I am staring at my Chapter 7 Discharge, which I just pulled out of the mail.
I want to share my story because there may be people out there like me that waited too long to file out of fear of the process and the unknown.
I am an attorney. Up until about 4 years ago, I had good credit. The truth is, even though we were paying our bills on time, we were living above our means. It seemed like we were constantly refinancing our home and our credit card debt was mounting (I had turned my Amex into a revolving credit card and was carrying about a $20,000 balance).
2008: Then my wife and I separated. The cost of maintaining two households quickly took its toll. We ate through about $10,000 in savings, and we fell behind on our credit cards and our first and second mortgages. A year later, the real estate market started crashing and my house that had just been valued at over $700,000 was then worth less than $400,000. We owed $450,000 on it between the two mortgages.
2009: The following year, we finalized our divorce. Since all of the debt was in my name alone and my ex-wife had no job, I assumed all of the debt in divorce. I knew then I would probably need to file for bankruptcy at some point. The house was in foreclosure. I was behind on all of my bills except for my child support and alimony and my rent. I was stressing everyday about whether my car would be repossessed and when I would get sued.
I knew in 2009 that I had to file for bankruptcy. But I was worried about the process. I also knew because of my salary (at the time $145,000) I would not qualify for Chapter 7. But a lot of my post tax money went towards child support and alimony ($4700 per month). So my salary was in reality much lower. I was living a pretty meager life and still my monthly bills exceeded my monthly (post cs/alimony) income. I knew I could not afford to pay anything into a Chapter 13 plan. So I avoided the issue hoping things would get better on their own.
They didn't...
2010: Things quickly got worse. The second lien holder for my house (the foreclosure still was not completed) realized there was no money to be had in the foreclosure and sued me instead of going through the foreclosure. In addition, four credit cards were suing me. I had defaulted on two (Amex and HSBC) and two others were in court just waiting for the court to sign their summary judgment orders (I had answered, but there was obviously no defense to the debt). Every day, I was getting calls from creditors on my home phone, my cell phone and my office line. The calls to my office would sometimes get routed through the operator and then back to my secretary. Embarrassing.
Then one day my debit card was rejected at the supermarket. I called and my balance was negative. I should have had about $3,000 in there. I later learned that the second lien holder on my house was able to unilaterally withdraw the delinquent payments from my checking account. [The second mortgage was with Commerce and that's where my checking account was. Apparently I signed something at closing that gave them the ability to do this.] About a week later, I received two applications for wage garnishments in the mail. I quickly realized that the garnishment would be based on my pre-cs/alimony income since I paid my ex-wife directly (if you pay through an agency, like the Probation Department, your support obligations are then considered court ordered and in essence become the first wage garnishment on your pay; a creditor will not be able to get much on a second garnishment). So I was behind on all of my bills, my bank account had been zeroed out, and I was a few weeks away from having my wages garnished.
This is what happens when you ignore the problem. Your creditors won't go away. Your situation won't get better on its own.
October 2010: I filed in October. I had to borrow $3,500 from a friend to pay my bankruptcy lawyer. My Chapter 13 plan proposed a monthly payment of $75. There was no push back on this initially. I went to the creditors meeting; no one showed up and the trustee asked very few questions. In December, there was a bump. The trustee realized that my alimony gets reduced in two years. That's about $1,500 a month more I will have in years 3, 4 and 5 of the repayment plan. Guess what her proposal was? Okay, so I know I have been irresponsible and that I am trying to get out of legitimate debts. But I was looking forward to the time when I could start to save again and not live paycheck to paycheck. I balked and instructed my attorney to reject the proposal.
The next day my attorney called me and said the most beautiful word, "conversion." She had spoken with the Trustee about my situation and they both agreed that this was a good case to convert to a Chapter 7 case. It made no sense to me. But the case was converted. I showed up a month later at a new creditors meeting. Again no one showed up. I was nervous because by that point (1) my firm had given me a $7500 salary increase for 2011 and a $10,000 bonus; and (2) I had finally filed my 2009 income tax returns and was expecting about $9,000 back. My case was assigned to the worst possible Trustee. My attorney had told me I might need to disclose the salary increase, bonus and refunds and to hope I didn't get this guy. Luck was on my side though. The other Chapter 7 Trustee was ahead on his docket and the guy I had been assigned to was behind. The nice guy came in, saw my attorney and pulled us into his room. My case was finished in 2 minutes.
So here I am, about 6 months later, staring at my Chapter 7 discharge. I am debt free. I have about $15,000 in the bank. And I have gotten so used to living frugally that I am saving about $1,000 a month. I know that most people repeat their mistakes and end up needing to file again in the future. I have vowed that that is not going to be me (but I suspect everyone feels that way in the beginning).
Thanks for reading. I know it was long. I hope someone will gleam something useful from my story. The bottom line is, DON'T WAIT.
