This is part 2 of my 11 article series covering my bankruptcy experience.
Bankruptcy is not a one and done type of situation. Depending on the chapter of bankruptcy you file (Chapter 7 vs Chapter 13) can greatly impact how long the process takes to conclude. I filed for Chapter 7 Bankruptcy in July of 2022. We had been going back and forth on filing since the beginning of 2019. I first originally looked into bankruptcy in early 2015 but I elected not to do it at that time due to the nature of my job.
We had many thoughts going through our heads during the 3 years before we chose to file for bankruptcy. Things like:
Will we ever be able to buy a house?
What about a car? Will we be able to buy a new one and not have a loan with 1000% interest?
Will we have to give up our personal belongings? Are they going to come to our house and clean our closet out?
These thoughts (and more) went through our heads as we were trying to figure out what to do about our debt situation. Sadly, if we had been more educated on the subject we may have made this decision sooner. In this article I am going to discuss my thought process on bankruptcy and what I wish I had done differently.
When I was first looking into bankruptcy around 2015 I only had about 14k unsecured credit card debt. I was working in banking at the time making a minimal salary. I was looking into bankruptcy but given the nature of my job, it could have put me at risk of either losing my job or needing to move to another position that made even less than I was currently making. I was struggling to make headway on my credit card payments, a manager of mine at the time suggested that I look into a Debt Management Program (DMP). I ended up finding a really good program and it worked for me at that time. It was a 5 year program and I completed it in about 3 years. I was able to achieve a substantial reduction in my minimum monthly payments, which allowed me to pay more each month.
Fast forward to 2019, we had accumulated some debt again. We had met with a local bankruptcy attorney but the retainer was too much for us at the time so we decided to hold off. I was doing okay managing my debt until the Covid-19 pandemic. I was running a business and I had a full time job. The government shut down all businesses within a certain category and my job was one of them. My spouse and I were both impacted by it. I had been carrying some debt (about 50k) at that time but it was manageable due to our incomes. My business income got substantially reduced (by about 80%) by the end of 2020. To make things worse, when everything was able to reopen, my job that I had was not on the same terms that it was before. It was making a lot less and with more hours. Thankfully I was able to find a new job with more favorable terms but my income was not what it was prior to everything shutting down.
During the shut down, our debt amount grew. Somehow we were still managing, but barley. It got to a point near the end of 2021 that we started looking into other options again. We were able to get a Debt Consolidation Loan to consolidate some payments, however that only helped us for a few months.
Early 2022 we ended up moving to another state, we tried to file for bankruptcy in the new state that we moved to. We were told that we needed to live in the state for the greater part of 160 days, which would have been 91 days. We decided to try something else. We opted into a Debt Settlement Program.
We did not actually enroll or start paying into a debt settlement program, but we did start to let all of our debt go past due. We were on track to enroll, but then we got a letter in the mail stating that we owed money for a surgery that I had a year prior. At the time of the surgery we qualified for “low income assistance” due to the fact I was injured and did not work a lot. After the surgery recovery process I was able to return to work and my income went up, above the level that was considered “low income.” The hospital found out and they said that I owed them the money. Around the same time I was hospitalized for a day with a breathing condition and our insurance had not kicked in yet. I was on the hook 100% for that bill as well.
At this point, we were both overwhelmed. We were getting tons of collection calls, the debt amount that we owed was well over 100k and there was no end in sight.
When it rains, it pours, right?
Wrong.
We decided to take control of our life and bite the bullet. There was no other way out for us other than a bankruptcy. We found a reputable attorney in the area, and we started doing research on life after bankruptcy.
Our biggest concern was that we would be blacklisted for 10 years after our bankruptcy from any type of credit. We were so wrong. Some information we found from research that made this decision so much easier:
You can buy a house 2 years after if you go FHA, 4 years if you want to do conventional
You are able to buy a car as soon as your bankruptcy is discharged! (Your rate may be higher, but you can mitigate this by putting more down or waiting until your score moves up after the discharge.)
You WILL get offers for credit cards after the discharge. (We started getting offers about a week after.)
Once we found the answers to these 3 pretty major questions of ours, we knew that we were making the right decision. We found an attorney and got the process going. You can check out another article I wrote: What to look for in a bankruptcy attorney, it will tell you what I found important to look for during your search for a bankruptcy attorney.
Filing for bankruptcy was the best thing that we ever could have done for ourselves and our future. If I could look back, I would have told myself to do it much earlier than when I initially did it. We are in a great spot now, but that spot could have been even better had we filed our bankruptcy 3 years before we actually did.
