Why Are/Have You Filed BK?

[Snax]

dragondad, congratulations on taking the plunge. I can tell you that my wife and I spent far too many months fretting over trying to make payments we simply couldn't afford, all the while, being punished increasingly by creditors who used that excuse to raise rates! They got what they deserved on that in the end however: NOTHING!

I'm not sure why you are discounting Ch7 right off the bat. It's primarily a raw numbers calculation, but unless you have actually run the numbers, which your posts suggests you may not have, having steady employment and barely skating by doesn't disqualify you. The #1 thing to look at for a Ch7 is the income threshold. Are you over? Even if you are, your expenses may be such that the trustee will accept it as a 7 anyway. I.e., don't give up hope!

We timed our filing carefully, as like you, I am paid bi-weekly, and the rolling 6 month period potentially lumped an extra pay period in that pushed us over the threshold. It turned out that the local trustee was understanding of that issue and wasn't interested in splitting hairs there anyway.

Nearly two years out from filing, we are still in our mortgage-free house, taking care of it as well as before, and they have just recently suggested that they would take a principle reduction to fair market value on the lien and arrange new financing at prime if we want to stay. (About freaking time!) To that end, we didn't waste a lot of time pursuing this option from them, as getting to the decision makers on such things is nearly impossible, but we always took their calls and told them the truth: We want to stay, we want far market valuation, and we want a prime rate, but we are prepared to walk if necessary.

Don't reaffirm of course, but make sure they know you want to stay if they will make it a good business decision for you to do so. Worst case, free rent for months (years) can go a long way toward moving on. Either way, resolving to give up the house if necessary while being relieved of the debt burden that brought you to this point will be a freeing experience for you. You have to change your mindset to look at your home as a potential investment going forward. Moving sucks, but being locked into a home that hogs up your entire budget and puts you into a hole is not worth fighting for.

[dragondad]

Thanks so much for your thoughts and consideration. I have run the numbers, we are above the median, but pass the means test for 7, though it is close enough it could be pushed either way, especially depending on how they consider my wifes unstable income. The main reason I am looking at a 13 is we really want to keep the house but are behind on both 1st and second. I know it is possible to make a deal after discharging the mortgage in a 7, but I am afraid my bank would tell me to pound sand. I also have to be carefull of what I do because my job requires me to keep a security clearance. Our home is in a smaller established neighborhood, the kind where people know each other, and an exceptional school district. My autistic son is thriving in their program. There are really no rentals for any less in our immediate area, so to reduce our housing cost would require moving out of the community and school districe. Moving would mean a pretty drastic change for my family nd would be very difficult for my son. At the moment, we are just not willing to give up on the house. Besides, in a 13 we could lien strip the second. I am pretty sure my income alone can cover the first, living expenses and a small payment. I am sure the lawyer will give let us know what our options are, I just know continuing like we are now is not one of them. It is so hard, the business actually has some work now, and i keep thinking just maybe... No. I know what needs to be done. I am tired of the light at the end of the tunnel being an oncomming train!

[beaconterra1]

Mine is technically not listed: "long-term unemployment" is closest, so I chose that. Permanent disability is the reason.

[nioka]

My story is over a ten year period.
I retired in 2004 from a fortune 500 company with pension, medical & life insurance, that was supposed to go on until my death.
Five years later the company went to court and cancelled our insurances. I had to buy Medicare gap insurance and life insurance. 2007 I had a heart attack and even with Medicare had to $1k to the hospital and $5k to the doctors. I was living in a 2 story townhouse and was told by the doctors, no steps. I moved but the rental management refused to release me from the lease costing me $4500. The move and costs ran about $5k. This depleted by savings. Any major costs went on the CC's and over 5 years added up to about $25k. The main drain was my aging car and medical expenses. I tried to keep the CC's under control and was doing fairly well. The final blow for me can when I was told my the electric company that I had to take a tree down that was leaning on the power lines and threatening to fall on the house. It was a very big oak. I went to my HOA and explained the situation but they were no help. Finally I persuaded them to grant me a permit and with that I had the tree taken down by a tree service. To my surprise I got a $1150 fine shortly afterwards. To get the money to take the tree down I had to pay the minimum on my maxed our CC's leaving me with nil. The HOA combined the fine with the HOA fees making impossible for me to make the payment. This was the straw that broke the camel's back. I said no more.
I talked to several attorneys and found this forum. I am now working off the recommendations of the good advice I have gotten here at BK and waiting for foreclosure.
Instead of paying my bills and mortgage in December I used the money to do the things I had been putting off. I got new dentures replacing my ten year old ones, my car got the much needed repairs it needed, and my dog got the surgery he needed. Then I put away the money to retain an attorney. Now I sit and wait for foreclosure.

