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|Mon, 10-28-2013 - 12:29am|
Just wanted to share and introduce myself. My husband and I have been in Chapter 13 bankruptcy since June, 2009 - and have just received the final closing from the court. We're 100% officially FREE!!!
I wanted to share with everyone that - contrary to what everyone tells you - the "discharge" is NOT necessarily your final get-out-of-jail-free card. There are two more steps that must be completed: The trustee files his/her final report with the court, and then the judge has to sign off on it and officially "close" the case. That process can take a few months. In the meantime, you still may be prevented from getting a loan, selling an asset, or buying anything, for value over $2500 even if your discharge has gone through.
We learned the hard way..... got our discharge, thought we were free, and attempted to sell our house (paid off). The title company put a stop to the closing, because our bankruptcy court order states we are prevented from making any transactions over $2500 without court approval, or until the case is "closed." (Not "discharged," but "CLOSED." Key wording. Check your paperwork!)
That's done now (didn't take as long as the title company feared, a few weeks only), and we are closing on the sale tomorrow. Woohoo!
There IS life after bankruptcy. Keep making your payments, abide by the court's order, and be vigilant about your finances. I understand now the benefits of the 5-year repayment plan --- it allows you time to practice good financial skills, get your house and accounts in good order, save money, plan for your future, etc. - all while you're still under the court's protection.
We had to file due to several issues, but primarily it was because our son was critically injured in Iraq and we dropped everything to help at his bedside for months at Walter Reed, and because of debts we'd incurred trying to start up a small business (that also failed due to his injury). During that time, we continued to pay our debts on time (we had NEVER been late or over limits), but also our balances skyrocketed to cover living expenses in D.C. This caused a dangerous balance-to-credit-limit ratio that the banks did not like, so they jacked up our interest to exhorbitant rates. Now suddenly, those $300 payments we'd been making to pay down the debt (for example, $40 in interest and $260 on principal) were now $260 on interest and $40 on principal) were barely paying down debt at all. I ran the numbers, and realized it would take 40 years to pay them all off. Prior to the rate hikes, we were looking at a five-year plan.
So I contacted the banks, and begged them to lower the rates to the previous figures. They refused. I tried for about a year to negotiate and plead reason. Time was running out - our budget clearly predicted that in a few short months, we would hit a brick wall like a runaway freight train: Unable to make even the minimum payments. We had no choice, so we contacted an attorney, then spent several months getting prepared and paying our attorney. We stopped paying the debts. NOW suddenly, the banks wanted to negotiate, lower the rates, settle for a lower balance, and so on. Terms I'd been begging for about two years by that time. But we were already committed, and did not have the cash available any longer to meet the new terms - we'd already given it to them in the months previous, trying to stay afloat. They threw us the life-ring after the ship had sunk.
So we filed. Made our payments to the trustee, watched our pennies, and started getting our life back to normal.
We are now 100% debt-free, have money in the bank, and are shopping for some land in the country to fulfill our dreams. Life is good!
Anyway, just thought I'd share our story. :)