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[dantehemi]

Everyone makes mistakes in life. I have made my fair share, but in a short time I will be officially bankrupt. My accountant is in the process of doing whatever it is an accountant does.

I have a good job that pays well, and no real expenses that weighed me down (mortgage, car payment, wife or children)

I did however make every bad financial decision I could have made (always buying things I want, living above my means, and accumulating upwards of 20k in credit card debt)

I also had my name attached to a construction company that my father and I tried to run (this is what is caused most of my financial distress, as the company is now over 100k in debt)

In the next month or so I will be bankrupt, and as far as I understand will be 100% debt free. I have spoke to the accountant and I am aware that there is a time period that I will be in a "grey" area when it comes to finances (no credit cards, car lease etc..) but after some time I will be able to rebuild my credit and start over.

Has anyone been through what I have just explained? Has anyone here suffered from the humiliation of bankruptcy? What did you do to make it through? Is there a light at the end of the tunnel? How does one go about rebuilding there credit? How long did it take you to get back to a normal financial life? Did it altar the way you treated your money afterwards, did you change for the better?

I am fully aware of how reckless I was with my spending and money management, and I have seeked help from several family members on how to properly manage my money. So please don't judge me on my past mistakes but instead can you post advice for the future and helpful tips that I can use to better my chances of success when I'm clear of the past.

And also I would love to hear the stories of anyone who has went through this also, and how they went about it and if they made it through and now are financially responsible and doing fine.

 

[mysticwhip]

Wow that sucks. On the upside, you have a roof over your head and are living in a first world country. live life and shit but don't be stupid.

 

[JGS]

Haven't suffered through it but experience it everyday. Definitely a light at the end of the tunnel and sooner than you think. At the bankruptcy discharging, you will be able to apply for credit cards again.

All loans will have sucky rates, but usually after 7 years or so, your credit will be good enough to get what you want again (If you ever go back to that lifestyle, hopefully it will be more responsibly).

As I said, I've helped more than a few people clean of their credit and now are doing fine.

 

[SolKane]

I forgive you.

 

[ReBurn]

I went through bankruptcy 15 years ago. I learned to pay cash and live within my means.

When I got back on my feet I went back and paid off all of the companies that my bankruptcy impacted. It was the right thing to do.

 

[Speedymanic]

So what happens when you claim bankruptcy?

Do they (the companies, banks, etc you owe) force to sell your belongings, car, home, etc or are you simply not required to pay the money back?

What are the negatives when you claim bankruptcy? I know one is a destroyed credit rating and another is you can no longer open a bank account, is that it?

 

[dantehemi]

I have no assets so I wouldn't know about the bank taking your shit away, but maybe? I think you would lose your house in the process.

And I believe I read somewhere that it's against the law for anyone to deny you a bank account regardless if your bankrupt or not. (but I'm in Canada so maybe the rules are different?)

More or less I'm looking at shity credit for a period of time and then I'm pretty much off the hook for everything.

I like the idea of paying back some of the money when your back on your feet idea, it is the right thing to do!

 

[JGS]

So what happens when you claim bankruptcy?

Do they (the companies, banks, etc you owe) force to sell your belongings, car, home, etc or are you simply not required to pay the money back?

What are the negatives when you claim bankruptcy? I know one is a destroyed credit rating and another is you can no longer open a bank account, is that it?

Technically they can request the collateral for paymnent but it rarely happens unless you're rich and they liquidate.

As long as re-affirm some debts (Like a house or car), you can keep those and keep making payments often at lower amounts.

Your bank account shouldn't be affected unless it's attached to the loans some kind of way. A bank can drain your account to pay debts until the bankruptcy is filed. Otherwise, unless the account is charged off, you should be able to open an account anywhere.

 

[mysterj]

They can't take your saving or assets away unless you used them as collatorals when you borrowed the money.

 

[JLateralus]

I filed bankruptcy near the end of last year mainly due to some poor financial decisions compounded with illness in my family. We were able to keep both of our cars (one of which was about 10 years old at the time and worth very little, the other we still had a loan out on) but chose to give up our house.

In July our older car crapped out and I was able to get a decent loan from a major local area dealership that specializes in second chance type scenarios.

So, while you may end up paying more in interest, it's not impossible to get (secured) credit after a bankruptcy.

