Why Are/Have You Filed BK?

[bktmom28]

Things finally came to a head.

First off, I just want to thank you for setting up this forum. I, like many others of you out there, never thought I would be in this position. I am 29, my husband 28, 3 kids, a mortgage, and $40000 in credit card debt. It all started back when we purchased our home in 2002 for $97000. We had a comfortable house payment, a tiny bit of credit card debt and a baby on the way. Things were very good. We felt very blessed. After we had our baby, we had a hospital bill of over $3500, and we did have insurance. That was our portion. We were in shock. We decided, still not sure why to this day why we did, to buy an SUV. We had a car that was paid off, and suited us just fine. I would say we were just stupid. Wanted to keep up with the Jones' and not be grateful to the Lord for what He allowed to have. We financed a $16000 used car that turned out to be a lemon. We were stuck with a car that we were putting money into 6 months after we bought it. Big money...had to replace the transmission. We were heading down without even realizing what was taking place. Anyway, we have figured that is where it started. From there things got better and worse. My husband got a new job, which dropped our pay temporarily, so we decided to take out a second mortgage. A few months later, we saw how easy it was and tried to get a little more money, each time our home appraised really high! Woo hoo! We were stoked! Some time later, in 2005, my husband and I got a phone call from the same broker that helped us get into our home. She told us that we could get into a 3/1 ARM that would consolidate all of our credit cards and we would have one payment. That sounded great. She told us something about our rates increasing in 3 years, but that wouldn't really affect us as we were planning to sell our home in 2 years anyway. Once again, we were young and stupid. Well, 3 years later and another 2nd mortgage later, our rates jumped. We were stuck with a $1200 mortgage payment and no sign of relief. We only had about 10000 in credit card at the time. Well, my husband had been informed that they would be hiring apprentices the following year. He prepared by taking 3 months off of work so that he could attend a vocational training school. I knew how deep in debt we were but I did not tell him because I knew that if he had any clue, he would not go. This was something that he needed to do so that he can further his career. Well, needless to say, we paid everything with credit cards, bought our kids Christmas presents with credit cards and felt sick everytime we pulled the stupid plastic out. I tried throughout this entire time to work out a loan modification, never missed a payment, which ended up working against us, then, had all of our credit cards jump from just under and average of %9 to over %30. We could not keep up. Then, another blow, they would not be hiring apprentices for another year. Great! Now what!
This past month I went and talked to CCCS and was advised that we needed to talk to a BK attorney. I was shocked. I knew we were in deep, but never had a clue. At first, I wanted to throw up. How could we have been so dumb? We are not big spenders by any means. We just allowed this idea of how things were "supposed to be" to cloud our view. I went and spoke to an attorney and she too looked at our income and said we most definitely qualify for Ch7. We will be giving up our home because we are $60000 underwater. I do feel like this will give us a clean slate. I will not ever hide anything from my husband again, and we will never again be using credit cards. I am almost done with the paperwork, but we are in the process of moving from our home to a rental, because our attorney told us that the trustee will want to know what we are doing with the money we aren't spending on our mortgage and CC debt.

[qsr]

I think this story is probably changing here in the past 8 months or so, as opposed to when this poll first went up. I have yet to file, but am leaning towards it. $60k+ in unsecured debts plus $25,000 in IRS/School Loans. I lost my job in October and have failed to find anything remotely near what I was making. I think filing bk and unloading some of the debt would really open my options up so I can find work--maybe even something I'd be happy doing. Almost all of my debt has been run up in periods of unemployment over the past 5 years, as I have had trouble finding steady work. When I get a job, it tends to pay pretty well, but they really come and go. Part of the problem is that I'm not entirely happy with the line of work I've been in, so it's hard to find motivation. This would be the "underlying problem" that needs to be addressed.

But with the post-Bush economy, it doesn't look like things are going to improve enough to the point that I'll ever be able to even keep current on my debts. I'm going to file as soon as I can sort out a rework on my mortgage.

[killinstinct]

Mastiffmom:

First of all, congratulations on having the courage to take this important step.

When you're ready, recognize that you must deal with the UNDERLYING issue to have a successful bankruptcy. That probably means the depression, in your case. You don't want to end up in trouble again, post-BK.

