When SHOULDN'T you file for BK?

In my personal opinion.. There are only a very few reasons to claim BK..

1. Death of the bread winner in the family.

2. Being overrun with medical bill due to illness.

3. A sickness or accident that prevents the bread winner from continueing to work.

That in my opinion is pretty much it. I know it wont be a popular opinion and I am sure I will catch hell for it..

Everything else falls under.. Bad things can happen to good people.. Loss a high paying job, that is horrible, should it negate your financial responsibility you have to your creditors.. NO.. I understand people cant go around lossing their homes.. So work two jobs to pay the mortgage let the credit cards get charged off and work on them later.. once you have have secured a better paying job.

No one told you to live beyond your means.. Why should the creditor be stuck with the bill cause you hit a patch of bad luck, or feel overwhelmed..

I just wonder if people didnt claim BK for the "bad things happen to good people" reasons.. What the interest rate would be on SubPrime Cards.. and prime cards for that matter..

Let the flaming commence..

 

I agree 100%. Unless you are dealing with a catastrophe, you should simply buckle down, stop spending money like an idiot, get on a budget, and get rid of the debt.

Keep your house current, sell your cars and get something cheap to drive, and only then focus on your unsecured debt. Cancel the cable, Christmas is a card, no vacations, no going out to eat -- leftovers are a way of life.

As Dave Ramsey would say: "rice and beans, beans and rice."

Com'mon people, this isn't rocket science!!!

--Galabar

 

These two do not represent all of us. So although they are the only to so far to speak their opinion, hold off on making any judgements just yet.

If you were to go on a shopping spree and a cash advance spree knowing that you were going to file BK later on, I think that is not only morally wrong but more than likely, fraud.

I think most people get in over their heads because of credit cards. Borrow now pay later. Borrow a little more still pay later. Before you know it, you find yourself in a very deep hole with no ladder. You didn't mean to do it. You thought you'd be able to pay off those cards. You just wanted to buy something nice since you work so hard for your money.

Probably MOST if not all people try to pay off their debt before considering filing for BK.

We filed a couple of years ago and I haven't lost a single minute of sleep knowing we filed. In fact, I've slept better. I don't feel morally bad. I'm disappointed that we weren't more smart financially during the past few years. But morally? Come on. Let he who without sin cast the first stone.

We basically used BK as a tool to help us get back on track. We paid all our bill on time but didn't have a penny left to spare. We were never late on any payment. When we went to buy a house after our son was born we discovered our debt to income ratio was out of this world.

We sat down and tried to come up with a plan to pay down our debt. It didn't take us long to realize that it would take us 20 years (?) to meet our goal. The killer was the credit cards.

If we could get rid of the cards, as we still had student loans and one car to pay for (mine was paid off), we could afford to get the house both financially and being able to get approved.

We struggled with that decision for a few weeks. We knew it would be on our reports for a long time. But if we wanted to get out of that apartment and buy a house with a yard for our son, this was the only choice. So we did it.

One year after BK we moved into our new house with a better understanding of credit. I have a Dillards, Exxon/Mobile, Orchard and Cap1 card too. The only balance I have is on the Cap1 card which I used to buy sod and rock for our home. My wife has a Cap1 card too that she just used to reserve a rental car for a trip we're taking in a couple of weeks.

We're sorry we had to file because we thought we were responsible people. I agree that the reasons listed above are probably the reason the government came up with bankruptcy many years ago but its not uncommon these days for people like us to get that helping hand to get us back on track.

If you have to go that route, don't feel bad about it or have these guys make you feel bad about it. They seem to be the high holy finance folks but they are few and far between. That's why you and I are on this board. Looking for answers and helpful advice. Not to be preached to by the Finance gods with perfect credit scores and who have never made a late payment or had to borrow a nickle. I'm sure they paid cash for their houses and cars and student loans, etc.

Good luck with whatever you decide.

 

Re: Re: When SHOULDN'T you file for

Hi,

Maybe you could give us a few more specifics about your situation, like household income and amount of debt. This thread is entitled "When SHOULDN'T you file for BK?".

I'm not going to tell you to pay things off if you are $1,000,000.00 in debt with $0 income -- we need to be realistic.

So, what was your situation?

