Who wants to tell their story about how they came to file BK?

[disgusted1]

I thought it'd be a good idea to get some of the reasons why we went bankrupt.

I'll start.

Hi, I'm Disgusted1, and I'm bankrupt.

Filed in 2006 after struggling so bad I had no other options. Self-employed, no income because of equipment breakdowns, no cash reserves. Bad credit because of slow pays, even though my best desires were to be able to pay all my bills on time, every time.
I'm 47, had better credit when I was 18. Made hundreds of thousands, lost just as many. Thought of suicide several times, but didn't have enough money on hand any of the times for bullets, rope, duct tape, etc., so I kept plugging.
Wife and kids were the only reason I didn't put the vacuum hose from the tailpipe of my idling pickup into the vent window (now you see where the duct tape comes in,) and sat and read a book till I tipped over. Plus, I always knew I had more potential deep down inside me, and that finding the way out of this and conquering the beast would be much more gratifying in the end than giving up like a loser would.
Went to Gulfport, Ms. during Hurricane Katrina to make my fortune in 2005, but got lied to from the beginning, it was like the Twilight Zone on Steroids. Came back after 2 months down there, (supposed to have a contract for 6 months, but Bubba lied,) with my tail between my legs, broken, battered, hopeless, mad at the world and my fellow man.
Filed chapter 13 to get creditors off my arse, and since then, it's been a breath of fresh air. Found I didn't need a single dime to wake up in the morning, and as long as you have the love of a family for support, things ain't never going to get that bad. I'm living proof of that...as you can see, I didn't use the vacuum hose OR the duct tape.
Finding out that you don't need all the STUFF that you thought you did will change the scenario in a hurry too. Without 2 car payments (we have NONE now,) no extra spending and a low mortgage payment, things are coming together finally.
Last Sunday my wife and daughter and I went to the lake with a package of hot dogs, mustard, buns, charcoal and fluid and had a nice little lunch. As I sat on the picnic table hallucinating out at the lake, it suddenly hit me that THIS WAS WHERE IT WAS AT! The simple little things we take for granted because we're too busy, too stressed, too full of ourselves to take a moment and smell the roses.
I like to make a lot of money and have stuff as much as anybody, but without the forementioned love, support and understanding that comes from giving AND taking...the money means squat. NEVER seen a hearst pulling a U-Haul...
Hope these few words of wisdumb helped one person, if nothing at all.

[bk4sky]

sure ill share

basically i had a real good job, making a decent amount of money to live comfortably and do some nice traveling, i had excellent credit, had some credit cards wich had crazy limits on them. I look back and even tho i was working a good job i think i started to fall into a habit of charging and just looking at the minimum payments instead of how much i actually owed. It was ok tho cause everything was under control.

Well i lost that job, i left it cause i couldnt handle the stress. i was in a very depressed mental state and for the next 6 months i basically used my cards to keep me afloat, still able to make my payments. Finally i started looking for work and found a job right away, only problem it was about 1/2 the income i was used to. When the CC companies started to see my debt to ratio income was getting bad they started cutting off credit and increasing the min payments and interest like crazy. So i was just able to pay my payments on my credit cards with my paychecks, and then charge gas and groceries to stay afloat.

Then i got good news, i was promoted to supervisor with a nice increase in income wich left me with enough money to pay on my credit cards, plus have enough money left over so i didnt have to charge anymore. all was good for about 6 months until they announced that company was closing.

I immediately got right into another job but i was back down to making peanuts, with this job, i only had enough to pay for all my necessities and nothing left to pay on the CC's. I knew i was def in over my head and refused to charge anymore, so i immediately seen a lawyer and retained him and started the BK process, i just wanted to do everything the right way. I kinda knew i was in too deep for a while but once i got that SUP job i was really hoping to keep paying them down the best i could, and once i lost that job it was the last straw.

Im still in that crappy position and i just filed today, im so glad its almost over. ive had a great job and excellent credit since i was 18, i was always great with my bills but the whole job situation totally changed things and i learned alot thru it all.

