There's no shame in BK

[mikeinsurpri]

I read through all of these posts and also other posts on different sites. It's interesting because there's always multiple sides to the stories and everyone has their opinions but yet most of the opinions are the same no matter what side you are on. We contemplated BK for about a year before we filed. In hindsight I wish we would have filed last year. Like most people I took a 401k loan to pay off credit cards (on advice from our investment guy). So now I'm paying off a 401k loan for 5 years at $360 a month. After we paid some of the credit cards off, we still couldn't afford to pay the other ones. We have/had a B of A with a 29.9% rate and a Wells Fargo with a 27% rate along with other ones. After a few months we finally made a simple spreadsheet listing money in (paycheck take home amount) and basic monthly bills (utilities, mortgage, etc.) and found that we barely had enough to pay the bills. That results on the spreadsheet showed us that it was a business decision and we contacted a few lawyers and got advice and then retained one and filed our BK. The only people we've told are my in-laws and a few friends that have either gone through BK or stratically defaulted on their house. Like currerbell I can't tell my family because they have the mentality that you do whatever you can to pay your debts and never think about BK. In our situation we thought do we want to pay credit cards for the next 30 years and be stressed and miserable or get it over with and start fresh. Once we took the emotion out of it and looked just at the numbers the decision was easy. Off course we have to blame ourselves for using credit cards to live (i.e. paying the utility bills with the visa card); the credit card companies for giving us over $50,000 credit limits, the economy, spouse losing her job and me having a job, but haven't had a raise in three years. So as everything has increased in costs, my paycheck has stayed the same or decreased. So our plan for the future is to pay cash for everything (we've been doing that for the past three months) and work on saving money. Instead of using credit cards we want to have a savings account with $10k or so in it and use that as our personal credit account. If we need money we can draw from there and pay ourselves back. Probably after the discharge we'll need to establish a credit card, etc. and work on getting a credit score so we can buy a house in the next 3, 5, 7 years. Sorry for the long post, but it was kinda theraputic for me.

[Brazzy]

I'm separating Bankruptcy from the events that sent me there. I would rather lose my job and go deep into debt than say have cancer, lose a loved one or many other scenarios that are certainly worse than what I went through that wouldn't put you in Bankruptcy.

Logan

My point is that you cant just look at the positives and discard the negatives. There are plenty of people who can take a week unpaid and go to europe without BK. Thats great that BK helped people recover and live a good life, but its not all dreams and magic. For most people the time leading up to BK was a nightmare, and for some the nightmare continues after the BK. Its like saying I wish I could be handicapped so i could sit front row at sporting events, get to park in handicapped spaces, and get to use special ramps and elevators. Meanwhile there is a laundry list of reasons to be not wish you were handicapped.

Yes there are worse things than bankruptcy, but thats like saying I want to get punched in the face just because its not as bad as getting kicked in the balls. Wouldnt you prefer to have neither?

[Logan]

My point is that you cant just look at the positives and discard the negatives. There are plenty of people who can take a week unpaid and go to europe without BK. Thats great that BK helped people recover and live a good life, but its not all dreams and magic. For most people the time leading up to BK was a nightmare, and for some the nightmare continues after the BK. Its like saying I wish I could be handicapped so i could sit front row at sporting events, get to park in handicapped spaces, and get to use special ramps and elevators. Meanwhile there is a laundry list of reasons to be not wish you were handicapped.

Yes there are worse things than bankruptcy, but thats like saying I want to get punched in the face just because its not as bad as getting kicked in the balls. Wouldnt you prefer to have neither?

I don't think you can find anyone in this world over 35 who hasn't been through something bad in their lifetime. The great thing about BK it allows the people who fall into debt a chance to start over. If you lose a loved one, are handicapped or have cancer you don't get that chance.

Personally I turned a bad thing into a good thing and my life is better for it. I would rather that Sept. 11th never happened which was the cause of my 3rd job loss that led to my eventual BK but I am better off than anyone who was on those planes!

Logan

Done arguing...I must go run the dog and wash the car

[onwards]

I don't think you can find anyone in this world over 35 who hasn't been through something bad in their lifetime. The great thing about BK it allows the people who fall into debt a chance to start over. If you lose a loved one, are handicapped or have cancer you don't get that chance.

