Bankruptcy and BIG Wins Interview Series!

When I was in thick of my debt I couldn’t see anyway out of it. I thought that if I was ever going to get out of the debt I would need a miracle to happen. The options I saw in front of me were to either file for bankruptcy or win the Lottery. Both extremes. Bankruptcy was a scary and foreign thought and it wasn’t a road I wanted to go down but I was headed there with my financial mess and winning the Lottery was pretty unlikely since I never even played!

The Bankruptcy and Big Wins series includes interviews with people who have either filed for bankruptcy or who have come into very large sums of money through unconventional means. We will be exploring these two extremes and the effects of both on life in the short and long-term. I hope you find these interviews as interesting and insightful into the extremes of money as I do.

The 1st interview (below) is with women named Lisa who filed for bankruptcy.

bankruptcy and big wins

Let’s get started with the 1st interview!…

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

Lisa: About 17K

ATWS: What year did you file?

Lisa: 2010, discharged 2011.

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

Lisa: All credit cards. Two were major credit cards, both at their max. I also had a credit card  I used for the vet for my dog, which was sick at the time.

ATWS: How was the debt acquired?

Lisa: It was all acquired over time. I moved out of my parents home at 18 and lived beyond my means for a while, because I had the credit cards. I would charge groceries, airfare, clothes. I would never pay the entire amount, just what I could afford at the time the bill was due. By the time I realized what I was doing, it was too late and I ended up playing catch up for a VERY long time.

ATWS: Did creditors harass you? If so, what was that like and how long did it go on for?

Lisa: The only thing I was ever harassed for was medical bills, they would call. I eventually set up payment plans with them to knock out those bills. My other bills, I was pretty good about paying the minimum.  This of course did not help me in the long run, but at the time I felt like I was keeping up on everything.

ATWS: What was the process like to ultimately decide to file?

Lisa: I always felt like bankruptcy was a death sentence, it wasn’t even an option for me. I thought I would eventually figure it out and knock out all my bills. I had tried budgeting etc. Casually one day while talking to my parents they asked how much money I owed. (I never told anyone prior to this, it’s an embarrassing thing to talk about. I didn’t like not having complete control over it and have it figured out by the age of 32.)  I said, “Oh, it’s not that bad – a little over $15,000.” My father’s jaw dropped, that’s when the bankruptcy conversation happened. I was completely against it.  Ultimately I thought, well a conversation with a lawyer couldn’t hurt. So I called someone a friend had used for their bankruptcy filing.

ATWS: Did you talk to professionals before filing? If so, what types of professionals?

Lisa: Yes, a bankruptcy lawyer.

ATWS: Did you try other options before filing? If so, what did you try?

Lisa: I tried budgeting. I tried paying one off at a time, which I was actually successful at with my store credit cards (and haven’t touched one since!) I even tried putting my debt amount on the refrigerator, reminding me constantly of what I owed. I called all my credit cards trying to get interest rates lowered, sometimes that worked, other times it didn’t. Writing this it doesn’t sound like I tried much, but it sure felt like it at the time.  I really thought I was doing all I could do.

ATWS: How long was the entire process from start to finish? What was it like? What was the cost?

Lisa: I began talking to the lawyer in November of 2010, we filed in December (officially). My court date was  in February of 2011 and I found out in March that my debt had been discharged. My court date was so much later than the file date due to the amount of people currently filing for bankruptcy, per my lawyer – it did not used to take that long. The process itself was fairly easy. Having a lawyer do all the work for you was the way to go! I met with him about 2 times, spoke over email answering a few extra questions he needed answered.  Then I went to court, answered a few questions for the judge there and that was it. More than anything I was just anxious not knowing during that in between time and hoping it would go though. I paid my lawyer $600 to get the ball rolling as a deposit. After that the cost was about another $1200, which I made payment plans with him to pay them off automatically coming out of my bank account each month.

ATWS: What were your feelings when you filed compared to today? Have your feelings and thoughts on this changed?

Lisa: I honestly though bankruptcy was a death sentence. It’s not something you want others knowing, it was embarrassing to think it was something I couldn’t take care of myself. Now – well, now I think it’s one of the smarter decisions I’ve made. I was in over my head for so long. I was stubborn thinking I would eventually figure it out. But being a single girl, with one income – I now think it was ok to get help/file. A fresh start isn’t all that bad.

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

Lisa: It has changed slightly. I was pretty smart about my money while trying to pay off my bills (after the damage was done), that hasn’t changed. But now because I can, I want to save. Before, that thought wouldn’t even enter my mind, because it couldn’t.

