Why Are/Have You Filed BK?

[erober3]

I'm contemplating Bk because of $25,000 in cc debt. some of this was misguided spending over my means, then last year was out of work for a while and put necessities on credit cards. I have not used a credit card in 8 months, and have paid off 3 of my 11 cards. Since all the CC companies are doing whatever they like even to those customers who pay on time (keep raising my interest, and my minimums) it has become impossible to pay my minimums even though I'm on a tight budget. job isn't guaranteed, I want to declare bk while I still have enough money to pay the lawyer...

[DebtDame]

Intro from NY & My Story

I've been lurking around this forum a couple weeks now. I hear a little bit of my story amidst the posts of many of you here. Unlike many of you though mine was not due to a job loss or medical issues/bills. At least that isn't the immediate cause though we have certainly had both of those things at one time or another. I thankfully can say that not all of the reasons for my current state are due to unpleasant experiences but believe me we have suffered our own tragedies over the years.

I have been robbing Peter to pay Paul while Mary keeps knocking for so long that I had become convinced that was just the way our life was meant to be. There are very few short periods of time during our entire 20 year marriage and the raising of our two kids who will be turning 17 and 20 this summer that we could even come close to claiming we were debt free. At first Credit cards were for those extra little things one thinks they need/deserve but eventually they became a means of getting through the week between pay periods. Someday the income would match the outgo and everything would work out right? Sometimes it was a minor charge for lunch, sometimes it was a weeks worth of groceries, sometimes it was for heating oil to keep the house warm while we were paying on our credit cards. Of course there were also those little fixer up projects needed around the house or the appliance that needed replacing. Then the squeeze began.

The town decided to do a reassessment and we learned our house was worth a good bit more than we had thought - unfortunately that meant we would be taxed a good bit more as well but we can worry about that later right?. Since our daughter was starting college it seemed like a good time to dip into a bit more of the equity after all we could recoup it when we were ready to sell as we planned in three years especially if we used some of the money to fix things up a bit. But wait, our debt to income needs to be improved to get the loan so what we need to do see is sign up for the home loan such that we consolidates all of those awful credit cards. What about those other things we wanted to do with the money - Put it on the credit card!

Sending the little girl that once was off to college and into a dorm is more expensive than one might realize especially when you haven't been able to save one dime over the years. That's okay she can borrow student loans for her tuition, room and board PLUS mom can always take out another loan too. Wait she needs books? A new computer? Dorm Decor? Put it on the credit card!

Hmm those credit cards are climbing up there again maybe a 401K loan will help us get them down and close the monthly gap. Which works for awhile until the car needs work and its Christmas time again. Put it on the credit card!

Then the noose begins to tighten as that inflated property tax bill comes due, gas climbs sky high and the credit card companies start wanting more each month, or charging me more interest. They didn't bother to lower our limits cause we were maxed out and every time we made a payment we had to use the card within days minus the now lost interest to pay some other creditor or to put food on the table.

The husband begins juggling his multitude of credit card accounts and making his own credit card payments on the computer. Trouble is he is not really computer savy so once in a while we miss one of those ones where you got to pay three days ahead of the due date in order to get it in on time. That's okay just click the little button and pay the $15 rush fee. Oh but don't worry dear this doesn't effect our checking account cause they just charge it to the card so you can pay interest on it. Hmmm I don't have the minimum today for that card - well just let it go a day or two until payday and then catch up. Holy geez how did our interest get up to 33%. Well you go ahead and catch up dear meanwhile I have to let one of mine go so I can keep the lights on okay don't worry its just a measly store card or the SL maybe I got time with them.

Then May 1 it catches up to us at last. Husband ends up with three cards due that day and signs on to the first and sets the payment no problem, then the second one he hits a snag his online account has been shut down because the company is fixing a security gap and you've been issued a new card but the payment is due today so we need to call them and make it via phone. After that ordeal sign on to the third and all but submit that payment. Two days later time to see what available credit I have so we can get some milk and bread. Hmm says we have a late fee on our account call up to find that the one taking your information on the phone misentered your bank account number and since the payment couldn't be retrieved from your bank charged you an bad check fee too. Manage to get that worked out with supervisor but then realize card number 3's payment never cleared the checking account either and it too has new fees assessed. Seeing has how something must have gone wrong over the Internet lets call the creditor and beg them to waive the late/overlimit fees as a one time courtesy while offering them payment on the spot for the minimum that was intended to be made two days earlier. No such luck now they want $400 to bring the account current and your $170 previous payment amount is not enough.

