new way of thinking about bankruptcy made me feel better

[meateater]

When I think about how I went bankrupt I usually feel bad, today I hit upon a new way of thinking about it.

The credit card companies and I gambled that I'd be able to repay what I borrowed. We were both foolish, if they examined my income and expenses, they would have known it was unwise to give me tens of thousands of dollars of credit. If I did the same thing, I would have known it was unlikely I would be able to pay it back without winning the lottery. When I filed, the credit card companies were out the money. I lost the ability to borrow money (for a few years) and suffered an intangible blow to my self-esteem for not keeping my end of the deal.

I don't feel bad for the credit card companies because they made a foolish gamble and lost (and given the interest rates, if I had managed to pay them back, it would have been like they hit the lottery). But I want to try to figure out why this is still bothering me, and how I can "fix" it.

[Dst1]

I'm glad you have arrived at that conclusion on your own. It has been pointed out before that the responsibility for a loan is a two way street. Unfortunately people tend to focus on irresponsible borrowing and forget all about irresponsible lending.

There is a reason you get charged interest on a loan. You are a risk...and the creditor knew that ahead of time.

BTW, I encourage you to explore more about why it bothers you. Just be forewarned, you might not like the honest answer...at all.

[DYLAN150]

Meateater: Why don't you tell us how it was a foolish gamble for the credit card company to issue you a credit card? You must have met their lending or isssuing guidelines and requirements. Your fico score and income must have been acceptable to them!!!! You agree to pay them back so why was it foolish? (I am not trying to sound like a wise guy here, just wondering)

[MSbklawyer]

The credit card companies and I gambled that I'd be able to repay what I borrowed. We were both foolish, if they examined my income and expenses, they would have known it was unwise to give me tens of thousands of dollars of credit. If I did the same thing, I would have known it was unlikely I would be able to pay it back without winning the lottery. .

While I am glad that you are at peace with your decision to file, don't let your credtors or your trustee hear you say what you said in the post above. Reason being : If you knew or should have known at the time you made the credit card charges that you'd never be able to pay them back short of a lotto win, as you post seems to indicate, you're handing your creditors a "bad faith" objection to your discharge on a silver platter.

[Dst1]

Hmmm. Maybe I misread the OP's post. My understanding is that the OP is saying he sees it as a foolish gamble in hindsight, not that he saw it as a foolish gamble at the time he took out the loan.

As to the general point, it seems to me bad faith cuts in both directions. It's wrong for a debtor to lie about their financial condition. That's true. But it seems to me equally as bad for creditors to engage in willful blindness as to the debtors financial condition. I don't see simply checking a FICO score as a good faith effort on the part of the creditor to assess a debtors creditworthiness. If the debtors lies and says they make 100K a year when their income is 20K that's bad. But I think the creditor bears some of the blame for that fraud when a simply pull of the credit report would have revealed the debtor never had a job beyond clerk at Wendys.

[MSbklawyer]

But I think the creditor bears some of the blame for that fraud when a simply pull of the credit report would have revealed the debtor never had a job beyond clerk at Wendys.

From a moral perspective and from a just-good-business-sense perspective I agree with you 100%. But from a legal perspective, the creditor is entitled to rely on the debtor's statements in his application for credit. They don't have to look behind it. The OP said:

If I did the same thing, I would have known it was unlikely I would be able to pay it back without winning the lottery.

If he believes that the creditor should have known he'd never be able to pay back the debt if only it had looked at his income and expenses -- information of which he had actual knowledge -- then how much more so should he have known it?

[meateater]

I never lied to any credit grantor about my income (or about anything else). I foolishly assumed that my income was going to increase (I was underemployed for years after finishing grad school). I have no idea what the credit grantor assumed, I obviously met their lending standards, but in hindsight it is clear to me that it was a poor decision by credit grantors to give additional credit to someone who's indebtedness exceeded their annual income, even if it appeared that the borrower had the education that would allow them to get a higher paying job (if one was available). I was foolishly naive, had no idea what I owed, and just kept shifting things around until I suddenly pulled my head out of the sand. Even then, at the verge of being sued by a credit card company, I still had access to tens of thousands of dollars in credit. But having finally realized the mess I was in, I realized I could not in good faith borrow more money to try to dig myself out.

