Life after bankruptcy

[Amy26]

I can see your points as well Bob...and not saying its wrong at all.

But "Many things that we consider necessities are really luxuries that we see others have and think we need as well." -- Sure...but where do you draw the line? To me... something like a lambourgini (spelling?) would be a luxury I'd say hell to the no for... but to me buying a 25k car is a necessity that many on here say no to. Then housing... where I live, you can't rent anything that isn't falling apart for less than 1500 a month (for say like 2 people). Some people would say OMG 1500 is too much... and that I should "move"... but if that 1500 is perfectly in my budget and living then its not a necessity its just the level I'm at or want. Just because I could go live in a hovel for 400 a month or go be someone's roommate for 500 a month doesn't mean I should just because my standard of living is a "luxury".

How do you draw the line on what is a luxury and what isn't?

I mean technically eating a steak for dinner is a luxury... you don't need it... it can be bad for you. So, do you not buy red meat at all? Do you live off bread and water because that's cheap and you shouldn't pay for "luxuries"?

[BobMango]

Hey Amy, I think we're probably in "violent agreement" here.

It is generally possible to live without debt. Most people don't like this idea and don't do it. Just think that in this country even "poor" people have microwaves and satellite dishes, while in other countries people are happy when they find a piece of corrugated tin that will just cover the open corner in their mud hut's roof. It's all about choice and perspective and I'm not about bring everyone down to the lowest common denominator.

I would consider a $25K car that has to be financed a luxury when you could pay cash for a $5K that would perform the same function equally well. Not a choice everyone will make, but again it's a choice that we are all free to make.

So I generally draw the line between luxuries and everything else as "if I can't pay cash for it right now, it's a luxury". To use your example, if I can pay for the steak with cash, cool. If I have to put it on a card and pay for it over time, that's a luxury. Now, I'm not judging anyone that does buy their steak on credit and pay over time. That's their choice and they are entitled to make it.

On the other hand I would consider going into debt for a life saving operation that you can't pay for today to be more of a necessity. Sure you could decide to put off the surgery until you can pay for it, but few of us would make that choice for obvious reasons. The point I'm trying to make is that in most cases taking on debt is a choice, not a necessity, and that as long as you act in good faith in obtaining and paying debt, more power to you.

[Amy26]

Hehe yea ok, I like that..."violent agreement" ... I think we are dangling close to each other on the same rope... but you're a bit higher up on it than I am I think.

Just watch out... I like to swing! (on a rope that is... no innuendo here :P)

[Flamingo]

Amy - as in any situation, there are exceptions to the rule. My purpose was to make a point - no matter what the situation or "excuse" (as some folks in denial about their finances use until they realize the realiity of the situation), if there is no debt or low debt at the time of a job loss, divorce, birth, death, etc., etc., one would not have to file bankruptcy. This is not meant to lump everyone together because there are those in great financial shape that could get hit with a medical disaster. Most debt is the result of poor financial planning and anyone who denies that is still in denial. I'll be the first one to state we were poor financial planners and should have known better but know better now.

I am just making this point to state to anyone reading this since we have gone through the mess of filing, have learned, and hope some reality of the situation will make someone realize what actually caused the problem. My excuse was my husband's job loss and loss of income...but we had high debt and could not recover job wise to pay it off. If we did not have that debt and live beyond our means, we would not have had to file. None of it was medical related.

Many people lost equity in their homes over the past several years but not all of those folks had to file bankruptcy. There were other causes. Planning involves thinking of future scenarios that could upset the applecart and realizing that at any time anyone could lose their job, have a heart attack with little or no insurance, etc. and not have any plan or savings in place. There were many people who really should not have taken on mortgage debt just to have a house because they really could not afford it and they did not realize they could not afford or just did not want to admit it and when the rate adjusted a few years later, realized it then and dumped it all. That is one of the main reasons for the mortgage collapse.

Flamingo, while I realize you're not attacking anyone and your points are valid as well, some people did not have to foreclose because they were "greedy" and "had to take out second mortgages to fill their homes with stuff".