[fireworks]

Why not.

I opened an online business out of my home in 2003 while I was still in college, using student loans and credit cards as working capital. The business grew every year, expanding to a small storefront in spring of 2006 and a bigger storefront in summer of 2007. All along the way I was financing my inventory and other purchases on various Visa cards. Some months when business was slow I didn't get a paycheck and so was living on other Visa cards.

2007 was a good year, early in 2008 we decided that my wife would quit her job and come work at the store instead heading up a new program. That new program flopped, we no longer had her income to rely on, the credit card charges sped up. By the end of 2008 we saw our accounts receivable skyrocket as people quit paying their bills. Since the items we sold were not essentials, when people started cutting back we were one of the first to be dropped.

By January of 2009 I could no longer ignore the writing on the wall. I didn't have enough credit left to pay my quarterly taxes and barely paid the rent on the store. Saw two different BK lawyers, took their advice to quit paying my non-secured debts, started planning for store closing and possible bankruptcy. We announced the closing in early February and had a "going out of business" sale, liquidated all of our inventory and a lot of the furniture and whatnot from the store.

Since we still have some long-term contracts out, I'm still somewhat in the business. My living room furniture is in a storage unit, I have a workbench where the couch was and a computer desk in place of the TV. We're trying to find someone who can buy those contracts out but so far no luck.

As of January we had about $130K in CC debt. Doubtless that's jumped up a lot from late fees, interest and other penalties since we haven't paid on any of them in well over 90 days - I haven't added things up since then. Student loans are all on deferment, total about $25K. We're keeping the house with its $70K mortgage, my wife's car with about $4K left to pay and my paid-for car. I just started a new job which will pay well eventually, but is very commission-based so pays only a small salary until I build up some business. I'm very ready for a fresh start - we'll pay off the student loans and the car ASAP, then start putting some money into savings. We're hoping to move into a bigger house in 2-3 years if we can get a loan (I understand VA loans are very forgiving about bankruptcy after a few years). I will definitely be much more careful with debt in the future - cash basis as much as possible from here out.

[SCorpPain]

After being layed off, for the first time in my life, in 2002, I could not find a job. I had been mulling over an idea for a business, but did not have the time or funds to launch it. When I could not find another job I decided to take the plunge, take a withdrawal from my 401K, get a loan against the equity of my townhouse and start the business.

From June 2003 until April 2008 we were in growth mode. By 4/08 I had 2 full time and two part time employees at the office/warehouse and another part time person doing customer service from her home.

In April 2008 the bottom fell out of the world! Sales fell off by as much as 50% some months. In an effort to save the business and keep my people off unemployment I went after every LOC and CC I had available. Being retail we had to hold on until Christmas. I was able to hold on and managed to get caught up on all payables at Christmas. However, it was a very weak Christmas, so I was not able to reduce any long term debt or pay off any credit cards, which I normally did in Dec.

So, I went into 2009 with very little in savings -- I put aside enough to help with payroll for a few months -- and zero open credit. My hope was that things would at least hold at the pre-4/2008 level and that I could work with the creditors so I could make it to Christmas again.

Nope! It did not happen. Jan, Feb, Mar and April were down by about 30% and I started falling behind on minimum payments.

I cannot see any other way out of this. The the biggest creditor is Wells Fargo and they have refused to work with me. I have talked to at least a dozen people there and met the same brick wall with each of them.

The attorney said I should liquidate the business then file personal bk. The company is an S-Corp. To me the debt is staggering... counting leases it's almost $500,000.

This one is tied directly to the recession. The stress has been really bothering me, though having a clear direction is helping.

I'm glad I found this forum. It has been very helpful and the price is right.

