I never have been good at bankruptcy..
My husband and I have been married for 14 years and we have a 28k damage, 20k is all medical. I almost died and three kids and four miscarriages will do this to you.
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Maybe this has already been done but $24,000 doesn't seem like a very large debt, and it seems this family is working hard so there must be a way to budget their money more wisely. Other people have lived on a low income and still paid off debt, controlling expenditure is the key and there is loads of free advice on the internet or from government agencies. Have they exhausted all avenues like charities and churches which give budgeting advice and support? Do they record all spending and analyse whether it is on a 'need' or a 'want', e.g.
Regards
Jo
Exhausted's story sounds very similar to our situation. I was fresh out of high school and working a full time job when the credit card offers started coming in. We were married with debt to begin with and the debt only grew and we had children (we have 3). We were always stressed and life really was tough.
Without going into all the details (which is very similar to Exhausted's) we finally filed for banktruptcy in September. We understood the consequences, and frankly, I never want to touch a credit card again!
Well, about 2 weeks after we filed, we were able to trade in our "broken" van for a newer one and offers started coming in for credit cards again (which I immediately shredded). Sure, the interest is higher for the credit, but we're also not paying late fees and the minimum payments that never seem to go down either.
We truly feel like we are starting over. We have more money to save, more money to take care of the kids, and less stress all around. We only filed because we felt like we had no alternative, life wasn't very "livable", but now with this fresh start, and all the lessons we've learned about debt, we're better off!
Before we filed, I spent a lot of time researching debt and bankruptcy online, TheDollarStretcher.com has been very helpful too. Yes, we have internet access, but it's dial up, and for us the internet has been great tool and worth the $15.00 a month we pay for it. We just had to cut back on other expenses (like cable tv, newspapers subscriptions, etc.)
This article just caught my eye and I wanted to let others know you are not alone either! :)
I would just like to respond to the last posting. Both my husband and I are contemplating Bankruptcy for several reasons. He was illegally fired. (We are currently retaining a lawyer to fight this.) The job that he was fired from would have allowed us to be out of unsecured debt completely in 2 - 3 years. I work, but my work doesn't bring in enough to pay the bills. I have a second job and in the mean time my husband is doing some self employed work.
When I talk about bills, yes we have internet and we have two computers (one computer was paid for - in cash - by his self employment last year when he made a small profit for his business) and the other was built and given to me by my father. Our internet is DSL (which now that we have purchased a wireless internet card we can utilize local "hot spots" and not pay for internet at all. Our phone bill is as low as it can go. My car is up for sale (we purchased it because with his job we needed 2 vehicles).
Please be careful when you talk about wants and needs. Yes, there is a higherarchy of needs that says that food and shelter are at the top of the list. But one really needs to look at the whole situation before judging someone's wants and needs. i.e. we need the internet to communicate with clients to save on phone bills which would be exorbant without the internet. Determining wants and needs is a careful balancing act, and in our case, when family is unable or unwilling to help lower expeneses (I asked my mother if we could move in with her to catch up while my husband looked for a job) and debt is high - not because we are spenders, but because people time and time again have taken advantage of us. Time and time again people have told us to "cut our losses" because we are young. $20,000 we are cutting our losses and considering bankruptcy. We live our lives in honesty and integrity.
My point is simply this: not everyone who files for bankruptcy is there by thier lack of understanding what is a "want" and what is a "need". Sometimes, life throws you an unexpected curve ball, even when you are living beneath your means.
I would just like to respond to the last posting. Both my husband and I are contemplating Bankruptcy for several reasons. He was illegally fired. (We are currently retaining a lawyer to fight this.) The job that he was fired from would have allowed us to be out of unsecured debt completely in 2 - 3 years. I work, but my work doesn't bring in enough to pay the bills. I have a second job and in the mean time my husband is doing some self employed work.
When I talk about bills, yes we have internet and we have two computers (one computer was paid for - in cash - by his self employment last year when he made a small profit for his business) and the other was built and given to me by my father. Our internet is DSL (which now that we have purchased a wireless internet card we can utilize local "hot spots" and not pay for internet at all. Our phone bill is as low as it can go. My car is up for sale (we purchased it because with his job we needed 2 vehicles).
