Bankruptcy is Not the End of the World
By Julia A. Keirns
I was young and naive. When I got married 35 years ago, I was the one who brought credit card debt into the marriage. I do not even remember now which credit cards I held, but there were a ton of them. I quickly taught my husband how the lure of buy now, pay later was an easy way to live beyond our financial means. We never went without, and neither did the kids.
By the time our youngest child graduated high school, we were in debt over our heads and the economy got the better of us. We fell into the housing refinance trap and ended up losing our home of 20 years in the Great Recession of 2008. Bankruptcy was literally our only way out.
It was not an easy process to declare bankruptcy and not one I would ever want to go through again. It was actually almost more work than it was worth. Many times, I wished we could just keep plugging away on the bills and not go through the whole process. It was not a fun time.
The first thing we needed to do was find a bankruptcy lawyer, and then decide if we should discharge all of our debt completely, or if we should come up with a repayment plan. Our Bankruptcy Lawyer was able to guide us and help us decide that we needed to go ahead and file for a Chapter 7 Bankruptcy.
Chapter 7 Bankruptcy discharges all of your debt with a few minor exceptions. Exceptions include student loans, court awards, fines or fees, and any taxes owed. Chapter 13 Bankruptcy, on the other hand, reorganizes your debt so you can keep your property such as a home or vehicle. It lays out a plan for repayment.
As we entered the process it was pretty easy to see that we needed to just forfeit our house and car and completely walk away from the home we had raised all three of our children in. It was a hard time, but we looked at it as a new beginning. We rented a home in a different town, found a car dealer that would loan us the money to buy a new vehicle and started over.
If you must declare bankruptcy, you must also change your spending habits, or you will simply fall right back into the same situation as before. I liken it to dieting. If I do not change my eating habits, then the weight will just come right back on, and usually worse than it was before.
Keeping current on any and all bills is important. It will take a full seven years for the bankruptcy to fall off of your credit report, but once it does you will be free of it forever. Today we have brand new vehicles, a new home, and pretty good credit scores.
If bankruptcy is in your future, it is not the end of the world. Life will go on and you will survive. As long as you change your spending habits and stay on top of the bills, you will repair your credit and will have learned some very important lessons along the way.