On a side note, we stopped paying on our house in October (at advisement of our attorney) my bankruptcy was discharged in December of last year. The bank still has not foreclosed on our home. Our attorney advised us that we could stay in the house for a year or more after stopping payment on it. We chose to move out as soon as we could after the Winter, but the house still has not been foreclosed on. It's just sitting there - empty. I even paid some guys to come mow the lawn during the summer so I didn't get ticketed. How the hell can you not pay on a home for over a year and it's still in limbo?

 

[Anno]

They can't take your saving or assets away unless you used them as collatorals when you borrowed the money.

If you try to file with a substantial amount of cash or investments the trustee can force you to use those to pay down some of the debt. Depending on whether it's a CH13 or 7 there are very different implications for what happens to both secured and unsecured debt. But no, they won't come take your furniture, auction it and put the proceeds towards your car loan or anything.

I've never had to go through it myself but I work with people almost every day that have or are currently in the process. It's humbling, to say the least. The majority didn't deserve it so much as they just had a good run of bad luck. That said, I think the stigma attached to it is way too pervasive. Failing, getting back up and trying again is supposedly an integral part of capitalism.

 

[JLateralus]

I've never had to go through it myself but I work with people almost every day that have or are currently in the process. It's humbling, to say the least. The majority didn't deserve it so much as they just had a good run of bad luck. That said, I think the stigma attached to it is way too pervasive. Failing, getting back up and trying again is supposedly an integral part of capitalism.

This. While some people obviously abuse the system, it's there to help people that need help. My father in law has basically disowned us because of it.

 

[Anno]

On a side note, we stopped paying on our house in October (at advisement of our attorney) my bankruptcy was discharged in December of last year. The bank still has not foreclosed on our home. Our attorney advised us that we could stay in the house for a year or more after stopping payment on it. We chose to move out as soon as we could after the Winter, but the house still has not been foreclosed on. It's just sitting there - empty. I even paid some guys to come mow the lawn during the summer so I didn't get ticketed. How the hell can you not pay on a home for over a year and it's still in limbo?

Any idea of the current value of the house? Depending on what state you live in, foreclosure can be a very expensive process, not to mention the risk that comes with owning the house in REO until it's sold. If the house simply isn't worth the bank's time or money you could theoretically live there for a very long time so long as you keep up with taxes. Check your bankruptcy docket to see if the bank even filed for relief to foreclose the property. It might be they just didn't even bother.

 

[dantehemi]

This. While some people obviously abuse the system, it's there to help people that need help. My father in law has basically disowned us because of it.

That sucks, I'm actually embarrassed to tell my friends or other people in my family.

 

[siddx]

Several years ago I was about 6K in debt and would likely have spiraled out of control and been in your shoes had I not been rescued by family. So no judgement here. I've always just been bad with my money. I never bought ridiculous items or spent recklessly, it was more that I just never kept good track of my expenses and had a bad habit of being too generous with others to the point that half my monthly income went to friends, girlfriends, and even people I barely knew. I'm glad you are, as you say, seeing the light at the end of the tunnel. Good luck!

 

[dave is ok]

In the U.S. it's officially off of your record in seven years, but I've heard of people getting credit card offers again after four or five.

Filing bankruptcy is a life saver and more people should do it, why struggle through life paying interest on loans you may never be able to afford to fully repay when you could save your money and put it towards your retirement and children instead?

 

[Flying Toaster]

That sucks, I'm actually embarrassed to tell my friends or other people in my family.

I do not respect the process of bankruptcy unless it is the absolute last choice.

But I do respect that you understand your situation, you are looking forward to the future and that you are aware of the consequences.

If anything this is a great experience that you will gain more knowledge from than most people ever do when it comes to finances. If you can look back after everything is said and done see how you felt and the hardships you faced before, during and after the bankruptcy then you will have gained the knowledge and wisdom that will help you and your friends out through life when another crisis of this type perhaps happens again.

There are two different types of people that file for bankruptcy. Those that blame everyone and live in the past. And those that move forward see the speed bumps along the way to the decision that lead them to using bankruptcy as a solution and better themselves because of it.

No one ever has to be the first but the majority seems to be there.

Best of luck.

 

[dave is ok]

I do not respect the process of bankruptcy unless it is the absolute last choice.

But I do respect that you understand your situation, you are looking forward to the future and that you are aware of the consequences.

If anything this is a great experience that you will gain more knowledge from than most people ever do when it comes to finances. If you can look back after everything is said and done see how you felt and the hardships you faced before, during and after the bankruptcy then you will have gained the knowledge and wisdom that will help you and your friends out through life when another crisis of this type perhaps happens again.

