Regrets?

[Dancer]

Hi everyone, my husband will be filing for Chapter 7 in about a month. He has a home that is underwater. We tried to do a short sale but the bank wants him to sign a large promissory note. We stopped paying the mortgage about 6 months ago and they have begun the foreclosure process although they stopped it when the short sale was pending. He also has some small credit credit card debt ($16K) and and a second mortgage on a home that he owns with his ex-wife. Chapter 7 seems ideal for him. We don't want the house as we live in my house. It solves the issues with the house, second mortgage and credit cards. He has no assets he needs to protect. We live in my house.

We've told my parents of our plan and my mother is now offering to help out. I think it's a really bad idea for them to use their money to help pay off a worthless mortgage. I told her that if they want to help us they can help with a downpayment in a few years when DH can qualify for another mortgage. Plus the second mortgage and the minimum payments on the credit cards is about $700 per month which makes our monthly budget go from doable to really tight.

My parents are acting on the assumption that declaring bankruptcy is the worst.thing.ever, KWIM? That it will ruin his life and make it hard for him to get a new job and all of that. My DH is a tax accountant. I'd say his job is secure but in this economy no one's job is really secure.

Bankruptcy is painful but I don't think it is bad enough to be worth taking money out of my retired parent's savings to prevent it.

What do you guys think? Am I naive? Is it worth pulling from savings that won't be replenished to avoid bankruptcy?

[AngelinaCat]

Your parents need to keep their money. It is wonderful that they want to help out, but at this point it would be the same as them taking their perfectly good dollars that they will need to live on down the road, and setting it on fire.

Bankruptcy can be painful, but it is a sound business plan for your DH to get a truly fresh start in life.

Good wishes to you!

[PANSYFACE]

Bankruptcy was the best thing that ever happened to me!! I wish I had done it sooner. I was a CPA - S--t happens and things will go on.

Your parents should keep their money - no point in trying to save a dead horse - Tell them not to worry!!!

[LadyInTheRed]

My parents are acting on the assumption that declaring bankruptcy is the worst.thing.ever, KWIM? That it will ruin his life and make it hard for him to get a new job and all of that. My DH is a tax accountant. I'd say his job is secure but in this economy no one's job is really secure.

Bankruptcy is painful but I don't think it is bad enough to be worth taking money out of my retired parent's savings to prevent it.

What do you guys think? Am I naive? Is it worth pulling from savings that won't be replenished to avoid bankruptcy?

You are not at all naive. Your parents are sweet for wanting to help, but their perception of how terrible BK is is exactly what the credit industry wants everybody to think. Sure, there are some lenders that will never lend to you again. But there are plenty of others who will. Your suggestion that they use the money to help with a down payment in a few years is a good one.

We see bkforum members come back a year or more after their discharge to tell stories of how well they are doing. Their stories include new jobs, new cars and new mortgages. I don't remember ever seeing anybody come back after discharge and say they regret filing.

[Drazil65]

Your parents SHOULD NOT use their money to bail you out....your husband will file and everything will be fine. Many people feel that way about bankruptcy and as someone already posted it is encouraged to think terrible thoughts by the banking system (credit cards). The reality is that people are finally catching on to the banking rouse and do not live and die by the almighty credit score. They can't scare us any longer and they can't control us, it really sucks for them I guess. They lost a lot of power and credibility in the past few years and fell hard. I guess their worst nightmare is coming true, they are NOT too big to fail, they are just another company in the big scheme of things.

Not sure why you said anything to them in the first place but it is really no one else's business and no one will probably know unless you choose to tell them. Good Luck!

[LadyInTheRed]

Not sure why you said anything to them in the first place but it is really no one else's business and no one will probably know unless you choose to tell them.

I told lots of people about my bankruptcy when I was about to file. A friend would ask what was new and the BK was the first thing to come to mind because it was a huge event in my life. I had just learned that I could resolve my unsecured debt problem and get rid of my 2nd mortgage. It was a significant event. I wasn't ashamed and a lot of people were very interested to learn about BK and how it might help them. It was rare for somebody to say "TMI", but when they did, we moved on to another topic. As far a family is concerned, I wanted them to know about my Chap 13 so they'd know why I wouldn't be visiting is often and why my gift giving would be a bit different than in the past. Not an issue in a Chap 7, but it is still a significant event that many share with their family.