[jennordhavn]

My story

I got my first credit card when I was 16 years old, a student Mervyn's account. Then I got an Emporium Capwell's card and when I started college I got a ton of major credit cards. I also ended up with a bunch of other store cards like JCPenney, Avenue, Macy's, etc. I've always worked since I was 13 so lack of income was never my problem. I managed ok into my 20s but I did buy a lot of stuff I didn't need and spent money on stupid stuff (like my then BF). When I was 26 and in law school I got pregnant and the father of the baby ended up moving out of state. I knew I wouldn't get any child support and that I needed to start paying for child care and other expenses when the baby was born, so I stopped paying all my unsecured bills. I filed BK 2 years later.

I was able to reestablish credit pretty quickly. I got a new car a couple months after my discharge and got new credit cards (Cap 1, First Premier, etc.) and a computer loan (Dell). I always had to pay for daycare and preschool and then I put my DD in private school since we didn't live in a good school district. I started getting child support when my DD was about 4 or 5 and I managed ok for awhile. But I overextended myself again.

I met my DH a couple years later and combining incomes helped ease my load tremendously. We got pregnant and things were going well. But then we found out our apartments were being converted to condos and we had to move. We decided to move out of the area to a better school district. It cost us a lot to move and my bills started getting behind again. I took a paycut at my new job and DH was commuting 2 hours each way when gas was high. I started taking over more and more of the household bills since his money was being eaten up in gas (and he made a lot less than I did anyways) and with one in full time daycare and one in before/after school care the bills just starting getting more and more behind. DH finally quit his job and found a part time job which allowed him to stay home with our baby and started going to school. I also lost my child support for about 8 months during this time, which pushed us further behind.

We decided to move back to the area we had moved from so I could make more money and get better benefits and he could continue going to school and watch our baby. We had to let one car get repoed because we couldn't afford 2 car payments anymore (we had three cars, two with payments). Moving and letting the car go has helped tremendously and I am able to support the family on my income, but all of the old bills had already been sent to collections and there was no "extra" money to pay them. And I had the deficiency balance on my repoed car that I was unable to pay. I also lost my child support again (haven't received anything since Oct 08). That was the final straw so I decided to file BK again. Now we are able to manage and I save a little bit and all of the old debt is wiped out. DH is looking for a job that pays enough to pay for child care and his bills. He is almost done with school. We plan to move in a year to a better area so that I can take my DD out of private school (she will be starting junior high). Plus our little one will be starting school in 2 years. We are going to try to get an FHA loan in 2 1/2 - 3 years and buy a house.

[BkinTX]

We got our first credit card, a Capital One with a $500 limit, about 9 or 10 years ago. We were very low-income but took care of our finances and did not have debt (not even an auto loan) or any government assistance.

If we had continued on that path, we'd have so much money now, LOL.

Trouble started when I got roped into selling Mary Kay. The "director" -- a friend of mine convinced me I needed to purchase inventory to the tune of 4k.

I asked for a business loan with BoA. Instead they gave me a credit card.

We always paid on time and so we kept being given more credit cards and higher limits. We paid most of our debt off with our ITR every year, but every year we wracked up more debt. Some for "emergencies", some buying things we wanted that we couldn't afford otherwise.

Never anything extravagant, so I guess that's how we justified it.

When my DH returned from Afghanistan a few years ago, we used our ITR plus his enlistment bonus to pay off all but $1k in credit card debt.

To celebrate, we promptly went out and bought a couch on credit.

Our concept of money is so skewed it's not wonder we're in the position we're in now. We have NEVER saved. We have always spent every penny that has come our way and then some. Never planning ahead.

A year after returning from Afghanistan, DH was deployed to Iraq. We were also pregnant with our third child. Even with the increased income, I spent and spent and spent. I had a maternity wardrobe worth at least a grand, purchased one "bargain" at a time.

The new baby was a girl -- after two sons. We spent and spent and spent. Nothing top of the line. Just lots and lots of "bargains".