--Galabar

 

broncsboi,

I am not trying to start a fight.. But you almost sound like your blaming the credit card companies for your irresponsible spending.

No one put a gun to your head to spend that money..

An yes, you got a helping hand through BK.. and thousands more just like you have gotten that same helping hand.. including my wife in her previous marriage..

But I cant help but take it somewhat personal.. Knowing.. Due to the sheer number of people filing BK cause they were irresponsible, has driven up rates on everything.. along with qualifing requirements..

An I am not trying to play holyer than thou... or anything.. Guess some people just were not raised to pay for what they owe.. I mean did any of these people filing BK.. give back the Tv's or vacations, or clothes... LOL.. ya right..lol

We have been raised and are raising children that think it is acceptible to file BK for being stupid when you were younger.. and thinking all those nice things credit paid for.. YOU SOME HOW DESERVED.. please.. You dont deserve it.. if you did you could have paid for it.. wether in installments or in one lump some.. We are a generation of "I deserve this" " I need this" "not my fault I was young" .. Always trying to pass the buck.. when it comes to being responsible.. I for one can NOT WAIT.. for stronger BK laws to come into being.. Perhaps only then.. the poor guy who missed a payment on his visa.. and his FICO score drops down a couple points.. Is not forced to go with Capital one.. or have their interest rates raised.. Due to the fact of so many people filing BK has raised all qualification requirements for the rest of us..who hit a bad month or two..

 

Re: Re: When SHOULDN'T you file for BK?

Ahhhh. Another Dave listener FPU was a life saver for me and my family.

 

jsummers - we're night fighting. We're having a discussion. No I'm not blaming the credit card people. We were irresponsible in our spending although it didn't catch up to us until we decided on a much larger purchase (house).

If we wanted to live out our lives in that apartment we wouldn't have filed and would have continued to pay our creditors and probably continued to spend. We would have had more money left over at the end of the month when our son left day care and the second car was paid off. We thought we had a plan and albeit we were at times living beyond our means, we figured we had it under control.

When we filed we really didn't weigh the pros and cons as we had never filed before nor knew anyone who had. We didn't sit and cry because Sears wasn't getting their $2000 that we owed them. Did we owe it? Sure did. Were we paying them, albeit minimum payments? Sure were. Ever late? Nope.

Were we ever going to get to live the american dream (owning a house) anytime in the near future? No way. We had long cut up all our cards and bought plenty of Top Raumen but the savings were minute to put towards the balances of our cards.

And you're absolutely correct in the fact that it comes down to financial education in the home. Our home didn't have much. But we hope to pass on our knowledge and experience with our children so they don't go through the same situation. We're helping my sister and her son now getting back on their feet financially.

I'm not going to debate with you two over this file or don't file and if you do file you're a piece of sh** cause you should've been more responsible now I'M picking up the tab. All I'm saying is if it isn't truly a Fraudulent move, use it as your ace in the hole but only as a last resort. Remember we tried to pay back the debt WE INCURRED but we're getting no where.

I don't sit at home at night and start fuming because I'm paying a higher insurance rate because people drive without insurance or don't insure above the minimums. I don't fume over the fact that I have to pay more for a shirt because millions of dollars are lost each year to shoplifters. Or take it personal because I have to pay more when I buy something because voters voted on using taxes to build that new stadium. Hell all of this is a part of life. If we were all perfect we'd all be naked.

I'm not going to give out my specific financials so you can use it to bash me or for futher ammunition. My whole point is as long as you're not fraudulent in filing, and you feel filing BK is your last resort, (and I don't consider counceling services as a resort) then don't feel bad about it.

We would've been happy with a Chap 13 but fortunately for us, we were given Chap 7 and we disposed of all our debt, minus the student loans. We kept the one car and continue to make payments on that.

And yes I sure as hell deserve it. I just wasn't smart on the right plan to get it.

Tougher BK laws? JSummers I hope they do pass so you can get a better Credit Card rate are are only penalized a few points when you miss your Visa payment. When that happens to you only then will I truly be able to get a good nights sleep.

 

Re: Re: When SHOULDN'T you file for

I actually wasn't debating you -- I was just interested in your particular experience. If you don't want to share this information, that is, of course, your choice.

There are lots of folks that may be in a similar situation -- giving concrete examples may (or may not) help others decide what to do.

