First Person: Thriving After Our Bankruptcy Filing

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It used to be that when you said the word "bankruptcy" people gasped and secretly thought bad things about you. It used to be that the only person responsible for ending up in bankruptcy was yourself. When Wall Street and corporate CEOs were honest people, there were less bankruptcies. When mortgage companies did not commit fraud, there were less bankruptcies. When healthcare costs were affordable, there were less bankruptcies. When people had jobs, there were less bankruptcies.

Now, bankruptcy can be a life-saving event that protects your home, your car, and your family without the negative social impact. I am not ashamed of having to file for Chapter 13 bankruptcy after our gasoline distributor at the small convenience store we owned itself filed for bankruptcy, sending our business into a financial nose dive. We made the mistake of using credit cards and loans to try to save the business, but it was hopeless after the legal and regulatory expenses and the costs to become independent gasoline retailers.

In our case, we were able to sell the business, our home, and our personal possessions at a loss prior to filing for bankruptcy. I figure it took us 10 years to get into financial trouble, but only five years to get out of financial trouble. That is not so bad. The hardest part of deciding to restructure our financial life was taking the first step toward bankruptcy and not being ashamed.

Shop for A Good Bankruptcy Lawyer

We interviewed with five different bankruptcy lawyers before we found one that we felt was really going to fight for the best outcome for us. In some cases, you have to pay around $250 up front to get a full financial analysis of how your bankruptcy will be structured and how much debt you will have to pay back to the creditors. In the end, that couple hundred dollars could save you thousands of dollars.

After losing our business, my husband and I found jobs, rented an apartment, and started to rebuild our lives one day at a time. We barely made more than $50,000 a year in income, so we could not file for a Chapter 7 bankruptcy that would have eliminated all of our debt forever. Instead, we had to file for a Chapter 13 bankruptcy that required us to pay back the debt in monthly payments over three to five years, depending on how much we could afford to pay each month. The amount of debt we had to pay back depended on which creditors filed claims against you, and which of those debts were secured or unsecured. We found that some bankruptcy lawyers do not tell you all of the facts up front.

For example, the first two of the five bankruptcy lawyers told us to quit paying monthly payments on ANY bills and wait for a creditor to sue us. Creditors have three years from the day you stop paying until they can sue you. In some states, the creditor can file a lien against you or garnish your wages. This is risky and can end up costing you more money in the end. We moved around the country with our jobs and did not pay like the lawyers said to do. The creditors found us anyway and one of them sued us. In fact, the local constable served our papers to us on Super Bowl Sunday, during the game!

After a year of all the penalties and interest on those debts, the amount of debt we had to pay back under Chapter 13 TRIPLED! The lesson we learned is if you have to file for bankruptcy, do it immediately and don't play the gambling game thinking the creditors will not find you or will not sue you. Of course, in any case, you should seek legal advice for your own circumstances, but still shop around and get more than a couple opinions from different bankruptcy lawyers. When we did find a good bankruptcy lawyer, the legal fees totaling $2,500 were included in the bankruptcy monthly payments, so we did not have to pay that up front.

Life After Bankruptcy Temporarily Belongs to the Bankruptcy Trustee For Good Reason

After filing for bankruptcy, we were assigned a bankruptcy trustee from the court. We think of our bankruptcy trustee as our personal debt counselor to help us through our debt restructuring process. There are some rules we have to follow while in a Chapter 13 bankruptcy:

- We must submit tax returns for three years to the bankruptcy trustee. We cannot file for a tax return extension without permission from the court. If we get a tax refund of more than $1,000, we have to send it to the trustee to help pay the bankruptcy debt.

- We cannot apply for any new credit or loans, including a car loan, without getting permission from the bankruptcy trustee. We j ust say no to those retail clerks who ask if we want to apply for a credit card to save 20% on our purchase!

- We must complete a debt management course, some of which are offered on the Internet or over the phone, prior to the bankruptcy hearing and at the end of the five years prior to our bankruptcy debt being paid off. Typically the cost of this course is around $35.

- We must notify our lawyer and the bankruptcy court if we move, if our income changes, or if we cannot pay your bankruptcy payment each month. We did learn that we can be late on our payment as long as we do not miss three consecutive bankruptcy payments. If we miss three consecutive payments, the court can dismiss our bankruptcy and we will have to start all over again, including filing and paying more lawyer fees.

Advantages of Life After Bankruptcy

The emotional impact of financial ruin can be devastating but it does not have to be if you think of the advantages of life after bankruptcy. The hardest part of life after bankruptcy for us was convincing ourselves that we could survive and not be ashamed of having to start our financial life over. We do not have a fancy house, fancy furniture, a fancy car, or a lot of nice personal things, but we have what we need to get by until our five-year Chapter 13 bankruptcy is over. Five years is a very short time in the scheme of life. Think about these advantages of life after bankruptcy:

You can still buy that brand new 60" HD TV with cash. When it is sitting in your living room, you can feel proud that you saved enough money to buy it and don't have to worry about how you will pay the credit card payment. That is what we did! What a relief and moment of pride in your effort to rebuild your life.

I saved enough cash to buy a brand new washer and dryer for our apartment, and I do not have to worry about a monthly payment. I may be financially starting over at age 55, but each time I can get something I need with cash, it feels like a great financial accomplishment instead of a load of bricks on my shoulders wondering how I will pay for it.

I never have to worry about the credit card companies raising my interest rate or canceling my card because I don't use it enough. In fact, after seeing the way credit card companies treat their best customers, I will NEVER have another credit card with more than a $1,000 limit! Credit card companies who prey on customers with limited means or customers trying to be financially responsible will NEVER again take advantage of me. Life after bankruptcy has taught me how to buy what I need with cash or live without it.

Life after bankruptcy does not mean you will never again get credit. When we rented our apartment after bankruptcy, we did have to come up with two months rent or get a cosigner on our lease, but that was a small price to pay considering we are now living with no financial pressure. Once we had a one-year history of renting with a good payment history, we were able to rent the next bigger apartment without the extra lease assurances.

I never have to worry about any hackers stealing my identity because I no longer have anything they want.

Even with a bankruptcy on my credit report, I was able to get a good job with healthcare benefits and retirement benefits that definitely helps me to rebuild my financial future. Life does not end after bankruptcy; in fact for me, it got much better. I am happy again.

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