# Has Anyone Faced Bankruptcy?



## Ruthanne (Aug 19, 2017)

Just wondering your thoughts on this (how to file bankruptcy) and how it worked out and any tips would be appreciated.I am interested in filing it and cannot make any payments with my income.


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## Butterfly (Aug 19, 2017)

I've not done it personally, but have known and worked with people who did.

Bankruptcy is NOT a step to be taken lightly.  Do NOT make the mistake of thinking it is something you can do successfully on your own -- You absolutely need an attorney who specializes in this area of the law and who can give you sound legal advice.  Do NOT make the mistake of taking the advice of non-professionals -- bankruptcy is an area fraught with potholes and absolute deadlines and tons of paper and which is very unforgiving.  Each person's experience will be very different, depending on the types of debt involved, assets, if any, involved, etc. 

If you don't know an attorney who specializes in this, call your local bar association and get a referral.  Most bar associations have a deal with specialist attorneys who will give you an initial consultation for a minimal price.  Good legal advice is an absolute must in bankruptcy matters.  Seriously.

If you are being hassled by creditors, get some good legal advice about what your options are.  Debt collectors will tell you they can do all kinds of stuff to you and threaten you will all kinds of scary stuff they cannot really do.  Bankruptcy is not a step I would take unless I had absolutely* no *other options, and I'd be sure, by getting some legal advice, that I really had no other options.


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## terry123 (Aug 19, 2017)

Most bankruptcies could be avoided by working out payment plans with creditors.  Most would rather do this than turn over to collection agencies as they take a big part of your payment as their fee.  I worked as a collection specialist for a hospital for 15years.  We would rather make a payment plan with no interest to a patient than turn over to an agency.  I had many patients making $10.00 a month payments and eventually paying their debt without interest.  We could have charged interest but chose not to as most patients had enough to worry about anyway.  Try to avoid bankruptcy if at all possible.  If I took bankruptcy I would feel obligated to still pay off my debt and I would as I would feel responsible for it.  Do get a referral from the bar association.  I used one probating a friends will and it cost me $20.00 for 30 minutes consultation.  It was well worth the $20.00,


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## Happyflowerlady (Aug 19, 2017)

Many years ago, back when the kids were little, and I was married to my ex-husband, he had been out of work longer than usual (he worked construction and it was seasonal) , and it looked like bankruptcy was looming in our future. 
We discovered an organization called something like the Consumer Credit Counseling, or similar to that. 
They looked at what we owed, and worked out a plan for us. things that we could return and cancel the debt, we returned, and things that we could not return, we made small payments on. 
With the plan, we paid so much each week from the unemployment check, and then that was adjusted when my husband went back to work again. 
No more bill collectors hounded us because they accepted the deal with the CCC, and however long it took for us to pay them off, they knew they would not have gotten any of it if we had filed bankruptcy. As the smaller bills were paid off, more money went to paying the larger ones. 
We were not allowed to buy anything else on credit until everything had been paid off. It was not an easy time for us; but it worked, and we were eventually able to get it all paid off and not have to file bankruptcy. 
The CCC was run by businessmen in the community; so I don't know if this is something that is available all over, or was just something they had where we lived at that time; but it is a possibility, if you can find a similar organization to help you.


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## Ruthanne (Aug 19, 2017)

Thank you very much  for your posts but payments are not an option for me and my income.  I see I didn't make that clear in my OP.  So I have edited it, sorry about that.

Does anyone have any tips on what happens in the process of bankruptcy; like what does the attorney have you do and what do they do, etc.  I am looking for tips from those who have gone through bankruptcy.


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## Lethe200 (Aug 19, 2017)

Yes, we have, although note the laws have changed and it is not as easy/useful now. A few info items I wish I had known, however, have not changed and should still be valid:

1) Do not, UNDER ANY CIRCUMSTANCES, use your retirement funds to try to stay out of bankruptcy (this assume you still do have them intact). We did not know that IRAs and 401k's, etc., are generally protected up to about $1M from creditors. When we filed, this was not a "legally defined limit", but it was accepted as a general rule in all states. The IRS has so far declined to disagree with the bankruptcy courts' rulings on this, so it stands as a _de facto _limit.