And I shopped to soothe my loneliness and stress. Raising three children alone allowed me to justify ordering out or buying gifts or clothes for the kids on credit. We made a trip to the mainland (we lived in Hawaii) when I found out my DH would be extended. Family paid for the plane tickets, but I took the opportunity to show off how well we were doing. I spent and spent and paid for everyone's meals and tickets to museums and attractions as if I had endless money. I also sent him the BEST care packages -- a $70 DVD box set was nothing to me.

DH had earned an extra $5k+ during the deployment and all we had to show for it was a a little over $1k in the bank and soul-crushing debt.

I really screwed us over. BIG TIME.

I got a balance transfer at 0% for a portion of the debt. Of course it was no interest and no payments so did I pay on it? Of course not!

The Army relocated us and not only did we lose a ton of income (we were receiving a very generous cost of living allowance in Hawaii), but we ended up with lots of expenses.

We rented a car for several days. We planned to rent a house but couldn't find anything so we decided to buy. We ended up living in a hotel -- and not a cheap one -- $80/night for over a month. And did we make sandwiches for all our meals?

Of course not!

We ate out. We had fast food. We had steak dinners. We had pizza.

The boys needed school uniforms. We were bored in the hotel so we went shopping. We were just digging ourselves a deeper and deeper hole.

When we finally did get into our house we bought appliances since the house didn't come with any. Did we pay for those with savings? Of course not!

Oh, we got inexpensive appliances. Because of course, we only buy "bargains" (at double digit interest, HA!).

Huge unexpected electricity bills, and ungodly electricity bill, a pregnancy, and soon we were just not making it.

I called BoA, who held our biggest debt, and asked for a lower interest rate. They said they couldn't do that but they could give us a cash advance from our MBNA card that they had bought out. $9k right in our bank account. Zero percent interest for a year.

Did I use it to pay down the BoA card?

Of course not! Slowly but surely we spent it. Spent it all. Little purchase, little "bargain", little "need" at a time.

Once that was gone, the BoA card started rising again. It was tied to our checking account as overdraft protection. This is one of the worst possible choices for overdraft. Each month, more in the red, but never feeling worried because we wouldn't overdraft. And we managed to pay our bills. We weren't deadbeats. We were responsible people!

HAHAHAHAHA!

Delusional.

I always had a plan for how we would get out of debt but I never stopped spending or put my plan into action. I read Dave Ramsey and we controlled our spending some. Sometimes.

When we got our ITR this year I knew we would apply it to our debt like every year. Then I thought we could snowball our debt. Get some momentum going.

When the money was actually in our account and I crunched the numbers and looked at what we actually owed, there was no way a measly 8k was going to do a thing for us. It would free up about $70/month to snowball.

But we still wouldn't have been able to afford life expenses with our crushing credit card debt and the $500 a month auto loan (we traded in and traded in until we had tremendous negative equity -- but I felt good -- I got us a good deal and a good rate -- what an idiot I am!). Our mortgage escrow was about to go up. We were still current on everything but we were not going to be able to continue to stay current. Our debt payments were so high that we couldn't afford living expenses -- even the most meager ones -- without using credit cards.

I would wake up in the middle of the night with a sense of dread and feeling like I had been punched in the stomach. Cold fear over our finances followed me around every waking moment. I didn't know how to stop myself or make things better. I was sick and terrified.

The decision to file for bk gave me so much peace.

The chance to start over and do things right means so much to me. Since we stopped using/paying the cards our finances have done a complete 180. We have goals. We have plans. We are able to use restraint and discipline. We plan ahead.

The peace is phenomenal.

I want to learn everything I can about being successful with our money and I vow to teach my children good money skills. I never want them to make the mistakes I have made.

I hate that I wasted so many years and so, so, so much money being a screw up.

[JRScott]

Well my story is short and sweet.

I lived for 30 years with no debt.

I got a credit card to assist in moving back east. I then ended up with more cards as time went on. I used the cards to support a lifestyle I couldn't afford really. Things went okay until I injured my back in 2001 and 2002. After that I had trouble at work. I hurt my back again in 2004. After that I had to leave my good paying job in early 2005. I was unemployed for a few months. Got a part time job. Worked part time for several months towards the end of 2005 finally got full time employment but pay was low. Could not really maintain payments. Started paying the basics and basically ignored the credit cards.