The irony here is that I was paying through the teeth just to get by. The mortgage was paid, the HOA was getting their dues every month on time. All the CC's were being paid and my utilities were up to date. I didn't have two nickels to rub together but I was supporting several businesses. Now because of an insensitive, greedy, and unscrupulous HOA nobody is getting a dime. What were our legislators thinking when they gave such awesome power to the HOA's? I would like nothing more than to tell the CC companies and the bank what happened but I can't because what I say may be used against me. I would also like to tell our politicians what they caused, but frankly I don't care anymore. It is just business as usual. Therefore my default is a simple business strategy and nothing more.

[nmocean]

Waiting on the attorney to call me back for an appointment. I took a 50% paycut at my job due to EPA air regulations and taking a new position. My wife a few months later lost her job and found another one that paid about 1/2 of what she made. At the same time I had student loans payments starting and putting a daughter in braces. I work as much overtime as I can get just trying to keep up. It finally caught up with us, we went to the attorney last spring and discussed bankruptcy and was advised not to file so we didn't. We are current on all our bills except the credit cards which totals about 30,000 together. Today. my wife gets a summons to court on her two cards, I am a nervous wreck have called the attorney to let him know and am now waiting for a return call for an appointment. I really hate to file but don't know what else to do, it is so rough living like this and working like a dog. I/we have always had great credit, it sure is not like we haven't tried, we have sold our boat, car and truck, refi the house, reduced our living expenses/utility bills, sent out 100's of resumes to find better jobs and have had no luck.

[TXskyblue]

I bought a house at the peak of the market. Luckily, Texas didn't peak like other markets but I still overpaid.

Charged up a credit card to pay for furniture and it snowballed from there. After 7 years or so, I found myself with 70-80K in credit card bills. It is no one's fault but my own.

I tried diligently to pay them down and managed to pay one or two off, but I'd be charging up on the others at the same time with a net increase in total debt. I thought that I could somehow keep this up until my house was paid off and my child support obligations were gone, but this proved as foolish as it sounds. I ended up working as many extra days as I could just to keep up with the minimums.

Finally I totalled everything up, splashed some cold water on my face, and accepted this was an untenable situation. I didn't know anything about BK and I thought that because of my income, there would be no way I could file. Tried to come up with a better plan, but the fact was that with that much credit card debt and my income, I knew that merely defaulting was not going to end well for me. Spent a few weeks researching and ended up here somehow.

My life, post-BK, is not perfect but it's hand over fist better than it was pre-BK. I sleep so much better without that albatross around my neck. I no longer feel like Sisyphus when I pay my bills.

[mabellemurph]

People file for bankruptcy to save their last resort of their income and not to become bankrupt as well.

[keitheii]

