$473K in Debt, Now What?!!?!!

bankruptcy and big wins interview series

I thought that if I was ever going to get out of the debt I needed a miracle. The options I saw in front of me were to either file for bankruptcy or win the Lottery (and I didn’t even play the Lotto). I’m really curious about these two financial extremes (HERE’S THE 1ST INTERVIEW and here’s the 2nd interview) so I will be interviewing people who have either filed for bankruptcy or who have come into very large sums of money through unconventional means.

We will be exploring the effects of both on life in the short and long-term. In the final installation I will be interviewing a man who won 6 Million Dollars in the Colorado Lottery. I hope you find these interviews as interesting and insightful into the extremes of money as I do. 

The 3rd interview in the series (below) is with a wonderful woman named Shelly. She’s going to talk to us about the nitty gritty of filing for bankruptcy.

And Then We Saved: How much debt did you have when you filed for bankruptcy?

Shelly: $473,084.43

ATWS: What is the breakdown of the debt that you had when you filed?

Shelly: Mortgage $296,972; Cars $32,648.58; Student Loans $47,096.62; Credit Cards $95,885.23; Doctors $482 for a total of $473,084.43

ATWS: How was the debt acquired?

Shelly: Buying a house, two new cars, student loans for me to finish my bachelor’s degree (which I have done nothing with, but there is a value to an education and these cannot be discharged in bankruptcy), vacations, necessities for the three kids, clothing, groceries diapers, and eating out.

ATWS: Did creditors harass you?

Shelly: We were never harassed by creditors because we were robbing one credit card to pay the bill on the other one.  Every time we would reach the credit limit, because we always paid the minimum balances due, they would increase the credit line, allowing us to pay bills by sending us checks we could use to draw on the account. And if we were no more than one month behind, we did not get calls, so we would alternate paying one bill one month and another the next.

ATWS: Did you talk to professionals before filing?

Shelly: I called a debt consolidation firm and was told that to consolidate our debt, our payment would be as much as our mortgage every month. It just didn’t seem like something we were going to be able to handle.

ATWS: Did you try other options before filing?

Shelly: The decision was reached one month when we just couldn’t pay all of the bills and were so tired and stressed by the financial situation we had gotten ourselves into. We always thought we had money because we had the credit cards and then suddenly realized how far in over our heads we actually were. We never really sat down with the bills every month to see what the balances were. I just paid the bills as they came in by whatever means possible, even if that meant using student loan money or credit cards to pay minimums or utility bills.

ATWS: How long was the process of filing start to finish? What was it like and what did it cost?

Shelly: Our case was filed in July 10, 2002, approximately two weeks after we saw the lawyer. We went to court on August 12, 2002. Our discharge was granted on October 25, 2002. It was very fast. There were feelings of embarrassment and humiliation from letting it get so out of control, but there was also a huge feeling of relief when it was over. We were able to keep our house and cars by agreeing to continue to pay those bills. I also was required by law to continue to pay my student loans, which I am still paying today, 8 years later.

I can’t find the original paperwork with the charges for the lawyer, but my memory is that it cost approximately $1700 for the entire thing.  Since we were told to stop paying all of the credit card bills, there was then money to pay the lawyer and it was a one time fee.

ATWS: Has your approach to money, spending, saving, and financial matters changed with filing? If so, how?

Shelly: I still find myself thinking that it is okay to use my credit cards and I know this attitude is not a good one. I try to limit all charging to necessary expenses and to go a cheaper route if possible. I do not go on spending sprees or mall shopping every week. I do not buy things for myself except for clothes I really need and I try to plan for large expenses. If we have to buy a major appliance, I look for a credit deal that is a no interest account for so many months and then make sure that we pay it off before we get hit with finance charges.

We also save a set amount taken every payday from my husband’s check that is direct deposited into our joint savings account. We had built up a healthy balance, which we recently used to get rid of all of our current credit card debt. To my dismay, new expenses arose immediately, making it seem as if that was a mistake because now our savings is almost nothing and my son’s college tuition is due by the end of this month.

We do not take a vacation every year, which we used to do. We clip coupons and shop the grocery sales. I believe I have finally gotten a handle on my spending, for the most part. There will always be areas I struggle in, but I think that is just life.