There are two different types of people that file for bankruptcy. Those that blame everyone and live in the past. And those that move forward see the speed bumps along the way to the decision that lead them to using bankruptcy as a solution and better themselves because of it.

No one ever has to be the first but the majority seems to be there.

Best of luck.

Nice condescension there.

 

[neutralgamer02]

So, bankruptcy is basically a get out of jail free card? I mean other than the lack of credit access for 7 years there are no other consequences?

 

[dave is ok]

So, bankruptcy is basically a get out of jail free card? I mean other than the lack of credit access for 7 years there are no other consequences?

In a Chapter 7 bankruptcy where it is determined that you don't have the means to repay your creditors

In a Chapter 13 bankruptcy, you have to at least partially repay the creditors

 

[Tunavi]

I did however make every bad financial decision I could have made (always buying things I want

This is why I love who I am. I shop smart.

OP what are your biggest purchases?

 

[ZombieSupaStar]

I went through bankruptcy 15 years ago. I learned to pay cash and live within my means.

When I got back on my feet I went back and paid off all of the companies that my bankruptcy impacted. It was the right thing to do.

how did that work? did it really boost your credit again? how did they react?

 

[Flying Toaster]

Nice condescension there.

How so? A person should be obligated to the debt that they originally agreed upon and the rules in which said debt would be paid. A signature even seals the deal. Too many people these days reach for the easiest way out.

I never once said that all people that declare this option should be hung or that their credit history be ruined forever. But debt obligation seems to be more and more a thing of the past.

Situations happen I understand that, this is why bankruptcy is in place.

 

[dave is ok]

How so? A person should be obligated to the debt that they originally agreed upon and the rules in which said debt would be paid. A signature even seals the deal. Too many people these days reach for the easiest way out.

I agree with the bolded, but I've seen hundreds of people go through the bankruptcy process and none of them were just looking for an "easy way out".

When some property magnate "strategically defaults" on a billion dollar investment, it's considered a good business move - when Joe Schmo can't afford his 200k mortgage because he got laid off and has to file bankruptcy, he is forever shamed by his peers.

 

[neutralgamer02]

In a Chapter 7 bankruptcy where it is determined that you don't have the means to repay your creditors

In a Chapter 13 bankruptcy, you have to at least partially repay the creditors

Again, seems like a get out a jail free card to me. The lack of access to credit should be longer to be honest to prevent people from accumulating debt and filing for bankruptcy. Maybe 15 years.

 

[Anno]

Again, seems like a get out a jail free card to me. The lack of access to credit should be longer to be honest to prevent people from accumulating debt and filing for bankruptcy. Maybe 15 years.

Bankruptcy isn't just filling out a small form and maybe handing over the keys to your car. It's a long and sometimes expensive process that's wholly degrading to the majority of people who have to suffer through it. You immediately decrease the number of people who will likely even hire you. Besides, strategic bankruptcies are fairly well sniffed out by judges and bankruptcy trustees and your case could easily get thrown out.

Like with any program there will be a very small percentage of people who can successfully abuse the system. That doesn't mean, however, that we should restrict debt discharge and restructuring any more than we should restrict foodstamps because someone uses them to buy fried chicken.

 

[bill0527]

I filed bankruptcy in 2002. My wife and I were separated and about to get divorced when she had a single car accident in the year 2000 that fucked her up badly. She spent most of the first year laying flat on her back in different hospitals being operated on and all of the next year recovering getting back on her feet.

2 years, 17 operations and rehab before it was all said and done. Total cost spent for her recovery was 1.2 million dollars, and our health insurance capped at 1 million, leaving me responsible for around $200,000 in medical debt, plus I had about 15k in credit card debt.

It sucked because in the state we lived, a spouse is legally responsible for the other ones debts, and we were not officially divorced so I was on the hook. I got served court papers for a wage garnishment, and in my state a wage garnishment is 25% of your take home pay. To avoid that happening I filed bankruptcy on everything.

Bankruptcy laws are different now, but when I went through it in 02, you were allowed to keep your home, 1 vehicle, and a maximum of $5000 in assets. Anything over that had to be sold or auctioned and proceeds go to the court for disbursement to your creditors. You had to inventory every single item you owned, along with what you thought the value of it was, and you had to submit it to the court. And I mean everything...every fork, knife, spoon, pair of socks, and number of towels and washrags.

 

[Flying Toaster]

I agree with the bolded, but I've seen hundreds of people go through the bankruptcy process and none of them were just looking for an "easy way out".

