Berkeley Parents Network: Declaring Bankruptcy

Berkeley Parents Network

Declaring Bankruptcy

Berkeley Parents Network > Advice > Household Management > Declaring Bankruptcy

Questions

Thinking about filing for bankruptcy, not sure where to start
Pros and cons of personal bankruptcy
Hate the thought, but feel trapped by finances
Should I go backrupt?
Friend considering filing for bankruptcy

Related Pages

Thinking about filing for bankruptcy, not sure where to start

January 2007

Thinking about filing for bankruptcy and wonder if there was anyone out there who had to file, and what your experience was. I'm not even sure where to start. I can't afford an attorney, thinking about filing on my own? Any books out that are super helpful? Any advice would be appreciated.
Money Trouble in Berkeley

Nolo Press in Berkeley publishes a how to guide- they have an impecible reputation in most do it yourself legal matters. How to File for Chapter 7 Bankruptcy by Attorney Stephen R. Elias, Attorney Albin Renauer & Attorney Robin Leonard Order online or call 1-800-728-3555 http://www.nolo.com/product.cfm/ObjectID/F87C0B36-D2FB-4FE2-801B76AD0792C01A/213/
Amber

Pros and cons of personal bankruptcy

March 2006

I'm seriously considering filing for personal bankruptcy, primarily because of credit card debt. (accumulated, btw, to meet basics during periods of inadequate income, not to buy luxury items...) I don't want to, but I feel that trying to keep up with the payments (over $1000 a month to meet the minimums) may be as much of a burden for me, a single parent getting ready to start graduate school, as the consequences of a bankruptcy on my credit record. I qualify under the new laws because my income is low enough to exempt me from a repayment plan.

I'm wondering if anyone else has experience with this. I'm particularly concerned about the ways a bankruptcy on my credit report can hurt me. Has anyone else out there had to make this choice, and if you chose bankruptcy, was it worth it or has it caused you a lot of problems? I'm particularly concerned about its effects on future student loans, student visa for Canada, and (eventually) a home mortgage. Anon

Check out the Nolo Press book ''The New Bankruptcy: Will It Work For You.'' It has lots about deciding whether or not to file for bankruptcy and the effects of filing. (They have other books that actually have the forms.) It's in bookstores and Nolo also has a website, www.nolo.com. Mary

Why are you starting graduate school if you can't afford to pay your debts? Could you defer school for a year and try to pay down your debts? Have you tried consumer credit counseling services? Have you tried talking to the credit card companies to reduce the interest or set up a payment plan? Whether you used the credit cards for basic living expenses or luxury items, you used them and you should pay them back. In my opinion, going to graduate school is just going to put you further in debt, unless you are one of the lucky ones getting funding to cover all your living expenses and tuition.

Hate the thought, but feel trapped by finances

May 2004

I have read the archived posts regarding filing bankruptcy but would like some new opinions too. I hate the thought of filing Chap. 7 or 13 but feel trapped by our current financial position. I would like advice about the real pro's and con's of filing. A little history: My husband was laid off a year ago. We had just bought a home just before he was laid off. I am a stay- at-home mom but do have a tiny side income. We have gone through all our savings and retirement and have had to use credit cards to survive. My husband has a job now and always is looking for extra work on the side, but it is never enough. We are $1000 short every month to pay even the very basics (not including health insurance, which we can't afford). Our mortgage is consistently late, credit cards aren't being paid, property taxes are delinquent, utilities almost get shut off each month, food is ''rationed'' etc. On top of it all there is a penalty if we sell our home before two years. So we would actually owe money if we sold our house now. I feel trapped with no hope in sight. I can see now how easily middle-class families wind up homeless! We would greatly appreciate any legal/financial advice regarding bankruptcy or alternatives. anon

I am a legal assistant with an attorney who has been handling bankruptcies for 20+ years. Though I help process the bankruptcy petitions, I do not have enough experience to let you know, definitively, whether you should claim bankruptcy or not (especially since you own your own home.) My advice to you would be to contact the Berkeley-Albany Bar Association at (510) 841-5000 to see if you would qualify for a free consulation with an attorney. (If you don't qualify, I think the fee is $25.00.) Or, if you don't mind the trek across the bay, our office is located in SF if you'd like a consultation with the attorney I work for. He is an excellent attorney and would not recommend a bankruptcy to you if it were not in your interest to file. At any rate, I wish you the best of luck and remember, the law entitles everyone a fresh start so don't feel badly about filing a petition if you do, in fact, have to file. PJ

This is may or may not be helpful to you as your situation sounds pretty dire-but my younger sister thought she was going to have to go bankrupt due to large credit card debt. All her accounts were closed due to late payments. Anyway she called the credit card companies saying she was considering bankrupcy because of her large debt load and asked them to negotiate her debt down to a level she pay back instead of doing bankrupcy. The upshot was that she managed to negotiate her debt down to about 35% and paid off those amounts- she got them to commit in writing to the agreement- instead of doing bankrupcy. I don't know all the details but if this is helpful i could put you in touch with her and perhaps you find out more about how she did this. Your situation sounds dreadful and i hope you have family or someone who can help. Perhaps you can find some kind of part time job, maybe when your husband is home from his job and can watch the little one(s). Maybe if you let BPN know what kind of qualifications or hours you can work someone can find you a job. Also recently, there was a discussion about salaries - think it was ''reality check'' and people discussed useful ways to trim ones monthly overhead. Good luck. eva

From what you said it sounds like bankruptcy is a good option for you. In general, you should not file for bankruptcy as long as you are ''judgment proof.'' Now that your husband is working, however, his wages could get garnished and you want to protect his earnings and your home. I strongly suggest you consult with an attorney who is knowledgable about bankruptcies before proceeding. Depending on your income and assets, you may qualify for legal aid. As to the ethics - the point of bankruptcy laws are to give a new start in people in your position. As for your debtors, assuming they are not family and friends, but rather are businesses, that is the cost of doing business. I urge you to do what is right for you, financially, and not spend time feeling guilty about it. If you do have debtors that are friends/family or small businesses that would feel the impact of the debt being discharged, you can choose to pay them voluntarily after the bankruptcy is complete. Anon

Should I go backrupt?