So it begins a trip to CCCS gets us nothing but a wake up call and an attorney is the only next logical stop. Then there is a few more weeks of isn't there some other way maybe we can catch it up some other way. Keeping paying those cards and using them just as fast but before you know it the end of the month is here there is still no way to catch up that one card and one day later they want $800. Now we'll just have to let the cards fall where they may.

[momisery]

We did not have credit card debt until the last year really. We were not concerned as we figured hubby's job was just around the corner. Being in the car business we are use to staff changes. It is common to hire someone and then have a mgmt change who lets people go to replace them with his pals. In our case I was worred, hubby would leave one job because there simply was not enough business and move to another, then suddenly they started letting him go. When times are really slow you could at least count on min. wage and we could get by with his and my income because all we had we the house and the cars. But then gas went thru the roof, and I drive a distance to work. Hubby was looking for car jobs an was willing to do sales, but no one was hiring for anything. So he took up selling insurance. That happens to be self employed and comission only. He drew unemployment to make up the difference. We tapped out the savings because of the nightmare house in GA, we simply thought it would get better. We used the cards, thinking it would turn around. Then, he had to have dental surgery and I had a horrible tooth ache, so we put a few thousand on cards. I put my doctors charges on the card too and the doctor ordered more tests that I thought were unnececesay so I did not do all of the tests. He gave me blood pressure meds, but he wanted me to come back every three months. My insurance is a 75-25 as of this year. It costs me 230.00 just for the healthcare portion of it for hubby and I and the deducatable is 500-1010 and the max out of pocket is 4500-9000. Which means I would be paying every 3 months to visit the jerk doctor for no reason. I can and do check my own blood pressure. I am not fat, and I exercise but this is genetic. I think the state you live in makes a huge difference during this time. My state brags about the lower cost of living and our homes are cheaper. But so are the wages, and everything else is higher than CA even. Then early summer my Dad had to have surgery and he is 90. We charged the car trip out and back it was much cheaper than flying. The fear of never seeming him again was in my heart. We came back only to find out that a lot of what was being told to hubby about making bonus at work was smoke and mirrors. He works for less than min. wage basically because they change the rules on bonus all the time. On our trip we thought we were okay still because we thought he was making bonus and things were on an uptick and we did some stupid stuff, we charged up a bit more on dinner for Dad and we bought our birthday/annivesary gifts and figured we could pay for them. I admit using the cars to buy toys was foolish, but the money was in the bank according to hubby and he thought he understood the pay plan. Now I am still trying to pay our credit cars which are at 12,000.00 and part of that is the dental about 7000.00 of it. The remaining 5 was groceries during our leanest times, and the 500.00 we spent on vacation. This is hard for me as I have never been late in my life! I guess I thought things would turn around, I never intended to not pay this debt. Now I am looking at the house, the unsecured loan which is our two cars that we paid off with it, and the credit cards and wondering what to cut. We need the cell phones for his job sales always requires that. We need internet hook up again his job, but we do use slow hookups. I do not get my hair done, nor my nails, not even a facial and buy lipstick at the dime store and use that for my cheeks too. I have always lived like that. I never thought we would use the savings, the 401K and he still would not be making but 100.00 per week. Crazy. We are talking to another BK attorney today, and I hope this ones consult is better than the last one. A Paralegal talked to us and she made me feel like a criminal. Plus they could not make up their minds if we should pay the unsecured debt or not. It is "only" 8 months old?? At the time it lowered our car payment by about 200.00 per month, seemed like a good choice and it kept us alive a lot longer to pay and wait out the recession. I am afraid they will take our cars because they are not secured and the are worth about 13000.-14000.00 total. Then what? We both have to drive for our jobs and buying a clunker that breaks down will cost us our jobs and put us from a 13 into a 7 if that is possible? I have thought about letting our house go we owe more on it than it is worth too. Geesh what a mess.

[Bex]

Mine has been the standard front-page news story for the past 3-4 years: felt extreme urgency to become a homeowner--I'm a single mother, make a decent living and my son and I had lived with my parents for 5 years prior to renting a year and then moving on to the mortgage. I wanted my piece of the American dream--a house and yard so my son could have a DOG! (Geez, all this for a DOG...REALLY!!??)