Dst1: have you explored this? can you give me any hints about what I might realize?

[kornellred]

There is a curious paradox associated with the unsecured credit business. One the one hand, it is a crime to accept money from a creditor who expects to be repaid when the borrower has no intention of paying it back. One the other hand, it is not a crime to not pay your bills. It does not matter one whit exactly why you would not pay your bills. It could be that you don't have the money. It could be that you have the money but you simply do not want to pay your bills. It's still not a crime unless your intention was to not pay your bills before you incurred the debt.

The situation becomes really tricky among people who amass great amounts of unsecured debt. It takes a long time, in most cases, to get that far into debt. At some point in the past, the debtor saw the writing on the wall, and came to the conclusion that financial difficulties lay ahead. At that point, conscious decisions had to be made. Either make adjustments to the lifestyle to manage the debt, or gamble on somehow being able to manage the debt in the future by postponing any radical changes.

Well guess what? Being human, we have a tendency to push our luck perhaps a bit more than is advisable. We take advantage of the easily available credit and get even further in debt, all the time knowing that bankruptcy would always be there to nullify our dilemma in case our decisions turn out to be mistaken.

So where in the process does that fraudulent "intention" develop validity? It happens when a debtor makes the irrevocable decision to file for bankruptcy protection, and continues to take advantage of unsecured credit. A little cash advance here - to pay off another creditor there. Gotta replace those tires on my SUV before I even think about filing. Damn! - the central air is out. I can't sweat my way through the summer.

You get the picture - life happens, and there are always expenses popping up that are not in the budget. Finally, the whole financial house of cards topples over. Lo and behold - bankruptcy to the rescue!

Don't you feel better now?

[espo1357]

There is a curious paradox associated with the unsecured credit business. One the one hand, it is a crime to accept money from a creditor who expects to be repaid when the borrower has no intention of paying it back. One the other hand, it is not a crime to not pay your bills. It does not matter one whit exactly why you would not pay your bills. It could be that you don't have the money. It could be that you have the money but you simply do not want to pay your bills. It's still not a crime unless your intention was to not pay your bills before you incurred the debt.

The situation becomes really tricky among people who amass great amounts of unsecured debt. It takes a long time, in most cases, to get that far into debt. At some point in the past, the debtor saw the writing on the wall, and came to the conclusion that financial difficulties lay ahead. At that point, conscious decisions had to be made. Either make adjustments to the lifestyle to manage the debt, or gamble on somehow being able to manage the debt in the future by postponing any radical changes.

Well guess what? Being human, we have a tendency to push our luck perhaps a bit more than is advisable. We take advantage of the easily available credit and get even further in debt, all the time knowing that bankruptcy would always be there to nullify our dilemma in case our decisions turn out to be mistaken.

So where in the process does that fraudulent "intention" develop validity? It happens when a debtor makes the irrevocable decision to file for bankruptcy protection, and continues to take advantage of unsecured credit. A little cash advance here - to pay off another creditor there. Gotta replace those tires on my SUV before I even think about filing. Damn! - the central air is out. I can't sweat my way through the summer.

You get the picture - life happens, and there are always expenses popping up that are not in the budget. Finally, the whole financial house of cards topples over. Lo and behold - bankruptcy to the rescue!

Don't you feel better now?

cliff notes?

What is your point here?

Thanks for the post anyway.

[kornellred]

No point. Just my opinions.

[Flamingo]

When I think about how I went bankrupt I usually feel bad, today I hit upon a new way of thinking about it.

The credit card companies and I gambled that I'd be able to repay what I borrowed. We were both foolish, if they examined my income and expenses, they would have known it was unwise to give me tens of thousands of dollars of credit. If I did the same thing, I would have known it was unlikely I would be able to pay it back without winning the lottery. When I filed, the credit card companies were out the money. I lost the ability to borrow money (for a few years) and suffered an intangible blow to my self-esteem for not keeping my end of the deal.

I don't feel bad for the credit card companies because they made a foolish gamble and lost (and given the interest rates, if I had managed to pay them back, it would have been like they hit the lottery). But I want to try to figure out why this is still bothering me, and how I can "fix" it.