[AngelinaCat]

As far a family is concerned, I wanted them to know about my Chap 13 so they'd know why I wouldn't be visiting is often and why my gift giving would be a bit different than in the past. Not an issue in a Chap 7, but it is still a significant event that many share with their family.

Actually, this can be a large factor in CH7 filing as well. Although we had already scaled back our gifts, cards, and everything else, we were (and still are) trying to learn to live within our means. 'Hub has a paltry pension at 430 a month, SS at @ 1400, a month. I am the one still working, PT at a college. My hours have been cut for the Summer, so I am literally picking up cans off the side of the road to turn in to the scrappers for a few dollars.

Our family knows NOT to come knocking on our doors, because "there ain't no money!" They also know that there is no money for 'perks'.

[spidge]

Sometimes I feel like I am bringing the family down because they will not give gifts if we cannot. We mostly do BBQ's because of the BK13 too. I always try to thank them all and when they ask how we are doing I simply say we are focused on the finish. I must admit that we are getting tired of it, but a simple reminder from one another helps. We are working on saving our older home that was worth 1/3rd the balance, but now is almost even with the extra from the BK and a modification.

It is rough, I hate it, she hates it, the kids hate it, but we all know in the end we may just end up in stellar shape for the future.

Just keep fighting.

[TXskyblue]

BK has a stigma. My parents would be horrified to learn I filed bankruptcy. I think it's a generational thing.

Still, let others deal with their own prejudices and do what is best for you. Bankruptcy seems ideal in your husband's case.

[pamkev]

For us it was the best thing we ever done.

Your parents need to save there money. I like the idea of down the run they are willing to help with a down payment that would b e great.

[Dancer]

Thanks everyone. Here's something I do not get. I've been lurking on the Dave Ramsey forum (just lurking, I do not post there) and everyone there is adamant that filing BK is the worst thing ever and that you'll regret it. They post anecdotal things like "everyone I know who has filed, regrets it." But I read here that most do not regret it.

Generally speaking, do you think that many people really do regret filing? I just don't get why they are so vigorously against BK.

[lillymarlene]

Hi Dancer. I certainly do not regret filing, like others have said, this is one of the best things I've ever done. Chapter 13 is harsh, but it does teach you to live within your means and try to be grateful for what you have. It is so nice to have broken away from the chains of debt.

I think that banks especially like people to be afraid of bankruptcy, because that is one of their greatest methods of control.

[LadyInTheRed]

Thanks everyone. Here's something I do not get. I've been lurking on the Dave Ramsey forum (just lurking, I do not post there) and everyone there is adamant that filing BK is the worst thing ever and that you'll regret it. They post anecdotal things like "everyone I know who has filed, regrets it." But I read here that most do not regret it.

Generally speaking, do you think that many people really do regret filing? I just don't get why they are so vigorously against BK.

Based on what I see on bkforum, I don't think a lot of people regret filing. What I see most is people regretting spending all their retirement savings and liquidating all of their assets trying to avoid BK, only to have to file anyway. I think you get a more accurate picture of BK regret from this forum where people are answering from their experiences instead of from fear of what they have learned they should avoid at all costs.

If somebody says that everybody they know who filed BK regrets it, ask how many people they know who filed and why they regretted it.

Perhaps they got out of BK and immediately tried to get credit, but couldn't. Instead of focusing on budgeting so they don't need credit, they are focused on their credit score because they think they must have credit cards. Everyone should know that their BK will be on their credit report for 10 years after filing a Chap 7 and 7 years after filing a Chap 13. They should also know that some creditors who they discharge debt with will never lend to them again. If they can't accept those consequences, they shouldn't file. There is probably another smaller group of people who regret it because they really could have paid off their debt if they just tightened their belt and budgeted to live within their means. They saw BK as the easy way out and took it. I bet that is more rare after BAPCPA.

If you really need to file bk and go in knowing the consequences, there should be no reason to regret it.

