The article includes a story of a woman that had a ton of credit card debt, $37,000.00 to be exact and with student loans around the corner to pay, she felt she was on the verge of disaster. In short, she ended up going through credit counseling that helped her budget and get the debt under control before the student loans were due, thus avoiding bankruptcy.

I took the quiz, and realized from the first multiple choice question that the questions all had obvious answers, such as “do you only pay the minimum payments on credit cards?” or “have you had to resort to cashing out your retirement to pay bills?” etc. and etc. So you have to be honest if you really want to gauge whether you’re on the verge or not (according to the quiz, anyway). I wasn’t. I picked all of the wrong answers on purpose and this is what my results were:

Someone made a mistake here. I don’t think congratulations are in order, but maybe there isn’t anything nice to say to someone that is almost 100% on the verge of debt disaster. That’s like telling your kid, “Yay! You’re going in time out!”

If I had written the article, I would’ve picked “Boooo. You’re in Big Trouble,” but alas, it wasn’t my article. Because, in the end, when you’re on the verge you know you are. Putting it in a fancy dress doesn’t change anything.

Anyway, if you want to find out or at least get an idea, try out the quiz. But be honest.

Note to self: I should stop taking these quizzes if I’m not going to take them seriously.

Monday, Steven Slater, a flight attendant for JetBlue became a hero to all who have thought of or dreamed of walking out on their job. Granted, there are a few additional points to Mr. Slater’s story that made him more exciting than most that quit their jobs.

First, he basically cursed everyone out over the intercom system and then opened an emergency slide and slid out of the airplane. Not of course until he snatched two beers on his way out.

Whether you are a fan or not of Mr. Slater’s, the fact remains that no matter how crappy our jobs are, most of us cannot just walk out, let alone in such a spectacular fashion.

If you are considering bankruptcy or have filed bankruptcy, you most certainly cannot quit your job. Unemployment is way up anyway, and it’s pretty commonplace for employers to run credit checks on applicants. There is a chance that you will not only find it difficult to find another job, but could also be denied employment because of your bankruptcy.

The professions that pay the most attention to whether you have filed bankruptcy or not are often finance related and either focus or deal with money or credit.

What Do You Do?

If you have filed bankruptcy and are job hunting make sure you are honest and upfront. If “Have you ever filed bankruptcy?” is on the application, make sure you answer truthfully and hopefully you can explain. Generally, people are more understanding of bankruptcy if it is caused by medical bills or unavoidable circumstances.

Also make sure that you keep your credit report clean and try to improve it by making any payments on time and managing the credit that you have wisely. This at least shows that although you filed bankruptcy, that you are on the right track to improving it.

Last, if you can, don’t apply for jobs that are finance related. This includes financial institutions, collection agencies, lenders and stock brokers. You may have to find a job in a different field until your credit report improves.

Most of all though, if you are employed when you file bankruptcy it isn’t a good time to follow in Steven Slater’s heroic footsteps. Bankruptcy is stressful enough without the added pressure of trying to find a new job, even if you do have an emergency slide. And two beers.

A year after my bankruptcy I acquired a slew of credit cards. Like a trick to mess me up and I fell for it. No one needs the credit cards I have.  My parents also co-signed on a vehicle that I needed and two years after the bankruptcy I was able to buy my own car. I was even approved for a low interest rate on the loan. My credit was over 700 (for some odd reason).

Combine bad spending habits, medical bills, being a single mother, and of course the bad economy and you have officially concocted something muddy that could possibly result in another bankruptcy. It was the fear of going through this again, of looking like a failure…again in yet another area of my life that jolted me back to reality. Kind of. I did suddenly become aware of the fact that I was heading for trouble again.

Luckily, I’ve managed to pay a lot of it down and am able to work on getting things in order. I need to purchase a house one day. I need to be able to buy things for my child. I need electricity. Living financially irresponsibly is no longer my cup of tea. Raising my daughter with money sense the way my parents raised me, is the new drink on the menu.

Credit Cards I Acquired After Bankruptcy (I know you want to know)

• Hooters (no reason, except that they gave me a higher limit than everyone else.)
• Capital One
• HSBC
• WAMU (who was sold to Chase, who totally messed me all up. See: Any posts regarding Chase Bank.)
• HSN I do not use anymore
• Walmart I do not use and should not. Do not charge stuff from Walmart, that’s just dumb.
• Target I do not use and should not. Do not charge stuff from Target, that’s just dumb.
• Kay Jewelers I have never used but have an open line of credit which I will never use.
• Barclays Bank (or Juniper)
• Car loan was with my credit union.