January 2003

I owe about 20,000.00 or a little more to credit cards I haven't charged for years and all I have been doing is paying them off but at times it seems like I will never see the end of the tunel. I have been enrolled in a debt management program but the rates are not as lowest as I hoped they would have been,I have been with them for about a year this makes me feel a little better knowing that I am doing the responsible thing by tying my best to pay this off how ever I am a single parent and pay rent ,a car note ,food and the other expenses we take on by working here such as the parking and union. I stuggle so hard by the 8th of each month my monies are as low as $20.00 to last me until the next pay day and I am even trying to look for a second part time job to help me get by . By going bankrupt I can save monies for a house pymnt and for my teens daughter's college education. What should I do. Single Mom, needs advice

Just found a relevant article on the Motley Fool website. Food for thought: http://www.fool.com/m.asp?i=806695 Jennie

Going bankrupt was the best thing I ever did. I just wish I had done it sooner. I was left after my divorce with a $30,000 debt. I tried paying it off for about a year and then I consolidated the payments through a credit counseling service and paid for about another year. I never put a dent in the debt, I only covered the interest. I was afraid to file bankruptcy because I thought it would ruin me financially. What I didn't realize was that I was already ruined financially. It would have lasted much longer had I not filed. Although the bankruptcy stays on your credit report for 10 years, I had good credit by 4 years post bankruptcy. Good luck, Danielle

I sympathize with your financial difficulties. We were in the same situation about five years ago. I was so stressed! I decided to file Chpt 13 Bankrupcy and I do not regret it. Once we were out from under the credit card payments, we were able to pay our bills and eventually get ahead of our debts. After four years of good credit, we found that creditors are willing to forgive a bankruptcy. We have financed two cars and refinanced our mortgage in the last couple of years. And we have ONE credit card that is always paid in full every month. It was hard to face a bankruptcy (we defaulted only on our credit card debts) but it was definitely the best choice for us. We're in terrific financial shape now and will stay that way. anon

Although I don't know enough about your financial situation to give a yes or no answer to your question, here's a couple of things for you to think about. You said declaring bankruptcy would help free up enough financial resources for you to start saving for a house down payment. Don't forget that a bankruptcy will stay on your credit report for 10 years, and that it will make it very difficult, if not impossible, for you to get a mortgage -- if you can get one at all, you may have to pay a much higher rate. Another question to ask yourself -- do you have the spending habits under control which caused you to rack up $20,000 in debt in the first place? You want to be sure that you do, otherwise, even if you do declare bankruptcy, you'll end up back in the same place a few years down the road. -- anon

You say you want to save up to buy a house. I believe that if you declare bankruptcy, you won't be able to buy a house until that is off your record (7 years). Since you're already making inroads in your debt, I encourage you to stay the course. Read ''How to Get Out of Debt, Stay Out of Debt, and Live Prosperously'' for more encouragement--you're already taking several of the steps! Also read ''The Complete Tightwad Gazette'' for ways to curb expenses and have more at the end of the month. It's a really inspiring read. Jennie

$20,000 seems like a lot of money to owe, but in my opinion, it's not worth the stigma of a bankruptcy on your credit report for 10 years for such a relatively small sum. I'd try to find a friend with a house who can let you use some of their home equity line of credit. Those rates are really low these days, (like 5%)and you can pay your friend back at their rate much faster than any other rate you could find. Just an idea. TC in Berkeley

Friend considering filing for bankruptcy

July 2002

A very good friend of mine and her husband have run into financial difficulties during this recession. The husband was laid off from his well-paying job about a year ago. The wife had been staying at home taking care of their 3 year old daughter. Since then they have eaten through their savings and have been paying their most pressing bills (mortgage, property taxes, health insurance, etc.) in part with credit cards. While she is hopeful that her husband will land a job shortly, she thinks they will in any case probably be unable to afford to pay off the credit card debt they have incurred, or even make the monthly payments. Does anyone have any experience (positive or negative) regarding filing for personal bankruptcy? thanks

Please tell your friends to contact Consumer Credit Counselors first! Banckruptcy stays on your records for ten years. It's a quick short term solution, but is a burden later on. I know, I did it. Anonymous

My partner had declared bankruptcy about 11 years ago and it did affect us whenever we had to rent an apt., or eventually when we bought our home. Thankfully it had gone off his record by the time of our closing. Otherwise, expect to pay higher interest rates, and have trouble getting any kind of services (utilities, cell phones, other credit cards). There are other options. Can your friends refinance their house with a no-cost mortgage and take some $$ out to pay off their bills? Not the best way of doing it, but if you have to, you have to. And what about signing up for one of the credit card's protection plans? They're expensive, and once you start up using the service, you can't use the credit card. Also, it's completely possible to call the companies and let them know what's going on...usually, they'll give you some grace period. It's when you aren't in contact with them that they start collection proceedings. Also, try some consumer debt services (Consumer Credit Counseling of SF is the one I know of, but there's one in the EB, I think.) Good luck! anon, because my partner still doesn't like to talk about his bankruptcy!

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