I want to share my story because there may be people out there like me that waited too long to file out of fear of the process and the unknown.
I am an attorney. Up until about 4 years ago, I had good credit. The truth is, even though we were paying our bills on time, we were living above our means. It seemed like we were constantly refinancing our home and our credit card debt was mounting (I had turned my Amex into a revolving credit card and was carrying about a $20,000 balance).
2008: Then my wife and I separated. The cost of maintaining two households quickly took its toll. We ate through about $10,000 in savings, and we fell behind on our credit cards and our first and second mortgages. A year later, the real estate market started crashing and my house that had just been valued at over $700,000 was then worth less than $400,000. We owed $450,000 on it between the two mortgages.
2009: The following year, we finalized our divorce. Since all of the debt was in my name alone and my ex-wife had no job, I assumed all of the debt in divorce. I knew then I would probably need to file for bankruptcy at some point. The house was in foreclosure. I was behind on all of my bills except for my child support and alimony and my rent. I was stressing everyday about whether my car would be repossessed and when I would get sued.
I knew in 2009 that I had to file for bankruptcy. But I was worried about the process. I also knew because of my salary (at the time $145,000) I would not qualify for Chapter 7. But a lot of my post tax money went towards child support and alimony ($4700 per month). So my salary was in reality much lower. I was living a pretty meager life and still my monthly bills exceeded my monthly (post cs/alimony) income. I knew I could not afford to pay anything into a Chapter 13 plan. So I avoided the issue hoping things would get better on their own.
They didn't...
2010: Things quickly got worse. The second lien holder for my house (the foreclosure still was not completed) realized there was no money to be had in the foreclosure and sued me instead of going through the foreclosure. In addition, four credit cards were suing me. I had defaulted on two (Amex and HSBC) and two others were in court just waiting for the court to sign their summary judgment orders (I had answered, but there was obviously no defense to the debt). Every day, I was getting calls from creditors on my home phone, my cell phone and my office line. The calls to my office would sometimes get routed through the operator and then back to my secretary. Embarrassing.
Then one day my debit card was rejected at the supermarket. I called and my balance was negative. I should have had about $3,000 in there. I later learned that the second lien holder on my house was able to unilaterally withdraw the delinquent payments from my checking account. [The second mortgage was with Commerce and that's where my checking account was. Apparently I signed something at closing that gave them the ability to do this.] About a week later, I received two applications for wage garnishments in the mail. I quickly realized that the garnishment would be based on my pre-cs/alimony income since I paid my ex-wife directly (if you pay through an agency, like the Probation Department, your support obligations are then considered court ordered and in essence become the first wage garnishment on your pay; a creditor will not be able to get much on a second garnishment). So I was behind on all of my bills, my bank account had been zeroed out, and I was a few weeks away from having my wages garnished.
This is what happens when you ignore the problem. Your creditors won't go away. Your situation won't get better on its own.
October 2010: I filed in October. I had to borrow $3,500 from a friend to pay my bankruptcy lawyer. My Chapter 13 plan proposed a monthly payment of $75. There was no push back on this initially. I went to the creditors meeting; no one showed up and the trustee asked very few questions. In December, there was a bump. The trustee realized that my alimony gets reduced in two years. That's about $1,500 a month more I will have in years 3, 4 and 5 of the repayment plan. Guess what her proposal was? Okay, so I know I have been irresponsible and that I am trying to get out of legitimate debts. But I was looking forward to the time when I could start to save again and not live paycheck to paycheck. I balked and instructed my attorney to reject the proposal.
The next day my attorney called me and said the most beautiful word, "conversion." She had spoken with the Trustee about my situation and they both agreed that this was a good case to convert to a Chapter 7 case. It made no sense to me. But the case was converted. I showed up a month later at a new creditors meeting. Again no one showed up. I was nervous because by that point (1) my firm had given me a $7500 salary increase for 2011 and a $10,000 bonus; and (2) I had finally filed my 2009 income tax returns and was expecting about $9,000 back. My case was assigned to the worst possible Trustee. My attorney had told me I might need to disclose the salary increase, bonus and refunds and to hope I didn't get this guy. Luck was on my side though. The other Chapter 7 Trustee was ahead on his docket and the guy I had been assigned to was behind. The nice guy came in, saw my attorney and pulled us into his room. My case was finished in 2 minutes.
So here I am, about 6 months later, staring at my Chapter 7 discharge. I am debt free. I have about $15,000 in the bank. And I have gotten so used to living frugally that I am saving about $1,000 a month. I know that most people repeat their mistakes and end up needing to file again in the future. I have vowed that that is not going to be me (but I suspect everyone feels that way in the beginning).
Thanks for reading. I know it was long. I hope someone will gleam something useful from my story. The bottom line is, DON'T WAIT.
Dying to know who your tt was originally....
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