I had been paying very high rent for the area intentionally both to qualify for the loan and to get used to the expense. I did not have 20% down, but I had done mortgage processing previously and I did have 3% plus closing for an FHA First-Time Homebuyer. Till the loan officer (one of the people I knew personally that I used to work with!!) got ahold of me--100% financing looks really nice when you're talking about a 40 year old property that you know already needs work (just updates, nothing deficient)

So...for the idea of putting a measly $3k cash into updating the house rather than the loan, I went for a MUCH worse mortgage product:

6.125% (not bad, but certainly wouldn't have been worse with FHA!)
0 down
PMI
AND joyous surprise 2wks from closing: &%^$# Flood Insurance (seller was original owner and did not have mtg on it--did not know about the flood plain, so was not required to disclose earlier)

While I was anticipating somewhere in the neighborhood of $700/mo PITI, I came away with $930. Since I had been so inexperienced at being head of the household coupled with the fact that I make okay, stable, money ($10K over local median in civil service) --I thought it sounded fine to go into a housing payment that was $400/mo more than I had been paying!! Of course, the bank showed me the numbers--it was a good loan.



That was exactly four years ago...now it's 2 surgeries (ruptured disc and gall bladder) and multiple same-as-cash offers from the home improvement stores and I'm just milimeter from insolvency.

So...starting over. For the last time. Like a lot of you, I've been here before. Not bk, but I had a decent-sized Citibank Mastercard charged off wayyyyy bank when and vowed NEVER AGAIN! But this time, it is for real.

I intend to never hold consumer debt again in my life, outside a mortgage on my primary residence --and I may not even do that once my son is through college! My folks have done the "pay everything by your rewards card then pay that monthly" routine for years and years, but I have finally realized that they are an extreme rarity--most of us do not have that restraint, in general, and where money is concerned we play even more clever mind games with ourselves! So I recognize now that, where I am concerned, THE HOUSE ALWAYS WINS!!

I feel a little conflicted about the whole process. Truly, compared to a lot of you folks, I have another several months of denial left in me somewhere, but I just don't think my health can take it. I firmly believe it was all the money issues that started with my little old house that have taken such a heavy toll on my health, so I just don't think I will be able to live through it and be able to support myself if I continue to support the cccs in the manner to which they have become accustomed!

Oh yah, I've had the lowered limit/increased interest rate/increased minimum payments game played on 2 of my 3 ccs with balances (I have 5 revolving accts altogether). NO MORE!!! There is no way to win this game and I'm sick of trying--I haven't charged a dime in over a year and the balances are pretty much the same as they were last year--and with the min payments so high, I know I've paid for any goods and services received at least 3 times over. I'm through and I won't have guilt about it!




Oh yah, let me put my particulars:

$98,500 1st mtg ($93,500 balance)
$7600 US Bank Visa
$3500 Discover Card
$600 Lowes
$1400 hospital
$800 physical therapy
$4000 orthodontist (I hate to have to include this, but I think it's in my name, even though my sainted parents have been paying it since its inception!!)
$17,500 student loan debt (some federally subsidized, some not)

Oh yah, just found out yesterday that they CLOSED the Lowe's account (dated July 2009)!! I was 2 mos behind just because I wasn't paying attention (call it denial, whatever)--geez, I could have paid that teeny lil minimum, no problem! But all others are rated in good standing "paying as agreed" and, at this point, everyone has been 30 days late at least once--weird--are they trying to keep us happy with the nice credit rating for as long as possible? It amazes me how hypnotized we are by that FICO --we'll sacrifice body and spirit to keep the FICO! But that's a whole other rant...

So I've had the electric shut off twice in the past year...cell phone 3 times...as I said before, I probably could close my eyes again and keep afloat another 6 mos or so, but no longer. It's kind of ironic because I was turning to my dad for budgeting help/financial advice exactly a year ago and he looked through all my books and said "you're going to have to take bankruptcy--you'll pay on this for 12 years or more and that's only IF you're never late or any other penalties!" Well, I'll tell you, the top of my head blew off--the crazy old man, wtf is he thinking?? I'm wayyyyyy better off than a lot of people out there!! I'm nowhere near that kind of situation!! Heh.


Sorry so long and thanks for reading my story! Hope you feel solidarity as I do from reading all of yours. And I have to say a big thanks and bless you all--I have already learned soooooooo much!! And I'm looking forward to the future: no fear, no guilt, and now I feel like I have the tools and education I need!