Somebody not willing to accept the consequences of BK can try following Dave Ramsey's advice. But, first they should read: http://www.nerdwallet.com/blog/finan...n-dave-ramsey/ Maybe Suze Orman's advice is better: http://www.thesimpledollar.com/dave-...debts-is-best/

For either Ramsey's or Orman's plans to work, you have to have income that exceeds your expenses. They may tell you to get a 2nd and 3rd job to pay off your debt. Instead of a few months in Chap 7 or 5 years or less in Chap 13, you can work your behind off trying to pay off your debt at high interest rates for as long as it takes. So, you get up in the morning, go to work, go to work again and maybe again and go to sleep. Not much of a life. And the stress of working more than a full time job is not healthy

I'm not willing to work more than one full time job. If I had to take a second job, I would not do it well. I simply don't have that kind of energy. If I hadn't filed BK, I would be paying off debt for the rest of my life and probably would have lost my home. Instead, in another year, I will be debt free except for my mortgage. By the time I retire in about 20 years I will have my mortgage paid off and a decent 401k. Between now and then, I will be able to enjoy the fruits of my labors instead of working to pay the banks far more than I borrowed in the first place.

I think the people on the Ramsey board are so against BK because they drank the Ramsey Kool Aid. But, even Dave Ramsey admits that sometimes BK is the only option. http://www.daveramsey.com/article/th...ut-bankruptcy/

Bankruptcy is not the right solution for every debt problem, but when it is the only reasonable option, it should not be avoided out of fear.

[AngelinaCat]

I, myself would like to have a FT job. I am only 61, but at my age range, no one is hiring--even though I have experience out the wazoo. I have been passed over for at least 5 good FT jobs, where I am currently working PT! Everyone knows me there; knows my credentials and qualifications, and KNOW that I would gladly give them ten years past my supposed Retirement date, all to no avail. They must have the younger set, that works more cheaply, I guess.

Then, as I look around, and watch what the younger set is doing--I am not impressed. I find that like LITR said so eloquently, I am tired. I do NOT really want a FT job. We ('Hub and I) have a house to rebuild, and our own projects we want to work on.

I actually would like two PT jobs that would dovetail nicely, but that hasn't happened yet. I keep looking though.

I am sorry--this turned into a RANT and I didn't mean it to be; I am just frustrated.

As to Dave Ramsey--keep in mind that he HIMSELF filed Bankruptcy, and enjoyed the benefits of it. Now he is preaching against it??? I am glad when people are able to pull themselves out of their debt on their own. But too many times, there other factors involved, that one may not realize in the long run.

Okay, I'm off my soapbox....

[Drazil65]

I think the point with telling people about your bankruptcy is that everyone has a different motivation for telling. You will get opinions and many will be negative. If you tell be prepared for the negative. Also perhaps some people tell in hopes that someone will offer help? IDK, but either way be confident in your decisions BEFORE you get all the negative feedback and be prepared. For us, we are private people and not interested other people's opinions where our personal finances are concerned. Our mistakes, our problem.

I think with Dave Ramsey (who if I am not mistaken filed bankruptcy once at a very young age) the belief is that if you make the mistakes, fix them by working long and hard to pay everything off then live on cash. If it takes 2 or 3 jobs then do it, if you cannot afford to stay in the house then sell it and move into something you can afford etc. I think he is of the school of thought that if you have to work really hard to fix everything you will learn from it. Some people I guess never learn and use bankruptcy to "fix" things whenever they can but turn around and do it all over again.

I think most people learn from it, we did for sure and we do live on cash. My husbands chp 7 was largely due to being laid off and us owning 2 homes, our tenant moved out during this time ( in another state) and we could not afford to pay 2 mortgages. We had to make some difficult decisions and we made them. He filed, we sold our primary home and finally got the other house sold in foreclosure. We filed 2.5 years ago, we rent a beautiful townhome (with pool and tennis court, never had that when we owned...lol) have an emergency fund in the bank, we do not use credit cards (did not have a lot of CC debt when he filed anyway), have a vacation fund, we pay cash for cars (we keep a budget and purchase only what we can afford with cash), life is good. The quality of our life has soared through the roof, so no regrets here BUT we have learned what is important in life (homes are just buildings and cars just need to go from point A to B). If we cannot visit family as often or buy gifts as often oh well, it is what it is, we do other things for people, we both have big families so there will not be a lot of gifts. But there will be invites down to see us if they wish and good old fashion together time that way or when we do get up to see them.

Its all perspective and what is ultimately important to you, but no regrets just live and learn. Good luck!