Due to the back problems I have trouble working any job that requires long periods of standing. Also I do not have a college degree so that limits job opportunities as well though I am planning to start classes in the fall to see if I might can get one.

As such after struggling from 2005 til 2007 I finally was served with papers. I then decided that the only real solution for my problems was bankruptcy. I spent a lot of time praying about it. Once I'd made the decision I felt a lot of peace. Ideally someday it would be nice to pay back the debts I bankrupted on, I do hope I have the opportunity but cannot be certain it will arise.

Since the BK I have operated on a cash and carry basis. I have no credit cards, no debt.

[woeisme]

My debt began when I was in graduate school. In addition to student loans, I used credit cards to pay the bills, always thinking "when I get my PhD, I'll have enough income to pay these all off". Well, after living on a shoestring for 5 years of graduate school, when I got my 1st job, not making great $, but making enough $ (50K in 1997) I didn't use it to pay off my spiraling credit cards, instead I took the attitude "I scrimped for so long, I deserve to treat myself now" and used my new salary for things like a new truck, a new computer, and trips, trips, trips! I had plenty of vacation time, and traveled a lot.

I only had that job for 2.5 years, then decided to go into teaching. Pay dropped by 10K, and I finally woke up a little bit that my student loans (50K!) and credit card debt (35K) weren't going to go away on their own, so I did the credit counseling thing. Really wished I had filed CH 7 back then instead... but tried really hard to make the CCCS thing work, but they took so much of my income to pay off the credit cards and my student loan payments were so high that I ended up getting new credit cards and using them to pay the bills.... so was stupidly running up credit card debt on high interest cards to pay my old credit cards, why did I not see this as a losing proposition? Did this for about 3 years before I gave up and went back to juggling everything myself instead of using CCCS anymore, so never completed the debt counseling plan. Had the debt down to about 20K at this point though.

Moved, got a different, slightly higher paying job, but had higher bills, then got married to a man who had much more debt than I did (~30K). He was raising a son as a single dad (son's Mom died) and I spent much of my $ trying to give them everything they'd never had, probably increased our total debt to ~65K, then had several medical issues between myself and my hubby, and despite insurance, the deductibles and then the 20% they wouldn't cover had our debt spiraling even further up from medical bills to about 100K, not including the student loans. Well, I now make 60K a year, hubby made 35K a year (recently went on total disability so only brings in half that now) so no way can we pay much beyond the minimum payments, and then the credit card companies kept raising the rates higher and higher, over 30%, until we couldn't even make the minimums anymore. And that is when I broke down and filed for CH 13.

We're paying back 75% of the unsecured debt, and I know from the years of interest accumulating that our creditors are actually getting back way more than we ever spent so I don't feel guilty about it anymore. (well, a little guilt about the medical debt only getting paid back 75% since they didn't charge interest so they really are taking a 25% hit.) I'm getting close to being 2 years into the CH 13, and while things aren't all smooth sailing, it sure beats the road we were on before. We actually live below our means, imagine that! I've got about 3K socked away for emergencies (and 4k a year in my medical savings account for the on-going medical issues). 14% of my pay goes into my 403b account so I have something to retire on. I have life insurance so my husband and step-son are protected if something happens to me. I know the difference between necessity and luxury now, and have a budget to cover all the necessities, and even a little for the occasional luxury. I've stopped equating love with how much stuff you can give someone. These are all things I couldn't say just 2 years ago.

So that's my story. I'd say it's about 90% my fault and maybe 5% bad luck (medical stuff), and 5% bad action by my creditors (I'd have kept struggling along paying them every month if they hadn't rate-jacked me).

[BkinTX]

That's a very interesting and honest history you've shared, woeisme.

I don't think you should feel bad about the medical expenses. They usually offer a substantial discount for paying in cash, so I don't think they are losing money on you.