There was a good example of this in a previous post where someone mentioned a $75k (although currently less) salary and debts of $30k. That individual seemed very focused on killing the debt without bankruptcy.

You can't tell us anything? Maybe the % of debt to income? That would be most useful...

--Galabar

p.s. As for issues such as shoplifting, city spending, etc., etc.. this has nothing to do with what you did, and should not be used to justify it. This is what is commonly called a "Red Herring."

 

Re: Re: When SHOULDN'T you file for

p.s. As for issues such as shoplifting, city spending, etc., etc.. this has nothing to do with what you did, and should not be used to justify it. This is what is commonly called a "Red Herring."

UGH. MY POINT IS THAT I DON'T LOSE SLEEP AT NIGHT OVER THINGS I CAN'T CONTROL.

C'mon, this isn't rocket science.

I'm also not justifying filing by saying I had the 'right' to file bankruptcy because I pay too much for a shirt.

We are obviously not on the same train so I'm getting off at this stop.

 

Re: Re: Re: When SHOULDN'T you file

Ok, I get it -- 90% of your post was explaining to the previous poster that he shouldn't worry about your BK because he has no control over it, and none of it was meant to justify your actions. Ok, now we understand each other.

Obviously you have some shame issues associated with this event (given your visceral reaction to the original poster) and I don't want to prod you any further. Can we get some other opinions or examples?

--Galabar

 

Re: Re: When SHOULDN'T you file for

It really bothers me when people think financial counseling shouldn't be considered before BK. It also bothers me, as was mentioned previously, that we have been raised to believe in instant gratification.

There are ways to pay off debts. And before you call me a financial god who probably paid cash for a house and car, let me assure you that you are sadly mistaken.

When my now-ex-husband decided to leave, we were in the situation you described. We were making payments on time, but were way over our heads. We already had a house.

He ended up wanting to file bankruptcy. Because of my job (which I would have lost if we'd filed), I took over about 77K worth of unsecured debt, mostly credit card. I went through all the problems--late pays, cards canceled, limits lowered, rates raised, the whole nine yards. I canceled the cable, canceled anything else I didn't NEED (remember there's a big difference between WANTS and NEEDS). I bought clothes at the thrift shop. I drove my cars for 300K miles or so. I didn't go to movies.

Do you know how I used my time that I wasn't watching movies or TV? I worked--a second and third job (one of them was as a consultant, so I could write off a lot of expenses). I also worked my tail off at my primary job. I don't get paid for overtime except in certain circumstances, but I still worked extra hours. Do you know how that paid off? I got a promotion, then changed jobs and got a decent raise out of it.

Granted, after I met the man who is now my husband, he helped me out. But the point is, I managed. I still have some debt left. But I'm paying it off and saving some as well. I'm now able to get better offers and have done BTs to get my rates down.

But the point is, I could have declared BK and been out from under all the debt. But I feel better that I have done the right thing, and in the end I know that I'm a better person. I now make good money and could afford more than I have. But I still don't have cable--I realized how much time the TV saps from your life. So that is now a lifestyle change, and I don't miss the TV a bit.

 

Re: Re: Re: When SHOULDN'T you file

Wow, great post and congratulations on your success! I'm sure a lot of other folks on this board can be positively motivated by your experience.

--Galabar

 

Re: Re: Re: When SHOULDN'T you file

Thanks. I try to help where I can, but I really strongly feel that we as a society as a whole need to start taking more responsibility for our actions.

 

Re: Re: Re: When SHOULDN'T you file

Regardless of the howls of creditors, bankruptcy is legal and is certainly not immoral. There are historical examples in religion regarding forgiveness of debts.

I think that you should make the decision based on simple financial facts. If you don't qualify the judge will not grant your discharge anyway. See an attorney. They will explain what the law is and evaluate your situation. Most don't charge for the initial consultation.

The definition of bankrupt is when your income does not cover your obligations.

Some related factors to consider:
Are you considering a future job (such as handling money) where bankruptcy will preclude your consideration?
Can you live strictly on cash until you can rebuild your credit?
Will your job require you to travel and do things like rent cars? This is hard if you don't have a credit card with a fairly sizeable limit.
Do you really need a fresh start?

I wish I had filed sooner rather than messed around for years trying to pay things off.