[MastiffMom]

Why I'm filing

Hi all. First post here. I have a stable job and a good income, but I've made some really bad choices. I've always had quite a generous nature and never really had serious money problems, but there were times over the years that I relied on consumer credit counseling. In 2007, I built a new house (stupidly, with retirement from a previous job). Shortly after that, my niece, her hubby, their two toddlers and a friend of theirs all moved in with me and lived here for a year. I just can't believe that things could go so far downhill in just a year that I have to file. They moved out in May and it's been a blessing and a curse. In the end, though my overspending is my fault, it wouldn't have happened if they hadn't lived here. I have a few unpaid medical bills and lots of unsecured debt. I am hoping to keep my house in a Ch 13. At least I don't have a car payment. I owe the IRS because of the use of my retirement. They just finally got tired of waiting and garnished my wages, so I didn't even get anything out of my last paycheck. So much for paying the atty this month. I'm not sure how I'm going to file now unless I wait until the IRS gets what they want, but what the heck will I live on. I need to be able to buy gas to get to work and buy groceries, though I could get by on whats in my pantry for awhile. And I wish depression didn't make me want to spend, spend, spend.....

[jonnyboy]

Well it started when I lost my job. I lived off of meager unemployment. Found someone had made me a victim of credit fraud. Opened 9 accounts in my name after a year of fighting it off i still had shards of it laying around. I have medical bills due to a very bad medical condition, and not too long ago I made a decision to go back to school and have that debt on me too. Bad decisions, Bad health, Bad economy, big mix of things

[troubled]

Hopeless optimism--harsh reality

Well, it wasn't one of the choices, but it fits our situation, in part.

I was laid off from my $70k a year job in 2004. Over the last few years I've had several jobs --none ever topping $50k and mostly earning $35k a year or so through several jobs at a time--and never in my field.

We keep hoping things would get better and "chancing" it by charging fun things like daycare, mortgage payments, etc. in 2006 we took out a second mortgage through Countrywide to take advantage of the value of our house...well, today that house is $70k lower than when we bought it in '03 and we still owe $93k on the second mortgage ( a balloon with an 11.8% rate).

I guess it was the harshness of reality that forced us to file ($100k plus in unsecured and the two mortgages). We'd still like to keep the house somehow--but not that optimistic anymore

[killinstinct]

Divorce + extensive custody battle which I survived intitally, then met the LOVE OF MY LIFE who had unfortunately just gone through Divorce + extensive custody battle....as you can imagine lots of $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

[Inthestorm]

Don't know about loan mod. for homes. Went to the Clark Howard site and heard all bad stories, none good.

[123ABC]

I was doing everything right... till I lost my job. My one biggest regret is not having a college degree and when this is all said and done I am going to go back and get one.

I was in a great sales job making 75k a year. My mortgage was only 1400.00 which at the time was no problem. My house is small and modest. I put a lot of money into remodeling which is where my cc debt came from. I had no problem paying the bills and having plenty of money to enjoy life BUT no savings. That was my mistake. When I lost my job everything came tumbling down. I was out of work 8 months and then took several crappy jobs to get by. Now I am in a stable job but with a 30k paycut. With the economy the way it is with out a degree I can not go back up to my previous salary. I have no choice but to file because I have not paid a single cc payment since 02/07! Working on get house modified and got my car modified. Will do things very differently from here on out!

[NewLifeAhead]

ease.. Thank you. I will be extremely thankful if we remain a no asset case after the 341 as we are extremely close with exemptions.

I'm happy to hear your marriage is doing a lot better now since filing. It's amazing the amount of weight that comes off your shoulders when you do finally decide to file. I had a good time putting all those cards through the shredder 1 by 1!!!!!!

Going through something like this really humbles you and the good part is, you get reacquainted with what really are the important blessings in your life.

[ease]

NewLifeAhead... I see your 341 is the day after tomorrow. Good luck with that!
Your last sentence summed it up for us. We kept thinking we'd just catch up and be able to pay down the debt. Meanwhile, constant tension, fighting fighting so much. Our marriage is SO MUCH BETTER since we cut up the cards and decided to file. I am truly grateful that our economic system has bankruptcy in place. It's been such a blessing for us.

[NewLifeAhead]

How did I get to this point?

I have been poking around this site for a bit and have gained valuable information from everyone's postings. So I finally decided to register to say how nice it is to know that we are not alone and there's a place to go for support. Firstly, I want to say thank you to all those responsible for these informative postings.

I was making an excellent income for several years but I was also house heavy most of the time. So I didn't save as much cash as I should have been saving. However, I did make a fair amount of money on houses I sold and rolled this equity into each of the new houses.