So, it’s not so difficult to get the credit as most people wonder about. It’s actually managing the credit wisely and changing the habits that make us resort to bankruptcy in the first place. Hopefully we can learn from the first time so we don’t have to resort to it again.

Student Loans:  Unfortunately, many people have huge student loans that cause the bulk of financial difficulty. Student loans can only be discharged in bankruptcy if it is proven that paying them back would cause the debtor or the debtor’s family undue hardship. Debtors also need to prove that the circumstances of the hardship will not improve, which may be difficult.

Taxes:  If you have tax problems that need to be repaid, you won’t be able to depend on bankruptcy to assist you. Most state, federal and local taxes are non dischargeable debts that have become due within the past 3 years will need to be paid.

Alimony, Child Support and Support Payments:  If you owe anyone any of these forms of support you will still be responsible for the debt.

Criminal Fees or Restitution: If you have fees or restitution that is owed because of a criminal matter, these debs are non-dischargeable.

Debt from Fraud or Illegal Activity:  If the court finds that you owe debts for any activity deemed fraudulent or illegal, they will not be discharged in bankruptcy.

There are certain circumstances where in rare cases non-dischargeable debt can be included in the bankruptcy. Most of the time the debtor will need to file a Complaint to Determine Dischargeability and show that the debt isn’t covered by the general rules of non-dischargeability. Make sure if you are considering bankruptcy that you are aware of which debts will be discharged and which ones will not.

This article, The Truth About Bankruptcy, by Mr. Ramsey, kind of sums up his doom and gloom theory on filing bankruptcy. Don’t get me wrong, filing bankruptcy is nowhere near a day at the state fair. I’d say it’s more like being at the top of the roller coaster at the state fair and you’ve realized you’ve peed on yourself. Embarrassing, if anything. Not the end of life, though.

Anyway, in the article, Dave Ramsey shares his feelings on why filing bankruptcy will completely and utterly destroy one’s life. I disagree. Mostly. But then again, look at my bank accounts. Look at his.

Still, as someone who has been there and secretly done that, here are my thoughts.

Bankruptcy Destroys Marriages

Possibly. In all fairness, any financial difficulty results in divorce, or at least assists it along in some way. But so does an abundance of money. Maybe the feeling of “starting over” makes people realize that they should actually start fresh and clean in all aspects of their life. Maybe the marriage wasn’t the greatest in the first place. If filing bankruptcy results in divorce, I’d have to say there are a number of other reasons that were equally the cause.

Bankruptcy Devastates Your Job

I don’t recall this happening to anyone I know. In fact, most people have already either lost their job so it doesn’t matter (thus the bankruptcy) or it affects the job none at all. Your employer doesn’t have to know you even filed bankruptcy unless they are a creditor and you owe them money, which to me would be kind of odd anyway. I do know that some jobs won’t hire you if you have a bankruptcy on your credit report. I would consider all aspects before filing, but if a job or possible job is in jeopardy, it’s worth a second look. Note: If you owe your job money, something isn’t right.

Bankruptcy Steals Your Peace of Mind

If anything, bankruptcy can give you back your peace of mind. No more crazy rude collection calls. No more fears of waking up and your car is gone. No more trying to figure out if you should buy groceries or pay a credit card bill.

Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report.

That’s what he says. I say I’d file bankruptcy again four billion times if I have to choose between divorce, severe illness, disability or loss of a loved one. It’s no fantastic time, but really?

I do agree with Mr. Ramsey in that it should be a very last resort. When you know you have no other choice. But, honestly, if you learn from it (as with everything else in life) you’ll move on and life can be just as great or greater.

It isn’t the end of the world. I promise.

Even worse, instead of having to endure the humility and embarrassment of filing bankruptcy that the rest of us have to go through, famous folks get to actually tell their stories and make more money to waste.

I would’ve given People magazine an interview for $50 and I don’t even owe anywhere near 11 million. I’m just sayin’.

Furthermore, how do you even get to be in debt by 11 million dollars? Most of the time creditors start laughing at you when you’re a few thousand in debt. They had an annual family income of $79,000.00. Are you kidding? That’s me and another average adult. Yes, I need a loan for 11 mil please.

Why. Why. And Why. I don’t get it. I don’t mean to sound overly critical of Ms. Guidice but I really cannot wrap my mind around how this could’ve happened. I understand her part, I know full well how easy it is to spend money I don’t have. I don’t understand everyone else’s part though. I almost want to laugh at the creditors that extended the credit and now will probably not receive anything.

