Bankrupcy - Experiences?

My husband filed chapter 7 bankruptcy right before we got married. He didn't have to pay anything back. 3 years later his credit was better that before the bankruptcy and he was able to buy a car. 3 years after that (6 years after bankruptcy) his credit was good enough to buy us a house with a 4.75% int rate.

For him bankruptcy was a good decision. He had a lot of dept from his previous marriage and from being young and irresponsible. He did not want to payoff a van his ex-wife was driving around in. The best thing about it is that when lenders look at his credit report, they only see a 6 year old bankruptcy, they don't see specifics. They don't see car loans and credit cards not paid off.

I don't think bankruptcy is for everyone. But if you have serious delinquencies like a house, car or sizable loans, it may be good for you.

I have worked with clients who wish to file bankruptcy for the last 10 years. While I do not work in your area, I can offer a couple of suggestions/pieces of advice:

1. Find a GOOD lawyer. Cheaper is NOT better. Check out the lawyer you are considering with the State board to see if they have had an undue amount of complaints or have had their license revoked recently.

2. Do NOT under any circumstances, listen to information from others (other than a licensed attorney) regarding how a bankruptcy works. The stories I hear range from humorous to flat out lies. Bankruptcy is like pregnancy - your professional is your best source of advice and everyone's situation is different.

3. There IS life after bankruptcy. While you may be restricted for awhile from mortgage lenders/refinancers, you will likely have access to credit very shortly after your bankruptcy is discharged.

4. If you decide that bankruptcy is not right for you, please do not contact one of those places that you hear about on TV or who send you one of those mass mailers promising to reduce your debt, negotiate with your lenders, etc. Most of those places are not licensed and/or not licensed in your area. Accordingly, when you find that they simply cannot do what they promised, you will have no recourse other than to notify the Attorney General. If you wish to try to reduce your debt through negotiations or work on lowering your interest rate, try calling your county or your church first. There are honest, legitimate programs that can help you with those goals (in our area, we have Lutheran Social Services and FamilyMeans - there will be something in your area as well).

4. Well-meaning people will offer suggestions of reading a certain book or listening to tapes to "cure" your spending habits. Most people who are considering bankruptcy are well past the point of needing that kind of help - they need the fresh start that bankruptcy offers.

Good luck.

We did Chapter 13 in 2000 and if you can afford to make a monthly payment, this is what I recommend. It stays on your credit for 7 years instead of 10 like chapter 7. Rules have changed now, but when we filed, we were able to keep our 401k's, our house and cars and didn't have to include them in the bankruptcy. The best part is all the phone calls from the creditors stop once you file, if not, you tell them you filed and they won't call you again. Since we filed, we haven't been late on a single credit card payment, mortgage or car payment. Yes, there is life after bankruptcy, contrary to what you hear. I don't remember our laywer, but you really don't deal with them or see them but a few times.
Thanks
C.

My ex-husband & I filed bankruptcy in 2001 & it was the BEST decision we ever made. Our debt was out of control (we were young & clueless). After speaking with MANY debt consolidaters, we were told this was really our only option. We went with Joseph McNeff as our attorney (if I remember right, his office was in Plano at the time). This lifted the enormous burden & gave us a fresh start. We already had a house that I kept in our divorce in 2002, but my ex was able to buy a new house in 2005 without any problems from the 2001 bankruptcy. Sometimes this can be the best thing to have the road cleared for your future. Good luck! :)

C.,
I have never been through bankrupcy and I don't know what your particular situation is but I thought I'd mention Dave Ramsey. He is a financial councelor who has written a FABULOUS book (The Total Money Makeover) that changed our lives. He is also on the radio every day from 1-4pm on AM 570. Again, I don't know your situation but I would encourage you to check out his book (it's a pretty easy read) and listen to his show for a week or so before you start looking into bankrupcy. Sometimes it's too hard to see the light at the end of the tunnel when you are overwhelmed with your financial situation. Dave's book might be able to help you step your way out of debt without having to file bankrupcy.
Let me know if you have any quesitons - my husband and I read the book, took Dave's Financial Peace University 13 week class at our local church, and worked our way out of debt using Dave's plan and it was a life changing experience. We are 3 years out and are debt free (currently on Baby Step #3) and we still use his system today.
Oh, Dave is also going to be in town this weekend doing his Total Money Makeover Live show. I think that there are still some tickets left - we went to the live show and it is so amazing and inspiring!
Check out his website www.daveramsey.com for tickets.
Good luck!