My reason doesn't fall into any of the choices and is kind of complicated, I work in IT and used to make amazing money working for a well-known food company. In 2008 They re-organizeed and laid everyone off and moved to another state, and I've never been able to find another job that pays even close to what I used to make. Every year my rent goes up $50 a month.. but I'm now taking home about $1200 a month less than I used to... I worked for a new employer for 4 years who jerked me around for quite a while not paying me on time, or in full.. and wound up paying me half of my salary... I eventually found a new job.. but I'm still making $1200 less a month.. It got to the point where I just couldn't pay the credit card bills anymore... paying everything else I am exactly even... what comes in goes right out.. and I still make a deceent salary.. but the cost of living.. it all goes right out the door.. I was receiving collection notices and certified letters.. I didn't sign for them because I figured if i didn't sigh for them or answer the door, I wasn't "served".. well winds up I was wrong.. not only did a creditor get a judgment against me that I wasn't informed about, but my checking account was frozen.. When this happened I immediately contacted an attorney, discussed my options, and going through all the unopened notices I realized they started sending me settlment amounts which amounted to half of the debt.. The settlement amounts I might have been able to hack if I borrwed some money from family, so I contacted the attorney who got the judgment against me to see if they would consider the settlement amount still.. if I could work with everyone, I could avoid BK. The attorney was sly and asked me a bunch of questions including what bank account did they freeze, how much was in it, etc.. then proceeded to tell me he's going to come after me for every dollar of the judgment and drain my checking account and garnish my pay. As part of this discovery process I found out I had two judgments.. And knowing that no one will work with me, and needing to protect my account.. I had no choice but to file... Which sucks.. I could have avoided this if I opened my mail.. but I didn't... I figured why bother.. it's just more of the same...

[LadyInTheRed]

My reason doesn't fall into any of the choices and is kind of complicated, I work in IT and used to make amazing money working for a well-known food company. In 2008 They re-organizeed and laid everyone off and moved to another state, and I've never been able to find another job that pays even close to what I used to make. Every year my rent goes up $50 a month.. but I'm now taking home about $1200 a month less than I used to... I worked for a new employer for 4 years who jerked me around for quite a while not paying me on time, or in full.. and wound up paying me half of my salary... I eventually found a new job.. but I'm still making $1200 less a month.. It got to the point where I just couldn't pay the credit card bills anymore... paying everything else I am exactly even... what comes in goes right out.. and I still make a deceent salary.. but the cost of living.. it all goes right out the door.. I was receiving collection notices and certified letters.. I didn't sign for them because I figured if i didn't sigh for them or answer the door, I wasn't "served".. well winds up I was wrong.. not only did a creditor get a judgment against me that I wasn't informed about, but my checking account was frozen.. When this happened I immediately contacted an attorney, discussed my options, and going through all the unopened notices I realized they started sending me settlment amounts which amounted to half of the debt.. The settlement amounts I might have been able to hack if I borrwed some money from family, so I contacted the attorney who got the judgment against me to see if they would consider the settlement amount still.. if I could work with everyone, I could avoid BK. The attorney was sly and asked me a bunch of questions including what bank account did they freeze, how much was in it, etc.. then proceeded to tell me he's going to come after me for every dollar of the judgment and drain my checking account and garnish my pay. As part of this discovery process I found out I had two judgments.. And knowing that no one will work with me, and needing to protect my account.. I had no choice but to file... Which sucks.. I could have avoided this if I opened my mail.. but I didn't... I figured why bother.. it's just more of the same...

An excellent cautionary tale for others. The law has provisions that allow a lawsuit to proceed, even if the defendant is trying to avoid service. So, ignoring mail is a bad idea. Better to stay aware of the status of your creditors' collection efforts. And never give a creditor or a creditor's attorney any information about you or your assets unless you are required to by law. If they froze the account, they will know what account they froze. If there is any doubt about whether you are required to provide information, consult with an attorney. Sorry you had to learn the lessons the hard way, keitheii. Too many people believe that if they are forthcoming and cooperative with their creditors, that their creditors will work with them. As many of us learned while trying to avoid BK, the creditors most often will not work with you in any meaningful way, even when it seems that they will get more that way than if you file BK. If my largest credit card had only been willing to reduce my interest rate to something reasonable so I could afford the minimum payments (after the end of the introductory balance transfer rate), I may never have realized that BK really was my best financial move.

Even if you hadn't ignored your mail, you very well may not have been able to settle with all of your creditors. But, you would have been able to get your BK filed before they got judgements and started freezing your accounts.

[Kaminoyousha]

We're filing Chapter 7 due to the following:

HUSBAND...too many dang payday loans, bank fees, repossessions, a personal loan, a divorce, paying child support for two sons (thankfully, one dropped and the other has three more years) and spending money he doesn't need.