Except laughing at people is not nice. I wonder what kinds of things famous people cut out of their budgets when they file bankruptcy.

I bet it isn’t cable. I bet they don’t give up fancy deli lunches or overpriced lattes. I bet they don’t have to look for a part time job. I’m just guessing.

What do you think?

Who Can’t File Bankruptcy (and Probably Shouldn’t Even Try)

1.  Those With Enough Money to Pay Debts:  Obviously if you have enough income to repay your debts, if you’re looking to file bankruptcy, it appears as though you’re just trying to get out of paying your bills. The “means test” will calculate how much income you have to repay your debts after allowed expenses are deducted. If you do not pass the means test, then you will not be able to file a Chapter 7 bankruptcy.

2.  Your Income is Too High:  Again, you may look at Donald Trump and think this is ridiculous, but the new bankruptcy law measures your current income against the median income for a family of your size in your state. If your income is over, you have to pass the means test mentioned before.

3.  You Already Filed Bankruptcy:  You cannot file bankruptcy again if  you have filed either a Chapter 7 in the last 7 years or a Chapter 13 in the last 6 years.

4.  You Are Lying About Your Finances:  The bankruptcy court will dismiss your case if they find out you are trying to defraud creditors, have lied about your income or have engaged in any fraudulent activity like unloading valuable assets with friends and family. Not only could the case be dismissed but you may also be prosecuted for fraud.

5. A Previous Bankruptcy Was Dismissed in the Last 180 Days:  If for some reason you filed bankruptcy and it was dismissed within the last 180 days, you cannot file yet. Some of the reasons a bankruptcy may be dismissed could be if you violated a court order in some way, the court ruled the bankruptcy as fraudulent, frivolous or an abuse to the courts, or you asked for a dismissal when a creditor asked for relief from the automatic stay.

6.  Certain Businesses Cannot File Bankruptcy:  There are some businesses that cannot ever file bankruptcy. Some examples are insurance companies, banks and estates.

In most cases though, you yourself know when you have no other choice and cannot pay all of your bills and still survive. Bankruptcy is generally a very last resort. If you can budget and cut out unnecessary expense, it’s always a better choice.

Obviously, there are do it yourself kits for nearly everything, and I haven’t tried any (except the one weird hair growing kit but that doesn’t count)  so I can’t really say how well they do or don’t work. There are also non-attorney time people that will help you file your bankruptcy for a small fee that may or may not work just the same. Whether you buy a kit from the internet or pay your neighbor’s brother’s best friend from high school, you’re paying for someone or something. Why then would you even consider trying it without an attorney?

Okay, so yes, the short answer is yes, you do need an attorney to file bankruptcy. If that’s the only question you had you can stop reading. Otherwise, here are my reasons:

Property - A bankruptcy attorney knows exactly what needs to be done to insure that you keep the property that you would like to keep. If you’re planning on keeping your home, for example, do you really want to take a chance on you, who has never filed a bankruptcy before and a $20 do it yourself kit?

Protection - If you file yourself or go through a non attorney, there is no one overseeing the work. (Unless you count whichever higher being you believe in.) With a bankruptcy attorney, you do have the Bar Association that the attorney would need to answer to if something were to get wonky with your case.

Assistance With Documentation - Attorneys and their staff generally prepare all of the documentation necessary for filing your bankruptcy. Non attorneys and random people like court clerks are usually not supposed to advise you on how to fill out or prepare your documents.

Attorneys Are Not Necessarily More Expensive - If you’re thinking of taking another route just because you imagine huge attorney’s fees that replace the debt relief you gain from bankruptcy, you may be interested in the fact that most non attorneys may cost just as much. Unless you can get a waiver because of your finances, you will most often have to pay at least the filing fee, which is currently around $299.00. There are also attorneys that will assist and file bankruptcies pro bono if you check with a Legal Aid office or Legal Assistance in your area.

I guess the bottom line is that if you want a little reassurance and confidence in retaining your rights and property, I would go with an attorney. Filing bankruptcy can be intimidating and stressful. Make sure you have someone in your corner to pick you up and help alleviate it a little.