2) You need to have some actual cash on hand, at least $3-4K, to file bankruptcy. There are various fees including the attorney's, and it is all paid up-front. No one is going to extend you credit now.

3) Any items that can be secured by the creditors will be subsequently listed in the filings; those items will still be owed by you. Their value is depreciated so unless brand-new, just keep 'em and pay them off. So, if you charged new appliances on a Sears or Home Depot account, for example, those can be legitimately claimed by the creditors as assets that you must repay them for.

*KEEP ALL RECORDS* of your bankruptcy. We found even 15 yrs later some credit agencies had incorrect information that we needed to correct by writing in; only then was the issue cleared up because I could give exact dates and copies of the court documents.

Now: you need to know the impact on your credit report. This is from the myfico.com site run by Fair Isaacs, one of several credit rating agencies :
"Here's the basic breakdown of how long different types of negative information will remain on your credit report: *Late payments: 7 years. Bankruptcies: 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies. Foreclosures: 7 years."*

Afterwards: Make a plan for gradually reclaiming your credit rating. It can be done; we did it. It will be a multi-year plan, if you stick to it you can recover from this. Remember, what good credit ratings consist of is "longevity of accounts" and "consistent payments", as well as "total debt to credit limit usage".
- Make a budget and stick to it this time. Cut your cards up and turn over that new leaf. Start a savings account because you will need cash for those frequent little emergencies that you used to charge, like new tires or an emergency plumber.
- Apply for gas cards. They're often the easiest to get because they don't hold big balances anyway, and limits are very modest.
- Once you have saved up $1+K, get a secured credit card. DO YOUR RESEARCH. Google for the best (cheapest) interest rates and try very hard to find one that does NOT charge interest if you pay your balance in full every month. You'll need a minimum of $500, but $750 is better. Don't go overboard, you will still be using cash for as many things as possible.
- Use that card wisely and thoughtfully! Do not let yourself slip into bad habits again. But it is a psychological comfort to have one card that is available (if you need to rent a car, for example, most major agencies will not do it without a credit card), in addition to rebuilding your savings ASAP.

If you are careful and thoughtful about your credit usage, you will start getting bank solicitations for cards after a while. Those ad campaigns rise and fall in number; they will always be out there somewhere. Don't get sucked into that hole again! - you need to rebuild your credit, but do so at a pace that works with your budget, rather than draining it to feed bank profits.

By year 5 we were doing well in rebuilding our credit. We had three or four credit cards with low but useful limits, and two of them were unsecured. As time passed and we continued our [better] credit/budget habits, the charge limits were increased.

By year 8 our credit ratings were close to where we had been before the filing. By year 12 we exceeded it and have never been lower than 780 since.

Credit is useful. We're in our mid-60's and still using credit (just got a new car at zero interest). But you MUST learn to use it wisely, and not let it control you. Remember that every cent of interest you pay is with your own after-tax dollars, and should be added to the cost of what you charged!

Good luck to you going forward. HTH.


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## Ruthanne (Aug 19, 2017)

Lethe200 said:


> Yes, we have, although note the laws have changed and it is not as easy/useful now. A few info items I wish I had known, however, have not changed and should still be valid:
> 
> 1) Do not, UNDER ANY CIRCUMSTANCES, use your retirement funds to try to stay out of bankruptcy (this assume you still do have them intact). We did not know that IRAs and 401k's, etc., are generally protected up to about $1M from creditors. When we filed, this was not a "legally defined limit", but it was accepted as a general rule in all states. The IRS has so far declined to disagree with the bankruptcy courts' rulings on this, so it stands as a _de facto _limit.
> 
> ...


Thank you very much for all the information.  I am going to make a copy to keep at hand.  I have found an attorney that says the total will be $1200.00 and another one that claims about $1000.00 and another that said $900. but some time ago so it may have gone up.  

I don't have any appliances, cars that I got or anything big and my debt is probably less than some but enough.  I am on a govt. income and a very low one at that.  

Once again I appreciate the time you took to write your post.  It's very helpful.  God bless you.


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