets?? The consequences of having trouble getting future credit and the like are not much a deterrent to many people. There ought to be more of a "stick" to balance out the "carrot" of easy credit.

    Bookmark   August 16, 2007 at 3:31PM
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"but now can't find a lender willing to lend"

Well, isn't that good? I mean, if you have excellent credit, you still will find a lender but if you don't have excellent credit, it is probably for your best to not get that loan.

Also, while the effect is similar, there is a big moral and legal difference between shoplifting and borrowing (provided there was no fraud).

Why just focus on debtor's prison and wage garnishing? Provided the borrower didn't commit fraud with the application, the lender should have to take _responsibility_ for ignoring low credit scores (sub-prime). If you or I knew that those sub-prime borrowers are likely to default, so did the lenders, I suppose. Tough luck for them, too.

    Bookmark   August 16, 2007 at 4:44PM
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My point was that there are people on the margins, people who have trouble qualifying for a mortgage but who are a good risk. It's those people who get hurt when interest rates go up and it becomes tougher to get a loan. I do blame the people who do not read the fine print of their agreements and foolishly think they have nothing to worry about when they get a loan that they will likely have trouble repaying. Of course lenders are experiencing some pain, and that is all well and good, but the whole mess hurts "innocent" people.

Regarding the "moral difference" you note, I agree that entering into a foolish loan agreement is not the moral equivalent of shoplifting, but I think buying things with credit cards that you cannot pay off is morally wrong. Certainly, getting oneself into huge credit card debt and filing for bankruptcy is, IMHO, theft. And innocent people do suffer from that sort of behavior in the form of higher prices. To deter that all-too-frequent occurance, there ought to be more severe consequences to the debtor.

    Bookmark   August 16, 2007 at 7:21PM
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"Certainly, getting oneself into huge credit card debt and filing for bankruptcy is, IMHO, theft."

I don't agree. The credit card company knows VERY WELL that the debt is unsecured. That is one reason why the interest rates are VERY high 25% APR and higher.

It is not against the law to not pay your unsecured debt. In fact, the law provides for a way to discharge the debt.

Some people think it is immoral to run up debt without paying it back, for example you.
Others think that it is immoral to charge 25% APR, for example devout Christians who follow the Bible which is very harsh on lenders who charge high interest.

For both viewpoints, fact is that both the lender and the borrower knew VERY WELL that both scenarios are within the legal limits so both parties are at fault and nobody is a sole victim or a sole criminal.

    Bookmark   August 16, 2007 at 8:00PM
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"Some people think it is immoral to run up debt without paying it back, for example you. "

I feel that way too!
You should pay what you owe, no matter HOW you got in the situation.

    Bookmark   August 16, 2007 at 8:46PM
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I disagree that "high" interest rates are immoral. Two parties ought to be able to enter into any mutually agreeable contract they desire, so long as it doesn't unfairly hurt someone else. I say "unfairly", because I do not mean, for example, Person A goes into some business with Person B and together they "run" Person C out of business by offering lower prices. Person C is hurt, but it was all fair play. Simply not paying your bills and sticking the cost of your irresponsibility onto some innocent party (e.g. retailers or consumers who pay more in the form of higher prices), is morally wrong. I must say, your comments, while disturbing, do give me insight into evil. Not Charles Manson evil. But it is evil. JMHO.

    Bookmark   August 17, 2007 at 6:06PM
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"I must say, your comments, while disturbing, do give me insight into evil."

I am taking offense that you think that I am evil because I think that lenders who extend credit to non-credit worthy people (there are credit scores for a reason) have to bear responsibility, too.

Usually I don't insult people ad-hoc but if you call me evil over such a trivial issue, I have to say you need to get your head examined.

Usually, I also don't quote the Bible but read
Leviticus 25:35-37
Ezekiel 22:12
Psalms 15:5
Ezekiel 22:13
Ezekiel 18:7-9
Proverbs 28:8
Deuteronomy 23:19
Exodus 22:25

You probably also think that the Bible is evil.

    Bookmark   August 17, 2007 at 6:23PM
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You can think that, but you'd be wrong.

    Bookmark   August 17, 2007 at 8:12PM
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Do I smell a religious discussion lurking in the wings?

I had my post scratched, here, when I commented on the "God helps those who help themselves" quotation above. Plus admin sent me a warning to behave myself.

I understood that religion and politics were not permitted on the Kitchen Table, but haven't seen in the Terms of Service that it was unacceptable elsewhere.

As many of you know, I have spoken often here in opposition to the 15 - 18% rates of interest on major credit cards and the 25 - 28% charged by store-issued cards.

When we sign (or, by our action agree to) contracts, it's important that we understand the terms. But many people don't bother ... many just ask how much they must pay as minimum monthly payment. Which means that, if they follow that procedure, they'll still owe part of that debt in 10 years or so.

Along with a number of others, I've said for years, and done some lobbying along the line of trying to get implemented, that children should be taught more about the management of daily living, including money management, in school - but in most places it's very little done.

As a parent, it seems to me important that I teach my children how money works, and how to take care that they not get into trouble in its use.

I've done quite a lot of talking here relateed to the need for people to learn increasingly how to manage both their income and assets effectively.

Taking on some of these credit card contracts grows to be more or less like flushing a $50. bill down the toilet ...

... every week.

Stupid ... and hardly any of them would take on such a contract, if the terms were fully explained to them.

I am distressed by the OP's reference to being able to keep not only cars ... but "houses", as well.

I lived for a number of years where people, many of them refugees who'd left their home with nothing, had to save for years to afford a bicycle. Plus devise methods of countering rather high rates of inflation which chewed value annually from each of their units of currency while they did so. That's a treadmill, for sure.

I am troubled by the lackadaisical attitude that some (many?) of our contemporaries seem to take regarding discharging obligations which they have undertaken: no one forced them into it.

If my kid runs down an icy hill with leather shoes ... s/he shouldn't be surprised if s/he falls on her/his patoot.

When we get to be adults ... we should act responsibly. When we make a contract, we should make a serious effort to fulfill our obligations in it.

ole joyful

    Bookmark   August 18, 2007 at 1:46AM
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joyful, I couldn't agree more. Your point about the need to educate kids/young adults about money management and the basics of credit, credit scores, financing, etc. is right on.

The Bible also says Thou Shalt Not Steal and that is what it is when one gets some good or service and does not pay for it. So what if the "terms" were tantalizing? We are talking about adults here, adults who ought to know better. And any adult who is capable of living independently should know that high credit card rates in combination with buying stuff you really cannot afford should NOT be tantalizing. And it hurts innocent people. Not just the credit card companies.

    Bookmark   August 18, 2007 at 5:55PM
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