In still trying to make more money, I sold again and bought a larger house with a larger mortgage thinking we could sell it in a few years. We didn't need this big house, but the idea of making more money overshadowed the cautious approach to investing.

Not long after we moved into the new house, our income started to drop while our expenses increased (larger house = larger expenses). So the plastic money game started (HELOC and CCs). After several years, our income was now half of what it was as clients dried up due to the declining economy. Robbing Peter to pay Paul was now the means to exist as others have posted. This past year and a half I was on the bench more than working for clients. I finally decided to look for full time employment and thankfully, after several months from the last contract, I found a great job.

However, our now dual steady incomes are no match for our debt load. Each month we are/were 2500-2800 short each month. In addition, even though all payments were on time, our credit limits were changed, debt ratio was increased, interest rates increased, house upside down 200k and the down hill slide was at top speed.

You always think you can catch up and things will get better. But slowly, the debt load and stress effects everything in your life. We have filed chapter 7 and will loose our house but this will be the best thing for us. We'll have a chance to start a new life where cash is king and being house rich/cash poor is taboo as you never know how things will change down the road!!!!

[Sazabelle]

Hello

Hi everyone, this is my first post here. I'm so happy to have found such an informational forum! It's nice to know that I am not alone in my financial difficulties, and that there is support/help out there for those of us who need it.

So how did I end up where I am today? It began about 4.5 years ago when I saw the auto industry (the industry in which I worked) really start taking a turn for the worse. I decided to take out a second mortgage on my house and use that money to invest in real estate. I purchased three rental properties over a period of several months. Everything went fine for the first two years, but then the economy took a downturn and tenants became more and more difficult to find. Things slowly, painfully got worse.

Last summer, after not paying these three mortgages for a couple of months, I decided to list the properties with an agent and try to do short sales, which the banks agreed to. They would have sold quickly, however, I soon realized that because of the 1099 issue, I would have owed the IRS over $10,000 when all was said and done! Instead of going that route, I decided to take my chances on the 1099 and let all three go into foreclosure. As of today, these three properties are in foreclosure status.

Now about my job. I lost my job this past March after working there for 15 years. This now left me with some huge decisions to make. After much contemplation and speaking with a BK lawyer, I have decided to also let my primary residence go as well as a camper that I purchased 5 years ago. I haven't made a mortgage payment in 4 months. My credit card debt is fairly minimal at around $4000. I have no idea if doing a short sale on my primary residence would be beneficial for me, or if I should let it go into foreclosure as well. I already have three foreclosures, what is one more? I am waiting to hear back from my BK lawyer about this issue.

I have received some cash since I left my job, but my attorney tells me that I can't file until enough time has gone by for me to 'spend down' that money. At this point, I am in limbo. I have decided to leave Ohio and move across the country in 4 weeks time, where I will have to hire and pay for another BK attorney at some point. Ohio, Indiana, and Michigan economies have been hammered by the auto industry and it's time for me to get out of this area and move someplace where the job market is a little better (if that's even possible?).

Anyway, my situation is somewhat complicated and I thought I was doing a pretty good job of dealing with it all until recently. Now I'm getting major panic attacks and wondering if I should have or could have done anything differently. I thought I had gotten past all of the emotions of dealing with this, but the closer I get to moving, the more emotional I become. It must be all of the stress. I know there are brighter days ahead for me but sometimes it's so difficult to see the light at the end of the tunnel.

Boy, do I wear my heart on my sleeve or what? lol In any case, hello to everyone in the forum and I look forward to learning quite a bit and getting to know some of you better.

[bxphae]

Lost my second source of income (part-time job) in March/09 short notice, the owner sold and let employees know 3 days in advance that the store was closing.

Credit Card debts $11325
Unsecured loans $19600
2 auto loans $37000

Total $67925

Current FICO 695 with a poor hit on my debt-to-income

I make less than my states median without my second source of income. I qualify for chapter 7 and just recently stopped paying for anything while opening a new bank account.

[Bex]

Mine has been the standard front-page news story for the past 3-4 years: felt extreme urgency to become a homeowner--I'm a single mother, make a decent living and my son and I had lived with my parents for 5 years prior to renting a year and then moving on to the mortgage. I wanted my piece of the American dream--a house and yard so my son could have a DOG! (Geez, all this for a DOG...REALLY!!??)