My home was purchased for a reasonable (comparable) price and it was a 900 sq. ft. condo. I did not buy some outrageous big house with a crazy mortgage that I couldn't really afford. I afforded it just fine but guess what? My home's value dropped over 150k in value in 2 years. I had 60k in equity in it when I bought it.

Why did I have to file? 1. to get rid of that home that I couldn't even rent out for anything close to what the mortgage was and 2. I moved overseas and ended up getting laid off from my job and had to move back to the US. And I never thought about this but I was refused unemployment because I was laid off from a foreign company.

My fault for making a risky move to Europe? Sure... my fault I got laid off and the housing market tanked? No. If I had been able to get unemployment benefits after that I wouldn't have had to file. I would have been fine on my savings and unemployment. But going over six months with zero income and a mortgage and student loans and some credit cards was just impossible.

Sure, I could have lived differently by never owning a credit card, renting someone's basement, and driving a beater but to me that is not living. I also was living within my means ... I just had a series of unfortunate events take place to make paying those obligations not possible.

If someone looses their job there is always going some financial reprocussion. You will always have something you need to pay... whether its rent, mortgage, student loans, car, or whatever... now, with careful budgeting you should be able to pay those obligations in the event of something bad happening right? Sure... but for how long do you plan for? Personally, I had savings enough for 3 months... but there are so many people right now who are going on 9 months without jobs. So, do you save up all your money into your catastrophe loss fund to live 12 months without income? 24 months? People should always have savings of course but where does it end?

Life happens... and I'd rather spend my life enjoying it rather than planning for catastrophe constantly and I will live comfortably and make smart purchases. Will I go into debt for some things? Sure... will I go crazy? No.

Everyone's situation is different and everyone needs to put certain limitations on themselves to feel sound or make them feel like they are doing the right thing... its all relative. Nobody is perfect and nobody can see into the future.

I totally agree and respect people's opinions about the importance of making smart decisions post bankruptcy or even pre bankruptcy... but I don't agree with lumping everyone into buckets. I don't like stereotyping and I don't like the psychology of putting people into categories. Everyone is different. I'm sure there are lots of people filing for bankruptcy that just were plain dumb and didn't care about their finances but then there are others that do it to make a smart decision or for reasons that they couldn't quite control.

And yes people can debate all those reasons till the cows come home but its best to present people with information and let them form their own judgements and actions rather than pointing fingers.

[rck3]

I think the point of having little or no debt at the time of a job loss is a very good point but most people simply can not include a mortgage in that. To say people should never finance a home is unrealistic. If you assume the only debt is a home (or maybe you simply rent), once you loose that job you will be forced to start accumulating debt. For me, I was laid off and it took me over a year to find a job paying 1/2 what I made before. When you have a mortage and basic needs to support a family of 4 you end up starting to accumulate debt. Once that happens, when I found a job that could meet our means it could not also meet the means of the extra debt which meant I had to start the moving debt around. Then that job had no more work so I was back to looking again with an even higher monthly needs which means relying on credit again. It quickly snowballs. I guess you can say I should have just not used the cards and let the government take care of us completely but I don't think that is any better than accumulating debt and also not in the best interest of my family. I'd rather rack up debt and go bankrupt to make sure my kids are not living in a shelter.

[killinstinct]

I understand and agree with the points being made to some degree.

However, as Amy26 posted, many of us were not living extravagantly. I was not either. My ex decided to go on a shopping spree for the last year of our 'marriage', cheat, and then put us through an outrageous divorce/custody proceeding. All in all, this probably cost close to 200K. I'm going to have to run the exact figures sometime just for fun.

Do you have 200K in savings? You know, because you'll need it for that 'emergency' or it's just "poor financial planning" according to some of the logic here.

How about medical issues? A couple days in ICU will put you over 100K easily.

There's a world of difference between people that went into BK on spending sprees, gambling, etc, and those who were forced into it by unfortunate circumstances. It's just not the same ball of wax.