A business is not "foolish" when it reviews the information you provide to obtain credit with them and sign the application wanting to borrow money for items or services you want to purchase using that credit. Their decision is based on your status at that time and if you do not or cannot make payments or pay the amount in full when due, there are clauses in the contract you sign at the time you obtain the credit as to what can be done. I have always in my life tried to put myself on the other side of the fence; how would I feel if I lent someone several thousand dollars on guaranteed terms and then they could not or refused to pay it back...at the time the event took place, there was no risk; however, the lending party in documentation protects itself with a contract in the event one cannot pay (i.e., fees, penalties, higher interest, wage guarnishment, judgement against real estate, garnishment of state tax refunds in some states...). Nonpayment of debts results eventually in higher costs and fees, taxes, etc. to every US citizen. Also however, unexpected stuff happens to people; i.e., job loss, major medical situations where the party cannot work, etc.

If something is a one time event in your life over which you have had no control and need to file bankruptcy, there is no need to feel ashamed about having to file. We all make mistakes and we all learn from them. It's those that do not learn from them and continue on with bad financial choices that make it hard for those that do learn...

[meateater]

Thank you all for the feedback!

Any suggestions as to how I can make myself feel better about my role in this? Should I try to pay back the discharged debt (I could do so in about two years, but have no idea how it would be done, whether they would accept payment, if I might be creating 'phantom' debt, or if this would even help me feel better). Or should I just accept that I am always going to feel this way (I never thought I would pay off my student loan, and when I did several months ago, it got me to thinking about what to do with the money I had been putting towards loans).

I don't understand how my default on credit cards leads to higher costs to everyone else (much like my paying higher interest rates did not lead to lower costs for anyone). No annual fee accounts, cashback and rewards programs, they all cost money. Before my crash, I had thought it was a terrific idea to use cards for everything (food, pharmacy, coffee shops) to earn reward points and get the store discount. Where did the credit card people get the money to pay for the rewards?

I now only use my cards sparingly to keep them active and pay off each month, I don't use the cards to buy anything I could not immediately pay for in cash, I'm only asking out of curiosity, as it seems that back when I was a prolific user of credit, "someone" was paying for me to receive rewards, discounts, and no annual fee (it costs something to mail the bill out and process the payment).

Flamingo, the reason I'm not feeling bad for the credit grantors any more is because i did put myself in their shoes, and realized that it was an incredibily foolish decision on their part to extend credit to me based on the factors known to them. If my past self appeared and asked to borrow money, I'd either refuse, or lend the money but not be surprised at not being repaid. That said, i do feel terrible about my part in this.

[mikeyisbroke]

Meateater,

I'm feeling the same way as you...I feel a lot of shame and embarassment about what i'm going to do in the next couple of weeks (that is retain an attorney). It was never my intention to let my debt get into the position it was, I too have been a professional that hasn't reached the high paying job I seek and now i've been laid off. I pay on time each month and was still penalized by increasing APR's and decreasing credit lines. I think overtime, the credit card companies still made a profit on me and haven't lost a dime.

As a result, I'm 33, living with family and afraid to even go on a date in fears of not being able to afford to enjoy the time and company of another. I'm living on the grace of god that nothing catastrophic happens (major car repairs, etc). Yes, its my fault because I wasn't diligent in being responsible with the privilege of having credit. I enjoyed living (not so necessarily beyond my means) life and taking care of those around me and not properly budgeting.

My fresh start is going to come with a huge price.

[Mi Bankruptcy]

Ahh.. phooey... It's a business decision and a life decision. I would have gladly continued to pay if I was guaranteed I would have a place to live and food on the table 30 years from now.

The difference in me and a company filing bankruptcy was the $$ mine was thousands rather than millions being written off.

[espo1357]

Ahh.. phooey... It's a business decision and a life decision. I would have gladly continued to pay if I was guaranteed I would have a place to live and food on the table 30 years from now.

The difference in me and a company filing bankruptcy was the $$ mine was thousands rather than millions being written off.

In the end, "they" still have us taxpayers beat. People that have guilt about BK, really don't see the big picture, and don't have a clear picture of reality.