ATWS: Do you feel that filing for bankruptcy was a good or bad decision and why?

Shelly: At the time, it was our only option and I try not to have regrets. We have been able to rebuild our credit to a respectable score. We now own both vehicles free and clear and I would like to keep it that way.  Whenever we talk about my getting a new car to replace my 9 year old Explorer, I say not yet. I do not ever want to have to file bankruptcy again, but I think it was the right decision at the time. We were just in too far to fix it ourselves.

ATWS: What have the pros and cons of filing been?

Shelly: Well, the biggest pro is that we were able to start over with a clean slate and then rebuild our credit. We were not exempted from buying our single family home because of the bankruptcy, for which I am extremely grateful. I have learned that you cannot charge your way though life and expect someone else to pay the bill. And I have regret for those creditors who were never paid. The pro, of course, is that you start over.

The cons have been the times we have been turned down for credit, which hasn’t happened often. At the time we filed, the law was that in seven years, the bankruptcy would no longer show up on our credit report, but we were just turned down last month for a store credit card and discovered it is still showing on the reports eight years later. If you work hard, you can rebuild your credit over time and have a good score and be able to do the things you want to do. But every once in awhile, it will still come back to haunt us when there is something we need. We have enough established credit now that being turned down was not a problem. We were simply looking for the free financing, but when the bill came, we just paid it off. I discovered with this last application that I need to contact our attorney after eight years and ask him to write to the credit bureaus to force them to remove the information in accordance with the law. You have to stay on top of your credit report constantly after declaring bankruptcy, which is a real pain.

ATWS: Did filing affect other areas of your life? Relationships, mentally, emotionally, work-life? 

Shelly: It’s been so long that it’s hard to remember. I know that my parents were very disappointed in me and that hurt a lot and still does. My husband and I agreed that it was something we had to do, so it didn’t affect the marriage in much of a negative way. We had gone through some rough times and this was just one of them. We had three small children and we had to support them.

I never had a credit check run by a potential employer, to my knowledge and by the time the bankruptcy was finished, I believe I was approved for disability for my bipolar disorder and fibromyalgia. My husband did have an employer run a credit check, but it was after he had quit his job and this was illegal. The man was later fired.  My husband discovered it by accident and called the guy up and told him in no uncertain terms that he was never to do that again.

Mentally and emotionally for me, I guess I would say that I still have feelings of failure and depression when I think about that time in my life. The bankruptcy was just one aspect of many mistakes I made when my mental illness got out of control. I don’t think about it often and I try to believe I have learned from my mistakes and become a better person.

ATWS: Was there anything about the process that was shocking/surprising/unexpected?

Shelly: Going to court was definitely unpleasant and embarrassing and I would never want to do that again. My husband has always believed in paying our bills, as have I, and I am sure it was very painful for him as well. I was surprised at how easy the process was once it was in the hands of the lawyers and I no longer had to open those bills. It was like a huge weight was lifted from my shoulders, but I am still sad that this was something we had to do. We are not deadbeats and we work hard to pay what we owe.

I was surprised at myself, actually, when a neighbor had to declare bankruptcy two years ago. I watched them let go of their house voluntarily that they had worked so hard to buy and move to a rental with their six children and discharge all of their debts in bankruptcy. I was actually very angry with them for walking away from their house next door to us, when the husband had a decent job and I was surprised at myself for being so judgmental. It’s amazing how we don’t know what it’s like to walk in other people’s shoes. I am sure some people would judge me harshly for what we did and I can’t say that I blame them. We didn’t handle our money well and having three kids is very expensive. But there were definitely expenses for things we shouldn’t have done or didn’t need.

●Shelly, thank you for telling us all about your bankruptcy. Thank You for being a part of And Then We Saved.●

P.S. Ready to get out of debt ASAP? Check out the Spending Fast Bootcamp

1 comment

One thought on “$473K in Debt, Now What?!!?!!

Leave a Reply

Your email address will not be published. Required fields are marked *

  1. Katie

    I'm glad you were able to get a fresh start, Shelly! I'm sure that was a difficult process to go through, but it must certainly be a relief to be free from all of that. It's amazing how fast debt can accumulate when you're not paying close attention to it. Thank you for sharing your story!


Leave a Reply

Your email address will not be published. Required fields are marked *