Please be careful when you talk about wants and needs. Yes, there is a higherarchy of needs that says that food and shelter are at the top of the list. But one really needs to look at the whole situation before judging someone's wants and needs. i.e. we need the internet to communicate with clients to save on phone bills which would be exorbant without the internet. Determining wants and needs is a careful balancing act, and in our case, when family is unable or unwilling to help lower expeneses (I asked my mother if we could move in with her to catch up while my husband looked for a job) and debt is high - not because we are spenders, but because people time and time again have taken advantage of us. Time and time again people have told us to "cut our losses" because we are young. $20,000 we are cutting our losses and considering bankruptcy. We live our lives in honesty and integrity.
My point is simply this: not everyone who files for bankruptcy is there by thier lack of understanding what is a "want" and what is a "need". Sometimes, life throws you an unexpected curve ball, even when you are living beneath your means.
By Gary Foreman
My husband and I got married quite young, made some unwise financial decisions and ended up in debt (some credit card, some personal loans) with a grand total of $24,000. My husband has worked very hard over the years, sometimes 3 jobs at a time trying to make ends meet. We have gone through credit counseling, and a consumer proposal. We are the parents of 3 young children and have had to choose between paying our bills so we wouldn't go bankrupt or buying groceries. After many years of trying we feel that we have no other choice but to file for bankruptcy. We honestly would like to do anything else but we feel that this is our only alternative.
Exhausted in Sudbury
Exhausted is not alone. In 2004 there were about 1.6 million bankruptcies in the U.S. and another 80,000 in Canada.
According to the U.S. Federal Reserve, the typical filer has about 1.5 times their annual salary in short-term, high interest debts (like credit cards and personal loans). About 2/3 of the those filing say that they have lost a job and about 1/2 have faced a serious health problem.
Canadian and U.S. bankruptcy law are fairly similar. There's a national law that authorizes bankruptcy and then state or provincial law determines things like what property you can keep through a bankruptcy.
Basically, a bankruptcy discharges certain debts and says that the creditor is no longer entitled to repayment. The purpose is to allow the debtor to get a fresh start and creditors to get an equitable distribution of any assets.
Just because debts are eliminated doesn't mean that the slate is wiped completely clean. Debts discharged in bankruptcy will appear in your credit history. In Canada they will remain for 6 years. In the U.S. the bankruptcy will appear for 10 years.
There are also some debts that a bankruptcy won't eliminate. In both the U.S. and Canada back taxes, alimony, child support, and student loans are not discharged. Canadian student loans can be discharged 10 years after graduation.
OK, now let's look at Exhausted's question. When is it time to throw in the towel and file for bankruptcy?
Exhausted is correct. Bankruptcy should only be used when the other alternatives have failed. When minimum monthly bills are more than the family can pay, the first step is to contact the creditors and ask for a payment plan. If that doesn't provide enough breathing room, it's time to contact a qualified credit counseling agency. They can negotiate the interest rates down.
Neither of those steps will reduce the amount owed. It will only cut interest rates and create a more livable payment plan.
Sometimes, that's not enough. If a credit counselor can't work out a plan to pay off your debts in less than five years, then it's time to consider something more drastic.
In Canada a debtor can file a 'consumer proposal'. It brings in a trustee and asks for a reduction of the amount owed and/or the interest rates charged. The debtor makes payments per the plan. At the end of the plan remaining debts are discharged. Creditors have the right to reject the proposal.
In the U.S. a chapter 13 bankruptcy filing serves a similar function. It's meant for people with a regular source of income and enables them to keep some valuable property (such as a house) while putting together a payment plan that usually runs 3 to 5 years. Payments must be completed under the plan before the remaining debts are discharged.
If Exhausted's income is only enough to cover living expenses without repaying debts, a bankruptcy filing in Canada or a chapter 7 bankruptcy in the U.S could be appropriate. In either country, if there's income available for debts, it's the court's responsibility to redirect the debtor to a consumer proposal or chapter 13 filing.
In a Canadian bankruptcy or U.S. chapter 7 filing, the court appoints a trustee. The trustee collects the debtor's assets, sells them and then pays the money out to the creditors. Some items are exempted from the sale. After the proceeds are distributed to creditors the remaining debts are discharged.