Good luck to us all

[bxphae]

Lost my second source of income (part-time job) in March/09 short notice, the owner sold and let employees know 3 days in advance that the store was closing.

Credit Card debts $11325
Unsecured loans $19600
2 auto loans $37000

Total $67925

Current FICO 695 with a poor hit on my debt-to-income

I make less than my states median without my second source of income. I qualify for chapter 7 and just recently stopped paying for anything while opening a new bank account.

[Sazabelle]

Hello

Hi everyone, this is my first post here. I'm so happy to have found such an informational forum! It's nice to know that I am not alone in my financial difficulties, and that there is support/help out there for those of us who need it.

So how did I end up where I am today? It began about 4.5 years ago when I saw the auto industry (the industry in which I worked) really start taking a turn for the worse. I decided to take out a second mortgage on my house and use that money to invest in real estate. I purchased three rental properties over a period of several months. Everything went fine for the first two years, but then the economy took a downturn and tenants became more and more difficult to find. Things slowly, painfully got worse.

Last summer, after not paying these three mortgages for a couple of months, I decided to list the properties with an agent and try to do short sales, which the banks agreed to. They would have sold quickly, however, I soon realized that because of the 1099 issue, I would have owed the IRS over $10,000 when all was said and done! Instead of going that route, I decided to take my chances on the 1099 and let all three go into foreclosure. As of today, these three properties are in foreclosure status.

Now about my job. I lost my job this past March after working there for 15 years. This now left me with some huge decisions to make. After much contemplation and speaking with a BK lawyer, I have decided to also let my primary residence go as well as a camper that I purchased 5 years ago. I haven't made a mortgage payment in 4 months. My credit card debt is fairly minimal at around $4000. I have no idea if doing a short sale on my primary residence would be beneficial for me, or if I should let it go into foreclosure as well. I already have three foreclosures, what is one more? I am waiting to hear back from my BK lawyer about this issue.

I have received some cash since I left my job, but my attorney tells me that I can't file until enough time has gone by for me to 'spend down' that money. At this point, I am in limbo. I have decided to leave Ohio and move across the country in 4 weeks time, where I will have to hire and pay for another BK attorney at some point. Ohio, Indiana, and Michigan economies have been hammered by the auto industry and it's time for me to get out of this area and move someplace where the job market is a little better (if that's even possible?).

Anyway, my situation is somewhat complicated and I thought I was doing a pretty good job of dealing with it all until recently. Now I'm getting major panic attacks and wondering if I should have or could have done anything differently. I thought I had gotten past all of the emotions of dealing with this, but the closer I get to moving, the more emotional I become. It must be all of the stress. I know there are brighter days ahead for me but sometimes it's so difficult to see the light at the end of the tunnel.

Boy, do I wear my heart on my sleeve or what? lol In any case, hello to everyone in the forum and I look forward to learning quite a bit and getting to know some of you better.

[NewLifeAhead]

How did I get to this point?

I have been poking around this site for a bit and have gained valuable information from everyone's postings. So I finally decided to register to say how nice it is to know that we are not alone and there's a place to go for support. Firstly, I want to say thank you to all those responsible for these informative postings.

I was making an excellent income for several years but I was also house heavy most of the time. So I didn't save as much cash as I should have been saving. However, I did make a fair amount of money on houses I sold and rolled this equity into each of the new houses.

In still trying to make more money, I sold again and bought a larger house with a larger mortgage thinking we could sell it in a few years. We didn't need this big house, but the idea of making more money overshadowed the cautious approach to investing.

Not long after we moved into the new house, our income started to drop while our expenses increased (larger house = larger expenses). So the plastic money game started (HELOC and CCs). After several years, our income was now half of what it was as clients dried up due to the declining economy. Robbing Peter to pay Paul was now the means to exist as others have posted. This past year and a half I was on the bench more than working for clients. I finally decided to look for full time employment and thankfully, after several months from the last contract, I found a great job.

However, our now dual steady incomes are no match for our debt load. Each month we are/were 2500-2800 short each month. In addition, even though all payments were on time, our credit limits were changed, debt ratio was increased, interest rates increased, house upside down 200k and the down hill slide was at top speed.