1. Accepting all those Damn Credit Cards

My intention was to hang on to them for emergencies and not use them. The open lines of credit actually made my credit score look even better. The problem only occurred when the emergencies came up, combine that with the irresponsible not quite emergencies and the credit cards ended up all being used and not saved. The concept of just hanging on to a credit card works for other more responsible people, I just know now that I’m not one of those folks. I should’ve just stuck with 2 main cards and I wouldn’t have some of the problems I have right now.

2. Bankruptcy is Embarrassing

The fact that I had to file in the first place is one of my biggest regrets. It’s embarrassing to me, when I have a credit report pulled, even when my credit score was good. Bankruptcy has to be an absolute last resort and I wonder to this day if somehow I could’ve worked out my finances and avoided filing at all.

3. Letting Medical Bills Run Amok

I can’t say that this was entirely my fault but I do regret not keeping up with the medical bills better and getting them paid off sooner. I’ve learned a lot about working with creditors and making payment plans but initially, the bills would bother me so much that I’d just try to ignore them until the absolute last minute.

4. Not Living Frugally or Budgeting Sooner

I don’t know if I had even heard of the word “frugal” at the time and I certainly wasn’t looking for ways to cut costs. Everything seemed to be going well so I didn’t worry about expenses or finding better deals on stuff. It wasn’t that I had a ton of money, I just figured that my bills were being paid so I didn’t have to worry about it. Don’t wait til you need to budget to budget.

5. No Savings Account

Younger people are smarter now and it isn’t unusual for a teenager to have a bank account with enough money saved for their entire college education. In my case, though, I figured savings was something I would worry about when I was older. I wasn’t a teenager after my bankruptcy, but I still felt young enough that I didn’t have to worry about it. If I had saved then, undoubtedly my savings would be drained by now to pay some of my medical bills and credit cards, but I wouldn’t have those bills to worry about and could be building up the savings account again.

Unfortunately, as the cliche goes, you can’t change the past you can only learn from it. I’m happy to say I’ve learned quite a bit on this journey. I just hope that one of these days I learn enough to stop making mistakes.

I’ll post about the good things that stemmed from my bankruptcy (believe it or not, there are some.)

Have a great Labor Day weekend, and don’t do anything you’ll regret later!

Myth #1

Somehow the bankrupt person wasted their money and then decided they didn’t want to pay their bills anymore. The bankruptcy stigma only applies to broke and poor people, no one ever said anything like that when Donald Trump filed, or Kmart or GM. The rich and famous generally get a ‘file a bankruptcy free card’ and of course, still are rich and famous afterwards.

Which brings me to another myth about broke people that file bankruptcy.

Myth #2

After a person files a bankruptcy they have no bills and suddenly a ton of money. No, I can tell you from experience that broke people are usually still broke and many end up filing again later. Keep in mind that filing bankruptcy doesn’t suddenly pay the rent/mortgage, utilities, car payment, etc. etc.

Myth #3

Bankruptcy filers are proud of filing and feel as though they some how “got over” on bill collectors. I personally was embarrassed of having to file and still don’t generally tell anyone.

These myths remind me of the time I went into my bank (as suggested by my mother) to discuss my options for buying a house. Not that I was ready to, I just wanted the basic information as to what I needed to do now to prepare and what I would need. I also needed to look into a car loan because the SUV I was driving when gas prices were almost $4.00 a gallon was killing me.

My family and their business have been with this bank since the beginning of banks so of course Mom thought I could just go in and get some information just like they would if they needed to.

I met with a woman in an office, don’t remember her title, but I’m assuming she was someone important at the bank. I let her know up front what I make, that I had filed bankruptcy in the past, was working on cleaning up my credit and would like to buy a house one day and was shopping for a car loan. Oh and that I’m a single mom.

Without filling anything out or running my credit report, she told me very simply that as a single mom and having filed a bankruptcy, I would never be able to do it by myself. No car loan. No house.

Never. That’s pretty much a conversation ender. I had no response and thought that was her “friendliest” way to boot my time-wasting ass out of her office.

I thanked her for her time and crawled to my mom’s house, of course crying because geez, is there any hope in never?

Mom gave me the mom speech about how ridiculous that is, that I can do it alone and I will and keep trying etc. etc.

The bank lady didn’t know me and I didn’t feel like I should mention my family. I fully intended on taking care of everything and doing it myself and still do. I moved my money from that bank into a credit union and a couple months later had a car loan.

I learned a lot from filing bankruptcy. I learned that I don’t want to have to ever do it again–mostly because of the myths and stigma of bankruptcy. Most of all I learned that I can do it, and although it’s a cliche, there really is life afterwards. Hopefully a pretty good one.