I had been paying very high rent for the area intentionally both to qualify for the loan and to get used to the expense. I did not have 20% down, but I had done mortgage processing previously and I did have 3% plus closing for an FHA First-Time Homebuyer. Till the loan officer (one of the people I knew personally that I used to work with!!) got ahold of me--100% financing looks really nice when you're talking about a 40 year old property that you know already needs work (just updates, nothing deficient)

So...for the idea of putting a measly $3k cash into updating the house rather than the loan, I went for a MUCH worse mortgage product:

6.125% (not bad, but certainly wouldn't have been worse with FHA!)
0 down
PMI
AND joyous surprise 2wks from closing: &%^$# Flood Insurance (seller was original owner and did not have mtg on it--did not know about the flood plain, so was not required to disclose earlier)

While I was anticipating somewhere in the neighborhood of $700/mo PITI, I came away with $930. Since I had been so inexperienced at being head of the household coupled with the fact that I make okay, stable, money ($10K over local median in civil service) --I thought it sounded fine to go into a housing payment that was $400/mo more than I had been paying!! Of course, the bank showed me the numbers--it was a good loan.



That was exactly four years ago...now it's 2 surgeries (ruptured disc and gall bladder) and multiple same-as-cash offers from the home improvement stores and I'm just milimeter from insolvency.

So...starting over. For the last time. Like a lot of you, I've been here before. Not bk, but I had a decent-sized Citibank Mastercard charged off wayyyyy bank when and vowed NEVER AGAIN! But this time, it is for real.

I intend to never hold consumer debt again in my life, outside a mortgage on my primary residence --and I may not even do that once my son is through college! My folks have done the "pay everything by your rewards card then pay that monthly" routine for years and years, but I have finally realized that they are an extreme rarity--most of us do not have that restraint, in general, and where money is concerned we play even more clever mind games with ourselves! So I recognize now that, where I am concerned, THE HOUSE ALWAYS WINS!!

I feel a little conflicted about the whole process. Truly, compared to a lot of you folks, I have another several months of denial left in me somewhere, but I just don't think my health can take it. I firmly believe it was all the money issues that started with my little old house that have taken such a heavy toll on my health, so I just don't think I will be able to live through it and be able to support myself if I continue to support the cccs in the manner to which they have become accustomed!

Oh yah, I've had the lowered limit/increased interest rate/increased minimum payments game played on 2 of my 3 ccs with balances (I have 5 revolving accts altogether). NO MORE!!! There is no way to win this game and I'm sick of trying--I haven't charged a dime in over a year and the balances are pretty much the same as they were last year--and with the min payments so high, I know I've paid for any goods and services received at least 3 times over. I'm through and I won't have guilt about it!




Oh yah, let me put my particulars:

$98,500 1st mtg ($93,500 balance)
$7600 US Bank Visa
$3500 Discover Card
$600 Lowes
$1400 hospital
$800 physical therapy
$4000 orthodontist (I hate to have to include this, but I think it's in my name, even though my sainted parents have been paying it since its inception!!)
$17,500 student loan debt (some federally subsidized, some not)

Oh yah, just found out yesterday that they CLOSED the Lowe's account (dated July 2009)!! I was 2 mos behind just because I wasn't paying attention (call it denial, whatever)--geez, I could have paid that teeny lil minimum, no problem! But all others are rated in good standing "paying as agreed" and, at this point, everyone has been 30 days late at least once--weird--are they trying to keep us happy with the nice credit rating for as long as possible? It amazes me how hypnotized we are by that FICO --we'll sacrifice body and spirit to keep the FICO! But that's a whole other rant...

So I've had the electric shut off twice in the past year...cell phone 3 times...as I said before, I probably could close my eyes again and keep afloat another 6 mos or so, but no longer. It's kind of ironic because I was turning to my dad for budgeting help/financial advice exactly a year ago and he looked through all my books and said "you're going to have to take bankruptcy--you'll pay on this for 12 years or more and that's only IF you're never late or any other penalties!" Well, I'll tell you, the top of my head blew off--the crazy old man, wtf is he thinking?? I'm wayyyyyy better off than a lot of people out there!! I'm nowhere near that kind of situation!! Heh.


Sorry so long and thanks for reading my story! Hope you feel solidarity as I do from reading all of yours. And I have to say a big thanks and bless you all--I have already learned soooooooo much!! And I'm looking forward to the future: no fear, no guilt, and now I feel like I have the tools and education I need!

Good luck to us all