I have not been through bankruptcy. I cannot suggest a lawyer in your area. I listen to/read Dave Ramsay and he NEVER suggest bankruptcy. Not sure what your particular situation is, but I'm guessing you might have a great deal of debt. Please get O. of Dave's books from the library, either Financial Peace or My Total Money Makeover. It will cost you $0 and it will help you. If there are financial issues, it really won't solve anything to declare bankruptcy, it will just put a Band Aid on the wound for awhile. You really can get out of debt yourself. It's not quick MAGIC, but it works.

I filed shortly after my divorce. I would not have been able to pay the bills and would have suffered for years trying to do so. I hired a good lawyer (Illinois) and it was effortless for me as they did everything. The calls stopped and I did not have to worry about paying for groceries or rent anymore. My credit took a hit as expected and I still have 4 years before it goes off my credit reports. Not long after, I was able to get credit, although at lower limits and higher rates, which was fine with me because I did not want to get into the same situation again. My husband filed before we married, after his divorce, and he was able to get decent car financing and credit cards as well. Both of us are not spenders and are very careful with paying our bills (in our case it was both our exes who caused the financial ruin), so we have not had and defaults, late payments, or missed payments in about 6 years, so our credit is fairly decent even with the bankruptcies. I have found in my experience that the late payments, charge offs, and delinquencies seem to hurt credit more than a bankruptcy does.

I would recommend getting a free consult first with an experienced bankruptcy attorney. I recommend Aimee at the Haugen Law Firm. She is really good at it and will let you know whether you qualify or not, and what the best approach for you would be. If she believes bankruptcy is nor best for you, she'll let you know too. The consultation is free so you have nothing to lose! Her phone number is ###-###-####, call her and schedule an appointment. Best wishes and God bless!

I can only share my PERSONAL story about bankruptcy. Every Situation is different:

After my ex-husband ruined us financially and lied to me about it for 3 years, we separated and divorced. I had been staying at home with our son for about 3 1/2 years and had to find an apartment and a full time job and had no money for a divorce attorney. My ex offered to pay for the divorce and also to take legal responsibility for all the debts he had accrued under our joint names.
At the time, it seemed very generous to me.

Well- because I had no legal representation in the divorce, I really got the short end of the stick there, as far as child support, etc. I also found out that even though on paper my ex was legally responsible for all debts on joint accounts- that meant NOTHING to creditors. They hounded me and hounded me and all I could do was fax them the divorce agreement saying my ex was responsible for the debt.

I had perfect credit when I married- after our separation and a few months of him making NO PAYMENT on anything and me scrambling to try and contact everyone and pay something, my score was 470. It was a nightmare. I felt so stupid that I had believed the lies and thought my life really was ruined.

I decided to declare bankruptcy and it was honestly the only thing that kept me from going on Welfare at the time. I was trying to work full time ( no health insurance) and pay for half my son's daycare costs and the apartment, etc. Meanwhile my ex kept his $75,000 a year job and paid minimal child support and no alimony.

What my attorney told me was this: Bankruptcy is for people like you who find themselves in a once in a lifetime, horrible financial situation that they realistically will never be able to climb out of. You are not a 'habitual debtor'- you had perfect credit before this situation and always paid bills and taxes on time. It is very unlikely you will ever be in this situation again.

We worked out the numbers- if I had not declared bankruptcy, I would still be trying to get my ex to shoulder his share of those burdens for the next 35 or 40 years. He was NEVER going to change and become more responsible- I did not want my son and I tied financially to him in that way for years.

Now, about 5 years later, my credit is on the mend. My parents put my name onto their accounts to help rebuild my credit and my finance and I have utilities, etc. in my name to also rebuild my credit history. So yes, your credit score will take a hit- but how bad is it now? Realistically, do you earn enough money to repay the debt?

Of course, this also got my ex off the hook for all the debt he had accrued and lied to me about. His credit score remained untarnished, since I was the one who declared the bankruptcy. But it was worth it.

It is not the best thing for everyone. But in some cases, there really is no other way to rebuild your life. Do what is best for yourself and your family and don't let other people make you feel guilty about it. Good Luck!

Everything starr said!

We filed a couple of years ago and due to some recent financial successes we are hoping to be able to buy a house excatly two years after filing(24 month waiting period after filing) and we have gotten more credit since. It is slow but on the mend and I personally would NOT change it for anything. The stress is gone, while it was very hard to shoulder during the process. Make sure you check the lawyer out well... we did not get a good one and we are still paying for that today as the loan we kept is not being reported on our credit to give us payment history as it should be and there is nothing we can do to change it. Also make sure you open any new accounts at your financial institution you will want for 7 years if this one you have a good relationship with as they will most likely block you. You will have to jump through a few hoops but like I said I personally would not change anything... Good luck and feel free to PM with any other questions.