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

Lisa: I think it was good. My credit score is already back up there, above average (706). I don’t stress about money like I did before and I don’t have to worry about SO MANY payments! For the simple piece of mind, to me, that’s worth it.

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

Lisa: Pros – same reasons as above, plus I’ve learned a lot. The only con is that I know its marked that I’ve filed bankruptcy. But at the same time, I’m single, I don’t plan on buying a home anytime soon and I know this was the best option for me.

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

Lisa: Filing? No, filing didn’t affect those areas. Being in debt, being in over my head affected those areas. The stress of having that amount of debt over your head I think would affect most. I think filing alleviated that.

ATWS: How has filing affected your financial life specifically?

Lisa: My credit score has gone up, rather quickly. In the past few weeks I purchased a new car. Something I never thought I’d be able to do on my own. My lawyer mentioned with something like a car payment, it will help your credit grow, faster. I had been trying to get a car for a few years, but always had money going elsewhere. I now have that money to use, because it’s not going toward 3 different minimum payments a month.

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

Lisa: Not really. My lawyer let me know what to expect. It was all very straightforward.

ATWS: Have there been any effects of filing that you didn’t anticipate? Or weren’t expecting? If so, what?

Lisa: I think the most surprising thing to come out of this is my reaction to it. I thought I was going to be miserable and I’m actually really happy I did it.

ATWS: Do your friends and family know about you filing? How did you come to the decision to tell them or not? What has their reaction been?

Lisa: My family obviously knows. I have told a few friends, but its generally not something I just bring up. All have been supportive. But I will say I did have one friend react in a way that made me feel like I SHOULD be embarrassed, which I’m not anymore. Something along the lines of “Oh honey, I’m so sorry!! Are you ok?” Ha, I’m great! I feel a hell of a lot better than I did this time last year.

ATWS: Is there anything you would like to share that you haven’t been asked? 

Lisa: I know there are other options for getting out of debt. AndThenWeSaved.com is fantastic proof of that.  I think for me, bankruptcy was a last resort. I wish I had done it sooner and not had such horrible thoughts about it before. I’m not trying to make bankruptcy sound like this great thing that everyone needs to try but for me, it is what I needed, right when I needed it. I have made my financial mistakes and learned my lessons, I don’t plan on repeating them. I have no credit cards, I’d like to keep it that way for as long as I can.

 

● Lisa, thank you for your honesty and willingness to open up about a typically un-discussed topic. 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

9 comments

9 thoughts on “Bankruptcy and BIG Wins Interview Series!

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  1. Brenda Piampiano

    My concern is that Lisa has jumped into debt AGAIN to buy a new car, an expensive proposition at a time when her accumulated savings is probably still very low. A new car drops in value the instant it is driven off the lot. A new car may not be truly affordable in Lisa's circumstance. Everyone should be aware that the willingness of the lender to extend credit post-bankruptcy is based largely on the fact that a person who has filed for bankruptcy cannot re-file for several years.

    Reply
    1. ashley

      you need to rebuild your credit immediately after filing for bankruptcy. i’ve literally had banking institutions tell me this – the key is to be moderate and thoughtful on how you will do it. i too bought a new car after filing – because my old car broke down. i have 1 credit card and just my car payment [plus my student loans that do not go thru discharge] and it’s helped raise my credit score significantly and signal positive credit.

      Reply
  2. Amanda

    While I admire Lisa's honesty, it's interesting to me that bankruptcy was the only answer when she was *only* in 17K of debt. I've known people making extremely low salaries and supporting families that were able to get out of much more debt than that by just applying the same principles as The Spending Fast – sacrifice. The interview doesn't mention that she lost a job, or was unable to pay her bills for some other reason, right? It sounds like it was just too "hard"?

    Reply
  3. Andy

    Amanda, I completely agree with you. It seems that Lisa didn't try too hard to find ways to pay off the debt. A second job, selling items, garage sell, etc would all be on my list before I got to the last option of bankruptcy.

    Reply
  4. Ben

    So, 17k-1800 (cost of bankruptcy) – new car debt equal ?
    Bankruptcy addressed the symptom and clearly not the problem.
    Sell that car. Save money. Pay cash. Otherwise keep that lawyer handy.
    By the way listening to financial advice from a bankruptcy lawyer is equivalent to following marital advice from a divorce lawyer….d'oh!

    Reply
  5. Amy

    Given that the debts that caused the most concern were credit cards, she would have been a great candidate for a debt management plan offered through a nonprofit. Through the plan she could have paid off all her debts in full in 3-5 years and avoided the harsh mark of bankruptcy on her credit. Full disclosure, I work for just such a nonprofit. We also do bankruptcy counseling, so we see all kinds of scenarios.

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