Post Bankruptcy Plan

[BobMango]

[Never_Again]

Very good overall...

I would add a spending plan (budget) and system for tracking that spending for compliance. I would take the emphasis from establishing new credit. If you are following rule #1 as you have them listed, it should be irrelavent.

[BobMango]

Thanks Never_Again. I agree regarding the credit, the only reason for looking to rebuild it is that I may need to relocate for a job sometime in the next few years and I'd like to make getting a new mortgage as easy as possible.

[SweetGeorgia]

Good thoughts. I've been contemplating life after BK, too. I want to arrange my life, to the extent I can, to avoid problems. (Sorry about the long-windedness below!)

I have a lot of what-ifs. I haven't seen a lot of sources for information, other than standard financial planning and the kind of generally prudent principles you've listed.

1. Voluntary debt, I can avoid. I'd like to do the things you're talking about to rebuild credit, but only because credit can offer some of the security I really miss now. I want a credit card in case of unexpected vet expenses or funeral travel, or other things that I can anticipate but not predict.

2. Involuntary debt freaks me out, specifically medical expenses. One of my justifications for delaying this BK so long is the thought: every day I delay is another day I didn't end up in the ER owing another $10,000.

3. So how could I protect myself from creditors after BK? If I don't own property, they can't get it. If I don't have money in the bank, they can't get it. If I am not paid wages, they can't get them. But I hope to do OK in the future and not always be poor!

I will likely remain self-employed. It's not a fool-proof plan to protect income, but it's better than earning wages. If we could get health insurance any other way, I'd love my husband to be self-employed. But I think we're just going to have to accept the vulnerability of his wages in return for the health insurance.

I'm not sure what to do with money other than keep it in a bank. I like the "move your money" local banking idea, but creditors can get local money much more easily than money kept in an out-of-state bank or credit union. My grandmother lived through the Depression and bought gold coins all her life with her savings.

I don't want to hide money, exactly, but if creditors can't find easy cash, then they often don't bother coming after you in the first place. (That's obviously anecdotal, but it took my first credit card 13 months to sue me, and that was only because I was snarky to the law firm. Anyone could see I didn't have anything to sue for!)

I'm also considering moving, if we can find the best state. South Carolina doesn't allow wage garnishment. Florida has a good homestead exemption; don't know if it holds up against creditors when you're NOT in bankruptcy.

I'd love to hear others' thoughts, or suggestions for finding more information and advice.

[BKInLA]

Great post OP, very inspiring plan of attack! I look forward to implementing it in my own life moving forward. I can't wait till a few years from now and see what has changed for the better!

[BKInLA]

Good thoughts. I've been contemplating life after BK, too. I want to arrange my life, to the extent I can, to avoid problems. (Sorry about the long-windedness below!)

I have a lot of what-ifs. I haven't seen a lot of sources for information, other than standard financial planning and the kind of generally prudent principles you've listed.

1. Voluntary debt, I can avoid. I'd like to do the things you're talking about to rebuild credit, but only because credit can offer some of the security I really miss now. I want a credit card in case of unexpected vet expenses or funeral travel, or other things that I can anticipate but not predict.

2. Involuntary debt freaks me out, specifically medical expenses. One of my justifications for delaying this BK so long is the thought: every day I delay is another day I didn't end up in the ER owing another $10,000.

3. So how could I protect myself from creditors after BK? If I don't own property, they can't get it. If I don't have money in the bank, they can't get it. If I am not paid wages, they can't get them. But I hope to do OK in the future and not always be poor!

I will likely remain self-employed. It's not a fool-proof plan to protect income, but it's better than earning wages. If we could get health insurance any other way, I'd love my husband to be self-employed. But I think we're just going to have to accept the vulnerability of his wages in return for the health insurance.

I'm not sure what to do with money other than keep it in a bank. I like the "move your money" local banking idea, but creditors can get local money much more easily than money kept in an out-of-state bank or credit union. My grandmother lived through the Depression and bought gold coins all her life with her savings.

I don't want to hide money, exactly, but if creditors can't find easy cash, then they often don't bother coming after you in the first place. (That's obviously anecdotal, but it took my first credit card 13 months to sue me, and that was only because I was snarky to the law firm. Anyone could see I didn't have anything to sue for!)

I'm also considering moving, if we can find the best state. South Carolina doesn't allow wage garnishment. Florida has a good homestead exemption; don't know if it holds up against creditors when you're NOT in bankruptcy.

I'd love to hear others' thoughts, or suggestions for finding more information and advice.

For some reason this post just really disturbs me.

[hackjob]

RE: BobMango

Great post.

Simplifying life is huge!

Zero Impulse Buying.

[dawntyoung]

Great post Bob! My post-bk plan is very similar. Doesn't it feel good to know that u can start over but retain the knowledge so u won't repeat the action again. Good luck in ur future- I wish u much success!!!

[StartinOver]

I haven't got my act sufficiently together to file yet, nor even to retain an attorney. But I'm glad this post BK section is in the forum, because the view on this side of it sucks so bad I need this new view to buoy me up so I can do what needs to be done.

I will never be in debt again, either. A long time ago, I knew a very creative person who liked doing his art and inventing so much that he lived in a hovel so that he never had to have a full time job to pay his expenses. At the time, I liked my designer shoes and suits and how "important" I was at work. Now, I totally understand what he was about.

I like the plan to buy used vehicles for cash. I'm so much feeling I want to run away from all this that being a nomad and LIVING in a vehicle even seems interesting right now!

[janie]

OP, great plan! Number 2 especially hits home with me! It is a constant challenge for me to part with the things that drag my life down. It is a good thing I finally took this step or you would see me on TLC's "Hoarding: Buried Alive" within a few years!

[researchnerd]

For some reason this post just really disturbs me.

