Bankruptcy

Almost ten years ago my husband and I went bankrupt. Going bankrupt was something we had never imagined would happen to us. But first I and then he contracted a long-term illness and were unable to work. We went through our savings, cashed in an annuity; sold our second car and anything else we could spare. We were now on social security disability and no matter how hard we tried, we were unable to pay our creditors. The phone calls started day and night, as we grew more frantic. Finally, we faced the fact that we needed to file for bankruptcy.

We saw a bankruptcy attorney who started the process of bankruptcy. Soon the phone calls stopped. (I have since found out that you can write your creditors requesting that they stop calling and contact you only by mail and that this stops the phone calls.)

We were concerned that we would lose our one remaining car or even our home but bankruptcy allows you to keep property that is necessary for daily living. Extra cars or real estate probably does have to be liquidated but each case is different.

We filed for chapter 7 bankruptcy and, even with the new laws, this will still be the most common form of bankruptcy. One difference in the new law is now you must take an approved credit-counseling course before proceeding with bankruptcy. Your attorney can help you find a course.

But how do you find an attorney? Frankly, we found one in the yellow pages. We chose an attorney who specialized in bankruptcy and the cost was $1000. Today, the cost runs from about $1500 to $2000. If you know someone who has gone bankrupt, you might ask him or her for a referral. If your bankruptcy is simple, any competent attorney should be able to handle it.

Finally the day arrives when you go to court. Bankruptcy is handled in the federal courts so you will go to a federal court before a federal judge. This sounds scarier than it is. Basically, the court is a big room filled with about 200 people in the same boat as you. The cases are discharged in about two minutes per person.

After you have been to court, a strange thing happens. We were inundated with car loan offers. We had absolutely no credit and yet, here were all these people wanting to loan us $30,000 so we could buy a new car. We did not bite. After just getting out of debt, we certainly didn't want to get right back into it.

The hardest thing about bankruptcy is that you have no credit and probably no credit cards. It is difficult to operate in this society without a credit card, although it is easier now that there are debit cards. You can get a credit card through your bank by securing it against a certain amount of money-as low as $200. Credit card companies will also begin to offer you credit cards, but beware. These cards can cost you a bundle. Not only are the interest rates very high but there are a number of charges: the set up fee, the yearly fee, the one time fee, the fee on the fee. If you add up all the fees, they can run up to $300 and more.

A bankruptcy lasts ten years before it is discharged. We are almost at that magic point.