My name is John, and I filed bankruptcy.
As of December, 15 2023, 403,000 people have filed for bankruptcy this year alone. That is not including the 15,274 businesses that filed. Of that number, 239,125 were chapter 7 bankruptcy cases and 173,362 were chapter 13 bankruptcy cases.
Bankruptcy may not be someone's first choice, but it can be quite beneficial and give people the opportunity to get their finances in order. My spouse and I filed for Chapter 7 bankruptcy in July of 2022. It has been about 1.5 years now since we filed and our financial life has improved drastically.
In this article I am going to walk you through:
Why I filed bankruptcy
Finding my attorney
Credit recovery after bankruptcy
Advice to my past self
For my spouse and I, we did not wake up one morning with and say:
“Do you know what would be fun?”
“If we filed for bankruptcy!”
It happened quite the opposite actually. We had gone back and forth for years on whether or not we should do it. Ultimately, it came down to us having more bills than we had income. We even tried briefly starting a Debt Settlement Program, but that would not have given us the relief that we needed nor would it have been sustainable for the long term.
We looked at our long term goals, starting a family, buying a house and we came to the conclusion that a Chapter 7 Bankruptcy would provide us with everything we needed to get back on our feet and reset our finances.
I would hands down say that this is probably the most important part of the whole bankruptcy process. You want to feel comfortable with your attorney, and feel like you are able to ask them anything without judgment. I personally interviewed 4 bankruptcy attorneys before finally finding the one that clicked with us. The other 3 attorneys that we met with were not ‘bad’, I personally would not have felt comfortable asking them questions about our situation.
Each time we spoke with an attorney I asked them these questions:
What are your fees?
Do you take payment plans?
Do I qualify for Chapter 7?
How soon after Chapter 7 can I buy a house/car?
Can I keep my car(s)?
What does the process look like?
What services are all included in your fee?
You want to find out if you have to fill out your own paperwork
Do you have to pay for the credit counseling course?
Are you going to be available for questions?
The attorney works for you, not the other way around. It needs to be a good fit for YOU. We had other attorneys give us packets of information to fill out. This overwhelmed us so much that the packets just sat there collecting dust.
We knew we found the right attorney on the initial phone call. She was extremely thoughtful and helpful. She went above and beyond to ease our anxieties and make us feel reassured in our decision. Her team was a reflection of her as well. Everytime we called they greeted us by name, they would give us check-ins every couple of weeks. I truly felt like she had our best interest at heart. You can read my detailed account here.
Prior to filing bankruptcy, I thought that I would be blacklisted from credit for the next 7-10 years. I can personally tell you that is not the case. When I talk to people about bankruptcy the one of the most common things I hear is: “I want to buy a house but I do not know when I will be able to.” After a chapter 7 bankruptcy you can purchase a home 2 years after discharge if you go FHA and 4 years after bankruptcy if you go conventional.
My spouse and I were extremely eager to start rebuilding our credit once our bankruptcy was discharged. We already had an idea of the secured cards that we wanted to get. We each got a secured credit card and made each other authorized users on them. This was a great idea because we each got 2 tradelines with each of us only having 1 inquiry. Both of our cards got the security deposit refunded and the credit line increased at month 6/7.
Keep in mind that after your bankruptcy is discharged you are going to get tons of offers for credit. Most of these may not have the most favorable terms, you want to make sure to read the fine print. Many of these cards have annual and monthly fees, as well as fees for authorized users. This can eat up your available credit before you even get the card, and in my opinion not the best idea.
I put off filing for bankruptcy because I was so worried about what other people would think of me. I let other people's opinions go to my head and in turn that did more harm than good. If I would have filed when I first started looking in 2019, I would have been in a much better spot now. Where I am currently is not bad by any means. I just would have been further along in my credit rebuilding process.
I do not regret filing for bankruptcy. I still believe that it was one of the smartest decisions that we have ever made. If I could go back in time I would have told myself to look at the facts, not what other people are saying. I took advice from people who had never been through this before. Each person's situation is different, and getting out of debt is not a one size fits all situation.