WIFE...student loans ( I know...can't be discharged),a divorce, long periods of unemployment, tried to start businesses that NEVER got off the ground, credit card debt, bank fees, apartment debt and robbing Peter to pay Paul (only to end up owing both Peter AND Paul...right along with Matthew, Mark, Luke and John and the rest of them).

[jgeddes]

I filed because I owed over $200K in back taxes that was going to take me forever to pay off a few grand a month at a time. Penalties and interest were continuing to accrue. With a new son and in between jobs I saw Chapter 7 as my only option

[newt76]

My story is just too many bills that we couldn't recover from. We had credit card bills, student loans, 1st and 2nd mortgage, car loans, and then both our cars broke down which broke our backs. Wells fargo started foreclosure proceedings, even returned a check for a house payment since i was 3 months behind. Was told to apply for home modification loan, which we did, only to get a runaround of not hearing anything for 8 months. They didnt have all the info, or the place it was sent to didn't deal with home loan modifications, etc. Finally when it seemed like the right people had the info to process the home mod. I see my house in the local paper as being sold on the courthouse steps. So i finally did what i had to and called a bankruptcy lawyer. Lo and behold as soon as I sent the paperwork that I was doing a chap. 13 i was approved for the home loan modification. I said it was too late and we went ahead and filed. BEST THING I EVER DID!!!!!!!!!! The lawyer was even amazed I hadn't filed years earlier since we didn't have any more money coming in than going out. Something I think we fooled ourselves into thinking, "We just need a tax return to get us through" Not even 5 tax returns was going to stop the cycle of bleeding money. Once you are behind you have to just look at your financial picture and suck it up. Nobody wants to file bankruptcy, and people will judge you, you can't stop it, but in the end you will have a fresh start. I can only speak from a chap 13 standpoint, as i have finished this week.

[didi768]

We have to file because we bought two investment homes and could not keep up the payments. We were going to flip them since my husband is handy. Lawyer sued and won. No credit card debt or medical bills. We lost those house in '06-07.

[bridget]

Had to file quite honestly due to irresponsible husband with no understanding of credit/finances. I am guilty of not getting involved with our finances sooner and not saying NO to his spending. After years of my dh avoiding telling me how bad things were. I had a melt down. Mortgage was falling behind, cc minimums were in excess of 300 dollars.....Husband refused to problem solve with me. With the help of my elderly father, we were able to uncover all the damage. My dad took me and to his accountant who recommended bk. I never considered because of all the horror stories I have heard, and all the "experts" saying not to do it. My dad, a retired attorney, also felt bk was the best option. DH and I are still married. We are over two years into our chapter 13. I have taken over our finances and we now have a small emergency fund and have enough $$ to keep our kids in different activities. We are still in our beautiful home and are current with our bk and mortgage. Bankruptcy was the best major decision I have ever made. I am very lucky that my husband and I both have well paying jobs with insurance. I am also in a field that allows me to find extra hours that increases our income by about 800 a month. I also know that I can rely on my family if I need them. I know things could be worse. This has been a roller coaster of highs and lows. Things are so much better than they were two years ago. But sometimes I get sick when I think about the money that was wasted, the worry this has caused my parents and if I will ever catch up with saving for college and retirement. I wish I filed sooner rather than later..... Glad I found this forum to go to for support and advice. Thank You!

[Newposter]

Wow...

First, I lent a large amount of money...never did find the guy. Poof...gone
I invested in a couple of houses to renovate. 2008 happened...poof..lucky to get out without more debt. But..lost the investment
Then, put my time and labor into an investment property....my partner cheated me out of my half.

Went to work on the race track. Horses. Made good money. Loved working with horses and horsemen.
Paid for a couple of horses. Raced them. Made good money winning purses. Then..big BIG vet bills. Horses never ran again

But, then found I was the only person that could be livein health aide for my disabled parents. Took myself out of the work world. I am not complaining.....I could never live with myself if they were in one of those awful medicaid nursing homes. I'll pick up the pieces later, and I will be more than able to move forward...chapter 7 will lift the burden, and I can be very stable from then forward. I am 65. Social security and pension will keep me ok.