There are other things to consider when deciding whether to file for bankruptcy. Bankruptcies are public records. In the past you could be pretty sure that no one would find out unless you told them. But, in today's interconnected world that's not so sure.
It's also possible that the debtor has some asset that they could lose during bankruptcy. For instance retirement accounts or valuable family heirlooms could be liquidated.
In the states, there will be filing fees, typically about $200. Your lawyer will get about $1,000 in fees, although you can keep that down by having current statements on all your income and debts. Many will offer one free consultation. Canadian fees are government regulated and typically are paid out of the assets available to creditors.
Exhausted should also pay attention to proposed bankruptcy legislation in both the U.S. and Canada that would make it harder to declare bankruptcy.
Finally, there is one reason for Exhausted to smile despite the challenge her family has faced. There was a time in old England where a person unable to pay their debts could get the death penalty! Fortunately that law doesn't apply today and no one is adding it to any proposed legislation.
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Have you tried watching the Suze Orman Show on TV. She is a financial genius. If you would like to email your question to her, she might include it on her show, or she might even talk with you. Go to Suze Orman.com. She is on Sat and Sun evening in CT on CNN. Check your local listings as she counsels many on bankrupcy which is NO shame. I wish you so much better fortune and peace of mind. God bless. She has written several excellent books dealing with finances. Check your library.
You might consider contacting a credit and debit counselor. We did this 8 years ago and are finally in a position to be considered "stable". Many agencies of this type are free and they then handle all the calls from creditors.
Also, most creditors are willing to work with you and take payments, no matter how small the amount. We were at the point of paying just $10 a month on a large medical bill just a few years ago. As other things were paid for we were able to step up that payment amount and take care of our obligations, our debts.
This is a very hard decision to make and I have been where you are. Hang in there and know that you are not alone.
Wait, do not do it. As you know it will stay on your credit report for at least ten years. Have you contacted the hospitals and asked them to write off the medical bills because of your low income? Try it, they very well may do so. Also, check out this website crown.org. They may be able to help further. Hope this helps.
If you think you need to declare bankruptcy, do it NOW! The laws are changing (fall 2005?) so that it will be much much more difficult to declare bankruptcy in the future.
You have my deepest empathy. I remember hearing that the greatest percentage of bankruptcies were for medical bills. I know you'll make the right decision.
coolchinchilla
You do not need credit card debt to be rated. You are rated on how you pay your bills no matter what they are. If you file make sure you have no significant assets they can take from you. And do it NOW as suggested above. Laws regarding bankrupcy are changing fast. I think those who criticized you for "bad spending habits" were incorrect to do so. Medical bills do prompt bankrupcies. Good Luck.
Honey, wait! Don't jump the gun. If bills are medical, and from a hospital, call the billing office. Ask them about uninsured or hardship help. Most times, THEY WILL NOT OFFER THIS INFO! I got over $800 basically wiped away because of this. Hope this helps. Good luck.
I can't tell you whether you "qualify" for bankruptcy or not. I do so empathize with your situation.
A few years back I filed bankruptcy after an accumulation of medical bills. It was not what I wanted to do. I was hospitalized twice in one year and between multiple tests and medications the bill mounted. I tried my very best to pay off the bills and did have some of the medical bills discharged but I was still in over my head.
I did call Consumer Credit Counseling services to attempt to get their help on getting out of debt. When I gave them all my information their reply was "File bankruptcy. You don't have enough income to ever get out of this amount of debt." Therefore, to bankruptcy I went.
I'm not sure I am explaining this very well. What I am trying to say is that sometimes life deals you a rough hand and sometimes your hand is forced towards a decision that you don't really want to make.
Many people now tell me that I need to get credit cards to build my credit back up but they scare me to death. I had my fair share of credit card debt because of trying to pay off the medical bills and make ends meet. Anyone who has tips on how to build my credit without credit cards, I would appreciate it. Thanks. :)
Try speaking to someone at your county assistance office--they once told me that if I had come in and told them about our financial situation and medical debts, they would have erased them completely! It may not be that way in your area, but it is worth a try, right? Just an hour out of your day..
good luck and God bless through all of this. I pray that you have the wisdom and peace you need at this time..
I don't think so you can't afford the filing of bankruptcy, you need an big amount for that.
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