Logan, all you're saying is true, but as we fickle humanfolk tend to do, you make hidden assumptions by over-generalizing your own situation. What it comes off as, to paraphrase the great bard, is a case where "the lord doth protest too much, methinks".

You present a compelling case of an "ideal bankruptcy". It's very similar to mine, by the way; we both got hit by unforeseen circumstances where multiple sets of expectations missed their mark badly all at once. In both our cases it ended up with the technical ability to restructure using the bankruptcy code, and again in both our cases we were able to recover our income rapidly thus gaining a new lease on life.

This is exactly what the BK code is designed to do, and when it works, it works very well. It is no wonder you feel so great about it.

But with that said, it's not always the case. This is where the hidden assumptions come into play. For example, from your postings it reads to me like you are a person with significant and marketable skills, meaning that recovery, for you, is comparatively painless. However, this isn't always the case. People may end up getting wiped out with no real hope of ever recovering; talk to some of the lifelong oysterers in the gulf right now to get a sense of what I mean. Or they may be wiped out because their health has deteriorated to a level where they can no longer utilize their considerable skills (my biggest fear is that I lose the use of my eyes and hands; I need them to perform my job on a computer, and if I can't, there is really nothing I can ever do to regain my income potential. And as a diabetic, this is a serious consideration every day of my life). There are many other similar scenarios. While a BK helps these folks by allowing them to baseline again, their lives are in for a nasty shock that is likely to not be easily overcome even after the discharge. For them, a BK is not so much fun.

I'll give you another example from folks that I know personally. A well-off family in my kids' private school. Not rich by any means, but well-off enough that the parents, both in their 50's, are retired; their net worth was probably in the neighborhood of $10M, managed conservatively by a very reputable financial management firm in LA. Or so they thought.

You know what happened last year? I remember it because I was there. They came into the CFO's office (with whom I am on very good terms, and I am quite involved with the school finances), shellshocked. I learned later that they just got a notice from their financial manager that their holdings were wiped out almost entirely. Seems like the money was with Madoff. In fact, they lost so much that they suddenly couldn't pay their bills, and they came to the CFO to say they could not afford the school tuition anymore. This from folks who always paid in full at the beginning of the year and donated quite a bit on top of it.

The parents, who have not been in the workforce for years, have been scrambling to find a job, ANY job. Good luck with that. They ended up losing their second home, belongings, and more, eventually filing for bankruptcy. While they will manage to survive, let me tell you something: their life style is gone pretty much forever. May not sound harsh to folks at the bottom end of the ladder, but I feel for them. The parents aged 10 years overnight. The kids are suddenly living in a world of shame and hurt, not understanding how this could be.

Sure, they were careless by putting so many eggs in one basket so to speak, but their statements were good and they felt comfortable. Even so, did they really deserve this ruin? and believe me, BK has not been a happy path for them by any means.

[Logan]

Logan, all you're saying is true, but as we fickle humanfolk tend to do, you make hidden assumptions by over-generalizing your own situation. What it comes off as, to paraphrase the great bard, is a case where "the lord doth protest too much, methinks".

You present a compelling case of an "ideal bankruptcy". It's very similar to mine, by the way; we both got hit by unforeseen circumstances where multiple sets of expectations missed their mark badly all at once. In both our cases it ended up with the technical ability to restructure using the bankruptcy code, and again in both our cases we were able to recover our income rapidly thus gaining a new lease on life.

This is exactly what the BK code is designed to do, and when it works, it works very well. It is no wonder you feel so great about it.

But with that said, it's not always the case. This is where the hidden assumptions come into play. For example, from your postings it reads to me like you are a person with significant and marketable skills, meaning that recovery, for you, is comparatively painless. However, this isn't always the case. People may end up getting wiped out with no real hope of ever recovering; talk to some of the lifelong oysterers in the gulf right now to get a sense of what I mean. Or they may be wiped out because their health has deteriorated to a level where they can no longer utilize their considerable skills (my biggest fear is that I lose the use of my eyes and hands; I need them to perform my job on a computer, and if I can't, there is really nothing I can ever do to regain my income potential. And as a diabetic, this is a serious consideration every day of my life). There are many other similar scenarios. While a BK helps these folks by allowing them to baseline again, their lives are in for a nasty shock that is likely to not be easily overcome even after the discharge. For them, a BK is not so much fun.