I agree. I think it's because of the emphasis on changing one's life specifically so that creditors can't get your money. IMO, it would be better to not have creditors to begin with. I really like the idea of having a savings account for emergencies instead of a credit card, so I'm working on that now. If you have some cash put away, things like unexpected car repairs or medical bills are no longer emergencies.

[researchnerd]

I agree. I think it's because of the emphasis on changing one's life specifically so that creditors can't get your money. IMO, it would be better to not have creditors to begin with. I really like the idea of having a savings account for emergencies instead of a credit card, so I'm working on that now. If you have some cash put away, things like unexpected car repairs or medical bills are no longer emergencies.

Just realized that my comment may have sounded snarky regarding not having creditors to begin with. I was focusing on voluntary debt, and recognizing how much of that is within your control. If "involuntary debt" (such as unexpected medical expense) is a frequent problem, is there any way to reduce or mitigate that?

[SweetGeorgia]

It did sound snarky, but I'm glad you recognized the distinction between voluntary and involuntary debts! I was focusing on the "back-end" of the process - after debt is incurred, litigated, collected, etc. I have no idea why it disturbs others. I actually think I was being both optimistic and responsible.

Now, "front-end" planning to limit the risk of catastrophic loss through unavoidable events? Is called "insurance." We actually do have good health insurance, but we're not actually insured against excessive loss, you know? You can run up some SERIOUS costs even with insurance; what has happened once could happen again. And yes, I'm always trying to solve this problem. Get a federal job? Move to Amsterdam? Heck if I know.

Ironically, employers actually do have stop-loss insurance to cover employee healthcare costs over a certain level. That's exactly what I want, but there's no consumer equivalent. If I had that, then I wouldn't be disturbing anyone with all this asset-protection musing. Wouldn't need to.

[BobMango]

As the one year anniversary of my CH7 discharge is coming up this Wednesday, I thought I'd revisit this thread. Looking at what I posted over a year ago is rather interesting. Here's how it's gone:

1) Pay cash for everything. Well, I'd give myself a B+ on this one. The big exception has been an unexpected well pump outage that required $1,800 cash that I didn't have. I was able to borrow from a family member and this will be paid off shortly. Other than that we've been living on a cash only basis.

2) Continue to simplify my life. Have to go with a solid A- on this one. Back down to one household, eliminated at least 40 moving boxes of stuff and continue to downsize in lots of areas. One thing I've started doing is burning my CDs to disk and getting rid of the disks. 1000+ CDs takes up quite a bit of space.

3) Start regular savings. Have to go with a D- on this one. (refer to Item 1 above). I knew this was going to be a stretch since my income used to be $135K annually and dropped to $68K when I filed. Just recently got a promotion and started renting out my house at a profit so annual income starting in February will be about $95K. Since I'm not adding any additional debt or other obligations everything will go into savings. I would have graded this an F, but I have managed to start funding my retirement and will continue to up that until I get at least the full employer match, then up to the Federal limit when I can.

4) Regularly monitor credit reports. A on this one. Not so focused on this one anymore. We're renting a nice house and plan to stay for the next 2-3 years, until the youngest is out of high school. Then we'll see. I have cleaned up my reports and only have a problem with GMAC wanting to report my discharged mortgage. This keeps my total debt higher than it actually is, but since they are reporting it as current and timely I'm not sure how much heartburn I have over it. We didn't reaffirm, just doing the pay and stay thing. My credit score has gone from about 560 post discharge to mid 600s now. Seems to move up 10-20 point every quarter right now. So I'm not sweating it.

5) Stay current on all payments. B+ here. My cell bill occasionally goes in late but that doesn't seem to be reflected on my credit report. I'm guessing they only care if it goes to default. I did have to provide about $300 in deposits for my utilities, but since I paid on time for the last year those deposits were paid back to me so I haven't have to pay my gas bill for about 4 months now.

6) Establish new credit accounts. A+ on this one. I didn't go with Orchard Bank, applied to HSBC and got approved for a $500 limit on the regular rewards card with a $35 fee. I actually go that before discharge. Then a few months later I applied for the Best Buy Rewards card and was approved for $1,500 with no annual fee. I just use the first one for small recurring monthly charges like Netflix and pay it off. I do carry a small balance on the other card but I'll probably pay that off this month since there's no benefit to doing that; doesn't do anything positive for my credit.

7) Teach my kids how to handle money. B+ on this one. We were always very open with them regarding what we were going through and why. They all now have savings accounts of their own and a portion of every dollar they get goes into before they spend anything. My youngest daughter paid cash for her little truck and my son is saving up for his first car. Me oldest daughter is learning the value of saving for emergencies and just had to pay $120 to repair her car. She was able to do that from savings without sweating it out.

So maybe this post is a little long winded, but I wanted to provide a follow up for a couple of reasons. Number one is that before filing I had little hope for my financial future. Filing provided the fresh start I needed and more importantly let some hope back into my life. Planning how to approach my financial future really gave me something to look forward to as opposed to continuing to wallow in the self pity that many of of feel as we approach our new realities. The second reason is to show that not all plans come out they way you think, but that learning to adapt without reverting to former bad habits is possible. My only real regret is that I wasn't able to avoid borrowing to replace that well pump, but that's not an item you can really do without for long.

I realize how very fortunate and blessed I am to be employed and able to make progress. If I let myself think about it I could get depressed about taking a 40-50% pay cut, but then I think about dropping almost $750K in debt and I'm fine with that trade-off. Good luck to those just starting and those still struggling. As Abraham Lincoln once encouraged, "Endeavor to persevere."

[SweetGeorgia]

Bob, I think that's fantastic. I especially admire your efforts to keep perspective and your determination to pass on what you've learned. Nice work!