You always think you can catch up and things will get better. But slowly, the debt load and stress effects everything in your life. We have filed chapter 7 and will loose our house but this will be the best thing for us. We'll have a chance to start a new life where cash is king and being house rich/cash poor is taboo as you never know how things will change down the road!!!!

[ease]

NewLifeAhead... I see your 341 is the day after tomorrow. Good luck with that!
Your last sentence summed it up for us. We kept thinking we'd just catch up and be able to pay down the debt. Meanwhile, constant tension, fighting fighting so much. Our marriage is SO MUCH BETTER since we cut up the cards and decided to file. I am truly grateful that our economic system has bankruptcy in place. It's been such a blessing for us.

[NewLifeAhead]

ease.. Thank you. I will be extremely thankful if we remain a no asset case after the 341 as we are extremely close with exemptions.

I'm happy to hear your marriage is doing a lot better now since filing. It's amazing the amount of weight that comes off your shoulders when you do finally decide to file. I had a good time putting all those cards through the shredder 1 by 1!!!!!!

Going through something like this really humbles you and the good part is, you get reacquainted with what really are the important blessings in your life.

[123ABC]

I was doing everything right... till I lost my job. My one biggest regret is not having a college degree and when this is all said and done I am going to go back and get one.

I was in a great sales job making 75k a year. My mortgage was only 1400.00 which at the time was no problem. My house is small and modest. I put a lot of money into remodeling which is where my cc debt came from. I had no problem paying the bills and having plenty of money to enjoy life BUT no savings. That was my mistake. When I lost my job everything came tumbling down. I was out of work 8 months and then took several crappy jobs to get by. Now I am in a stable job but with a 30k paycut. With the economy the way it is with out a degree I can not go back up to my previous salary. I have no choice but to file because I have not paid a single cc payment since 02/07! Working on get house modified and got my car modified. Will do things very differently from here on out!

[Inthestorm]

Don't know about loan mod. for homes. Went to the Clark Howard site and heard all bad stories, none good.

[killinstinct]

Divorce + extensive custody battle which I survived intitally, then met the LOVE OF MY LIFE who had unfortunately just gone through Divorce + extensive custody battle....as you can imagine lots of $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

[troubled]

Hopeless optimism--harsh reality

Well, it wasn't one of the choices, but it fits our situation, in part.

I was laid off from my $70k a year job in 2004. Over the last few years I've had several jobs --none ever topping $50k and mostly earning $35k a year or so through several jobs at a time--and never in my field.

We keep hoping things would get better and "chancing" it by charging fun things like daycare, mortgage payments, etc. in 2006 we took out a second mortgage through Countrywide to take advantage of the value of our house...well, today that house is $70k lower than when we bought it in '03 and we still owe $93k on the second mortgage ( a balloon with an 11.8% rate).

I guess it was the harshness of reality that forced us to file ($100k plus in unsecured and the two mortgages). We'd still like to keep the house somehow--but not that optimistic anymore

[jonnyboy]

Well it started when I lost my job. I lived off of meager unemployment. Found someone had made me a victim of credit fraud. Opened 9 accounts in my name after a year of fighting it off i still had shards of it laying around. I have medical bills due to a very bad medical condition, and not too long ago I made a decision to go back to school and have that debt on me too. Bad decisions, Bad health, Bad economy, big mix of things

[MastiffMom]

Why I'm filing

Hi all. First post here. I have a stable job and a good income, but I've made some really bad choices. I've always had quite a generous nature and never really had serious money problems, but there were times over the years that I relied on consumer credit counseling. In 2007, I built a new house (stupidly, with retirement from a previous job). Shortly after that, my niece, her hubby, their two toddlers and a friend of theirs all moved in with me and lived here for a year. I just can't believe that things could go so far downhill in just a year that I have to file. They moved out in May and it's been a blessing and a curse. In the end, though my overspending is my fault, it wouldn't have happened if they hadn't lived here. I have a few unpaid medical bills and lots of unsecured debt. I am hoping to keep my house in a Ch 13. At least I don't have a car payment. I owe the IRS because of the use of my retirement. They just finally got tired of waiting and garnished my wages, so I didn't even get anything out of my last paycheck. So much for paying the atty this month. I'm not sure how I'm going to file now unless I wait until the IRS gets what they want, but what the heck will I live on. I need to be able to buy gas to get to work and buy groceries, though I could get by on whats in my pantry for awhile. And I wish depression didn't make me want to spend, spend, spend.....