I'll give you another example from folks that I know personally. A well-off family in my kids' private school. Not rich by any means, but well-off enough that the parents, both in their 50's, are retired; their net worth was probably in the neighborhood of $10M, managed conservatively by a very reputable financial management firm in LA. Or so they thought.

You know what happened last year? I remember it because I was there. They came into the CFO's office (with whom I am on very good terms, and I am quite involved with the school finances), shellshocked. I learned later that they just got a notice from their financial manager that their holdings were wiped out almost entirely. Seems like the money was with Madoff. In fact, they lost so much that they suddenly couldn't pay their bills, and they came to the CFO to say they could not afford the school tuition anymore. This from folks who always paid in full at the beginning of the year and donated quite a bit on top of it.

The parents, who have not been in the workforce for years, have been scrambling to find a job, ANY job. Good luck with that. They ended up losing their second home, belongings, and more, eventually filing for bankruptcy. While they will manage to survive, let me tell you something: their life style is gone pretty much forever. May not sound harsh to folks at the bottom end of the ladder, but I feel for them. The parents aged 10 years overnight. The kids are suddenly living in a world of shame and hurt, not understanding how this could be.

Sure, they were careless by putting so many eggs in one basket so to speak, but their statements were good and they felt comfortable. Even so, did they really deserve this ruin? and believe me, BK has not been a happy path for them by any means.

There will always be bad stories as well as good stories. Some people die from cancer while others turn around to do great things (Lance Armstrong).

Logan

[lorelei]

I've just read through this whole thread. As I prepare to file Ch. 13, I am utterly wracked with guilt and shame, to the point I can't eat well, get only about 3 hours of sleep a night, cry all the time - I'm sure some of you know the drill.

Intellectually, I know that I'm beating myself up for nothing. There's a double standard at play. The institutions that are our creditors are in fact often debtors to others. And when the big banks were deep in debt, guess what? They called themselves too big to fail and demanded handouts.

When we can't make our payments, what do those same institutions do? Hound us, several times a day, by phone. Try to make us feel like bad people. Like we should be ashamed. Like we are failures. Try telling them that you're too ____ to fail and see how that goes. It's a double standard, and a nasty one.

As my attorney put it, "What's good for GM is good for America, right?" (And I'm actually in Michigan, and my work is tangentally tied to GM, which made that line so funny to me it snatched me back from the brink of tears.)

BUT. But... I still feel sick over it.

I tell myself, "A company that went bankrupt is called a failed company. So what does that make a person who goes bankrupt? A failed person." I don't know that there's anything anyone could tell me at this point to make me feel worse about this than I already feel.

And - again, intellectually - I know that's useless. Because whether I feel sick over it or I am unaffected by it won't ultimately make one damn bit of difference. I KNOW this. But I can't change how I feel. Yet.

[currerbell]

lorelai - just try to focus on the things that matter - your health, family, etc. If you are like me, the incredible stress and anxiety of trying to make ends meet that you experienced prior to realizing you had to file BK was giant. As terrible as I feel about filing BK (I finally got enough money saved up to pay the attorney; have to file 7 because my income has been in the red for the last 6 months), it is nothing compared to the years of stress and anxiety that preceded it. It actually *did* make me sick.

And no, filing BK doesn't make you a failed person. Most companies that file BK keep going afterwards. So, you aren't a failed person - you're just a person that had to throw in the financial towel and start over.

[onwards]

And no, filing BK doesn't make you a failed person. Most companies that file BK keep going afterwards. So, you aren't a failed person - you're just a person that had to throw in the financial towel and start over.

I highlighted this because it is critically important.

A bankruptcy is no more, no less than a restructuring of finances. It has zero to do with you as a person. Because unlike a corporation people cannot cease to exist Ch7 merely means the divestiture of assets without the liquidation (of the person) part. Otherwise they are identical.

[lorelei]

I know that. I'm still trying to FEEL it. The ridiculous thing is, my partner filed Ch. 7 more than a decade ago, and I don't think any less of her for it at all. But when it comes to me, I'm so hard on myself. But I haven't figured out how to stop it yet.

[blockhead]

There is no shame. But there is a public record - that's the part I don't like. But I realize the necessity of it.