the case *for* bankruptcy?

iVillage Member
Registered: 09-23-2004
the case *for* bankruptcy?
21
Thu, 09-23-2004 - 2:33pm
I'm trying to help my sister make a painful decision. I see the light at the end of the tunnel for myself, but I struggled with the spectre of bankruptcy several times. Now she's considering bankruptcy, and I'm trying to help her get past the shame of even saying the word. Honestly, since I read an article on MSN Money and saw a past roommate positively *enjoy* the effects of Ch. 7, I'm gung ho! Read on for her situation, but I'm pretty sure that Ch. 7 is good fit and appropriate for her, not an escape or enabling. But what would happen if she didn't declare? What could the credit card companies do to her? Sue? Garnish her wages? She needs to know what "the worst" is, because she has only vague fears and threats, not *facts*. (And frankly, I want to know, too.)

She's already been to every credit counseling service out there and they've all painted horrible pictures for her of bankruptcy -- but their solutions are no better. She owns nothing -- no car, no house (rents), is single, owns only secondhand furniture and clothes, has no 401(k)/savings/life insurance -- nothing, she has absolutely *nothing*, and is terrified that bankruptcy would involve someone coming to her house and taking away her beaten-up shoes and thrift-store blender because "You're not allowed to have them." She only makes $31K, owes $35K on credit cards (all at 29.99% interest), and has $60K in student loans.

Here's the problem: The student loans are cosigned by our parents, whose horrific money management and credit woes have ruined her carefully balanced finances. She was scraping along OK, making every single payment, living within her means... when they defaulted on something and WHAM. Up went every credit card, and now she can't afford even the minimum payments on those cards. Every time she opens a statement, it gets worse. She can't get rid of the student loans and hence, the disastrous financial link to our parents. But if she could end the nightmare of the credit cards, she'd be able to live again -- and of course, keep paying on her student loans.

I just can't get a good reason from anyone why she *shouldn't* declare bankruptcy. She's in therapy and working on the reasons she racked up credit card debt in the first place (making ends meet while she was unemployed), has resolved firmly *never* to get tangled up with those awful companies again, has a budget -- everything except the ability to get past her shame. It just kills me to see her struggling under this massive weight and the credit card companies making it harder and harder for her. I know she signed the agreements -- but she was 18, in college, and in a family where debt was abused like alcohol. She's in recovery, and wants to end this nightmare. And I can't think of a reason that bankruptcy couldn't be that answer.

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iVillage Member
Registered: 07-23-2004
Tue, 09-28-2004 - 7:59pm
I definately feel bankruptcy is the answer in certain situations. In 1994, my husband decided to up and leave me for another woman. At that time,we had been together for 10 years (married for 4) he was making about $250,000.00 a year (a business that was handed to him by his father at a very young age). At that time, we had large CC bills, and we had just purchased a house. I was 25 years old, and hadn't worked in a number of years, because my husband expected me home even before we were married. There were business parties, and other things that I had to make myself available for. It was a totally different way of life then I was brought up in. Basically, $65,000 of the CC debt was in my name.

Since he was planning on leaving for a while, he managed to get all of our money out of the joint accounts, and because I had my head buried in the sand, and he handled the finances, I was left holding the bag...I was young, and foolish, and I put my trust in a second rate divorce attorney while my ex had the best. He stopped paying the mortgage, (even though the judge ordered him to pay it), stopped paying my health insurance (again, court ordered), and refused to pay a dime of the 200.00 a week temporary support, also ordered by the court. Unfortuantely, the judge imposed NO penalties for my ex going against the orders..... and I had to move back to my parents house. I had no job experience at the time (other then fast food, and dept stores, which I had done as a teenager)...certainly no job experience that would allow me to pay off those bills. I ended up taking a job as a receptionist at a doctors office making 6.00 an hour, and working 80 hours a week. To make matters worse, I dont know if it was the stress of the situation, or what, but all of a sudden, starting 3 months after my husband left, I had to be hospitalized with severe abdominal pain and nausea, which happened every month with my time of the month...every month I was hospitalized for 3-4 days, and I had to handle those bills as well. (after 7 years, and multiple surgeries, we finally got it under control with medication).

At the time of the divorce 2 years later, I recieved $48,000 in the divorce settlement. After paying the $18,000.00 attorneys bill, I was left with $30,000.00. I settled with all of the CC companies after really haggling with them for $20,000.00, and paid my mother back $10,000.00 which I had to borrow from her in the 2 years following the divorce to keep the creditors at bay. I was left with nothing...except whatever was left of my dignity. Had I realized what was going on then, I would have filed bankruptcy during the 2 years I was in limbo that the creditors were calling my parents house, and leaving evil messages with my mom while I was out there trying to work...Maybe that would have forced my ex husbands hand had he been the one getting those phone calls as I believe the creditors would have gone after him had I filed....My attorney was useless, he couldnt be bothered searching for the money I know my husband had hidden...


My credit was messed up until 2 or 3 years ago, I now have a great score, but it took alot of hard work. Had I filed, the cc companies wouldn't have HAD to settle with me, they would've ended up collecting it ALL from my ex....


While I think that there are a few people who use it as an easy way out, MANY MANY people don't have too many options out there. Had I not had my parents to go to to borrow that money, or their home to live in, I would have had absolutely no other choice. I would have ended up living on the street. I couldn't even rent an apartment because my credit was so shot by then..and even if I could have, I couldn't afford it anyway.


Edited 9/28/2004 8:03 pm ET ET by shiningonme

 

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