When do you realize you need BK?

[strtingovr]

Example:

Poor financial management (unsecured cc debt), coupled with increasing expenses (2 children) and diminishing income (down to one income from two, which has decreased over several years) has led me to investigate this path.

I have about 40k of unsecured debt, a mortgage I am keeping up with, and can only make minimum payments on credit cards. It will take me around 100 years or so to get out of debt making minimum payments!

Haven't started falling behind, but I am one calamity away from disaster.

There is one small hope of having the opportunity to serve my country in a reserve status which has a significant financial bonus (don't get me wrong, my reserve app is not for money, it's for service.). This significant bonus is enough to get me out of debt in three years. So if it works out, I could be in a great position to give back to my country and get out of debt. And get a nice hot sandy vacation in the desert (or a cold one in the mountains, eh? Things have shifted to Afghanistan)

But if it doesn't work out, how long should I wait to declare bankruptcy? Should I wait until I start missing payments? Short of doubling my income (I fall below my state's mean income) it seems to be inevitable.

I'm not there yet, but it sure is coming my way!

[BobMango]

Hard question to answer. For me the realization came just before the first lawsuit arrived. Of course, taking a job at half my previous salary also helped with that realization.

If you think bankruptcy will be necessary, I'd start collecting all of the information you need to file now. There really is no reason to wait if you don't have issues with recent luxury purchases or bonus payments that push you over the median, etc. You'll save yourself a lot of stress if you file as soon as you realize it's inevitable. You'll miss out on all the collector calls, the sleepless nights wondering about paying this bill or that one. Just don't wait to spend down all of your assets first.

Figure out what you can protect, and then plan your bankruptcy to give yourself the best opportunity to start over.

[DeadManCrawling]

I am invincible. NO ONE can touch me.

Or, so I thought.

I was GOING to win, save face and salvage the future.

Look familiar, as you gaze into the mirror?

I was you.

Now I am me. And grateful for the humbling experience.

Some things cannot be valued, and this is one such.

I hope you see the truth of the matter and can evaluate who you are by more than what you have managed to accumulate.

LIFE matters, money does not.

I was the poster-boy for financial excess, and can say it does NOT matter.

I wish you well,

-dmc

[tkharvey]

DMC..... Sounds eerily familiar. I thinkyou may be my husband in disguise!! We, too are grateful for the "humbling" experience you speak of. Wow, who would have ever thought we would belond to a bankruptcy forum? It can happen to anyone, anytime. No one is immune from the state the economy is in. We all need to be in "survival mode". For the original poster, you need to do what you need to do. It took us a very long time to come to this decision, but our debt far exceeded yours. Now that we have filed and are close to being discharged, I can sleep better that I could for the past eighteen months. My only regret is not filing sooner.....

[keepmine]

Were I you, I'd file today and then if that bonus materialized -well you got a healthy savings account and some measure of financial protection for your family.
I may be a bit hardcore here but no way on planet earth do I risk my life and then turn the proceeds over to credit card companies.

[fireworks]

I finally realized I was bankrupt when I didn't have enough left on my credit card to make the minimum payment on the other credit card. I'd been trying to beat the odds for years with my business, running up credit cards to finance everything. When I was out of money I would swipe my card through the business' credit card machine and have more money to make payments with (blatant violation of lots of rules).

Looking back, I should've realized it years ago, but I didn't. Poor business choices led to too much debt, lack of discipline in making payments on time led to late fees and high interest rates, then it all came crashing down.

[DeadManCrawling]

As a practical matter, I would look at it thus, from a pure numbers point of view:

If there is little REALISTIC chance of you paying off all of your debts within 3-5 years and being totally debt-free, I would file BK. Reason is, that BK makes you debt-free instantly, your credit will recover within 3-5 years, and you will not be buried under the debts for that long. Also, family considerations, you should weigh these carefully. Your family is worth more than any credit card balance.

The CEO's of BoA and CITI are not staying up late at night, worried that StrtgnOvr might not send in his or her payment this month. Why should you?

I think we all know, deep inside, when it is too late to hang on. Too many of us, me included, TRY to hang on, long after hope is gone. THAT is the mistake.

[HHM]

When do you realize you need BK

Sadly, for most people, later than they should.

[frogger]

Sadly, for most people, later than they should.

Exactly. We should have filed several years ago. Pride seems to get in the way of good business decisions.

[fireworks]

Sadly, for most people, later than they should.

That's me for sure. I should've closed my business and filed bankruptcy a long time ago. It would've made the last couple of years much less stressful.

[CCA1984]

Exactly. We should have filed several years ago. Pride seems to get in the way of good business decisions.

Frogger that is exactly what i thought and you are 100% correct ... i was being stubborn and shouldve a couple years back ...well said

[sofarsogood2]

We wasted alot of time, money and risked damage to our otherwise happy marriage. We could have filed sooner, but I felt the need to really research bankruptcy and spent alot of time finding the right attorney. Even though you want to push the possibility of filing to the back of your mind, I found that when it finally became clear that filing would be in our best interest, I was pretty knowledgeable and knew which attorneys I would meet with. This helped me transition emotionally and I knew what questions to ask. We had great income, great credit score etc. Never thought this would happen to us. I commend you for your desire to serve, just a shame that the bonus money would go to creditors. You must do what you feel is best for you and yours- don't let shame or guilt over finances deter you from doing what is best for your family. I can sleep at night again and enjoy my children, and that is priceless. This forum saved my sanity and knowing we weren't alone really helped. Just make sure you don't spend your last dime trying to avoid the unavoidable- having money for attorney fees gives you one last thing to worry about. Best wishes to you!

[strtingovr]

Wow, I appreciate all the perspective!

I think I'll start getting things in order.

[andy158]

As most members here say, "I should have filed sooner" can't be more true. We were doing fine two years ago and then things started turning for the worst. In the last two years we have had a $30k loss of income from loss of overtime and quarterly bonuses in both of our jobs. Our mistake was budgeting our living on assuming these were secure sources of income. Yes we did save, but no where near the recommended three months worth of wages. All equity in what we owned was maxed out and still we were falling further behind. No pay raises and increases in health insurance, property taxes, and normal living expenses soon surpassed our income and it became very difficult living paycheck to paycheck. Any bump in the road would have put us in the ditch. When the cc's started their loan shark tactics, that was the final straw. Could not keep up with the minimum payments. Went on like this for about six months when we finally came to terms with our overwhelming debt and emotions and filed. What a relief knowing in 4.5 years all the ugliness will be gone and our financial life will be reborn. The same mistakes will not be made and the banks will no longer "own" us!

[JRScott]

I struggled for 2 years with the need to really file. I kept hoping the situation would improve that I"d pay the debt. Finally though I was under tremendous mental strain due to the stress and after much prayer and thought came to the conclusion for my own health's sake it was better to file and get some relief from the situation so that my health would not become worse.

It is really a personal decision on many people's part and most of us delay filing in hopes of improving and paying it off, but eventually we have to succumb to the truth.