When some property magnate "strategically defaults" on a billion dollar investment, it's considered a good business move - when Joe Schmo can't afford his 200k mortgage because he got laid off and has to file bankruptcy, he is forever shamed by his peers.

I agree with you here. Some of the loopholes for every law out there always side with those that can afford to screw up.

Bankruptcy is usually influenced by people living outside of their means.

Or as the poster above me said, unusual circumstances that were out of the persons control.

 

[dantehemi]

This is why I love who I am. I shop smart.

OP what are your biggest purchases?

Well, I really didn't make any huge purchases.
Looking back and trying to figure out where all the money went, it becomes obvious that I just blew my money on complete crap! Buying video games, shoes, clothes, going out to clubs and buying bottles living like a baller, but in retrospect I was living like a idiot cause now I'm just a mess. It's depressing I'm 30 years old and have nothing.

 

[neutralgamer02]

Bankruptcy isn't just filling out a small form and maybe handing over the keys to your car. It's a long and sometimes expensive process that's wholly degrading to the majority of people who have to suffer through it. You immediately decrease the number of people who will likely even hire you. Besides, strategic bankruptcies are fairly well sniffed out by judges and bankruptcy trustees and your case could easily get thrown out.

Like with any program there will be a very small percentage of people who can successfully abuse the system. That doesn't mean, however, that we should restrict debt discharge and restructuring any more than we should restrict foodstamps because someone uses them to buy fried chicken.

I still think the lack of credit access should be longer.

 

[timetokill]

If I could discharge my private student loans through it, I'd be right there in bankruptcy city with ya OP. Stay strong.

 

[ReBurn]

how did that work? did it really boost your credit again? how did they react?

It actually hurt my credit to do this. It dragged the bad stuff back onto the surface. From that perspective it would have been better to just forget it.

But Discover didn't make me go buy thousands of dollars worth of crap I didn't need with money I didn't have. That was my own foolishness. Much of what people borrow money to buy is not necessary. Instead of buying a new TV on credit I can save for a few months and buy one with cash. That's the real lesson I learned.

 

[LuCkymoON]

Bankruptcy isn't just filling out a small form and maybe handing over the keys to your car. It's a long and sometimes expensive process that's wholly degrading to the majority of people who have to suffer through it. You immediately decrease the number of people who will likely even hire you. Besides, strategic bankruptcies are fairly well sniffed out by judges and bankruptcy trustees and your case could easily get thrown out.

Like with any program there will be a very small percentage of people who can successfully abuse the system. That doesn't mean, however, that we should restrict debt discharge and restructuring any more than we should restrict foodstamps because someone uses them to buy fried chicken.

Yep, I had a friend who had his case thrown out. The judge looked at his debt and how much he made and that was that.

 

[JLateralus]

Any idea of the current value of the house? Depending on what state you live in, foreclosure can be a very expensive process, not to mention the risk that comes with owning the house in REO until it's sold. If the house simply isn't worth the bank's time or money you could theoretically live there for a very long time so long as you keep up with taxes. Check your bankruptcy docket to see if the bank even filed for relief to foreclose the property. It might be they just didn't even bother.

The bank did file for the relief - I was served the paperwork. I purchased the home 6 years ago for $135k or so. Due to the housing market crash and based upon other home sales in the area I think it's worth about $120-125k.

Before my wife got pregnant and then sick afterwards, we tried unsuccessfully to sell the house for a year. We priced at a point where we wouldn't make a profit but just enough to pay off the bank. That's a whole other topic though.

Again, seems like a get out a jail free card to me. The lack of access to credit should be longer to be honest to prevent people from accumulating debt and filing for bankruptcy. Maybe 15 years.

Like I said, I was able to get a car after about 6-7 months at higher than average interest rates. Just because you can get credit soon after doesn't mean it's an inexpensive way to do it. There are still penalties.

 

[Atrus]

I only dislike bankruptcies because many people who game the system (in terms of fraud, tax evasion or avoidance, and schemes that screw a great many people) use it as a method of getting ahead in life.

Basically, screw everyone to the hilt and hope you don't get caught. If you succeed, you're ahead in life. If you fail, claim bankruptcy and after a bit start over and screw people again and hope you're odds are better the second or third time around.

People like this guy are quite prevalent: http://www.cbc.ca/news/canada/calgary/story/2011/06/23/calgary-maghera-fraud-new.html

But they usually go under the radar because these are white collar crimes and somehow less heinous, even though they're literally ruining lives.

The flip side is that the people being victimized at least have an avenue that saves them from shoving a gun in their mouths and pulling the trigger after some idiot screws them over.