I haven't had any significant problems. I refinanced my FHA mortgage 10 months after discharge and got a 3.9% 0 down loan from Ford Credit after 15 months. Of course I was recently refused a savings account from Wells Fargo! I haven't even attempted to get another credit card. I've lived on cash for everything else.

 

I agree 100% also.

I read on here alot of people with more then average incomes and only like 30k in debt that want to file (and all credit card debts). It's not like someone held a gun to their head to make them charge it all.

But major medical bills without insurance can really add up and it's not like you wanted to get hurt or sick. I work in insurance and know they aint cheap.

Plus remember when you file bankruptcy society has to pay for it too in higher fees. I don't like to have to pay for someone who knew what they were doing and knew they were in a hole but just kept doing it.

 

Two things strike me:

1) There's no question that bankruptcy is a legal method for escaping an impossible situation, and it is both useful and necessary for some people.

2) There's also no question that situations can feel impossible when they really aren't.

Time and again, people who shouldn't file for bankruptcy sometimes take that drastic step. The corollary is also true: Time and again, people who perhaps should file for bankruptcy don't do so.

I like some of the guidelines presented in this thread -- death of a breadwinner, for example, seems like an unquestionably good reason to consider bankruptcy -- although that may not be the only solution either, depending upon the circumstance, insurance conditions, etc. However, the mentioned situations surely don't comprise an exhaustive listing (nor did the poster present them as such). I frankly don't think it would be possible to make a list of reasons why one should or shouldn't file BK. Financial situations vary from person to person; sense of debt responsibility varies from person to person; ability to generate new income varies from person to person; emotional motivation varies from person to person; and the maximum pain threshhold varies from person to person as well.

Even though the question can't be answered (my opinion only), it is a great question and discussion, though!

Doc

 

I don't think the reason should make the slightest bit of difference. If by living very conservatively, doing everything you reasonably can to get extra income, and selling off everything you don't need to be lugging around with you, you can't pay off everything but your car and your house in five years, you have every right to file. I don't care if you blew it all on strippers.

If you file for reasons that were your fault, I charge you with the obligation to live responsibly afterwards. But it's completely ludicrous to spend the rest of your life paying for at worst a series of stupid mistakes, and at best a disaster utterly beyond your control. People kill people in this country and get sentenced to less than five years probation.

Far less than 1% of all the people in this country are completely immune from the possibility of bankruptcy. Over half of all the people in this country are only a single paycheck away from starting to suffer financial ill, and many more are a single lawsuit away.

If you can pay off $100G in 5 years, it does NOT mean that you can pay off $200G in 10 years. It's probably that you'll never pay off $200G, because the accumulating interest is bigger than the principal you can apply to the debt. Just because someone busted their ass to pay of $20G of debt doesn't mean that you can pay off $30G.

This poster owes $30G in student loans and $30G in unsecured debt. His total household income is $45G. If that isn't expected to change, he should file. If it goes to the $75G he's expecting, he should look at it carefully. It's still a close call.

I don't care why he owes the money. If it was his fault, he should learn a lesson from this and not do it again. If it wasn't his fault, then he has nothing to even feel bad about.

 

But what brought someone to accumulate that much debt where they HAVE to file bankruptcy?

It isn't SOCIETY'S fault he went out and bought that stuff and now since he can't afford it he's gonna stiff all his creditors. That isn't fair to anyone. He is basically living beyond his means and then saying "Oh the heck with you!" and writing it off to society.

Now, medical bills are another story as they are not something someone did for a good time.
There is SO much help out there for people who think they are going downhill. It's the fact that you have to realize you need to CUT UP those cards or FREEZE them and get responsible before the last resort...bankruptcy.

Just because you are irresponsible with debt doesn't mean you should just write them all off and start over. Alot of people who do this file again and again and never learn.

I think there needs to be more "education" on debts, finances, etc....so we can prevent people from getting to the point of over spending, charging card and maxing them out and then not being able to pay.

If you can't afford to buy it DON'T....and lenders need to stop giving "kids" credit cards. They are always looking for suckers.

Oh and you can't honestly believe charging something up is a "stupid mistake" when it hurts everyone but the person doing it.

 

Sounds pretty good to me...

#1 only ONE bread winner???

Or are you saying "PRIMARY" bread winner...