Bankruptcy?

[LuvOrlando]

So I just finished watching an MTV show called True Life about teens/young adults alarming amounts of debt. I don't usually watch MTV but happened across the show and it caught my interest. One of the girls was only working part time yet had amassed around $50,000 in debt- no kids, no responsibilities, just her

Anyway this young woman ended up filing for bankruptcy and it seems her debts were cleared. At the end of the show it said after the filing she was able to get herself on track and start saving $400 a month.

This is in direct contradiction to anything I have read about current bankruptcy laws which make it sound like there is no way to clear debt any more and that at best all you can do is restructure and ruin your name.

So this show left me wondering if I, and others, have been deliberately mislead in our understanding of bankruptcy by the credit industry via propaganda in an effort to keep people from seeking Bankruptcy protection? Which doesn't exactly surprise me, but makes me question where the consumer watch dogs have been all this time?

Anyone out there have any experience with this? I know the filing stays on your record for 10 years and all, but with all the laws out there that have forced banks to lend to risky borrowers... does the filing even matter any more?

 

[STLDisney_Freak]

She probably filed a chapter 7. If so, then yes most of her debts would be cleared except student loans, child support (if there was any), and some IRS debts.

If it was a chapter 13, then she would have to pay a portion of the debts back and be subjected to certain rules under the court. She would not be allowed to take out anymore credit while under a chapter 13 case.

 

[LuvOrlando]

The attorney didn't speak much so I don't know what exactly she filed. She didn't have any assets, no children, and didn't mention post HS education or college... the whole package made me wonder how on earth she got credit in the first place???

 

[kacaju]

the whole package made me wonder how on earth she got credit in the first place???

Because the cc companies were giving out credit cards to anyone and everyone.

 

[LuvOrlando]

Yes I know, but I thought there was SOME limit to the stupidity of the practice. Apparently, I was way off the mark

Still, I don't think these kids, who were largely taken advantage of IMO, should need to spend the rest of their lives with this hanging over their heads.

I am wondering if anyone has any experience with this? Has it helped anyone, changed anyone's life for the better, or hurt anyone more than the debt would have? I mean, if you stop paying your bills long enough doesn't that do just as much damage to credit as the filing in day to day life?

 

[swald91]

Because the cc companies were giving out credit cards to anyone and everyone.

You are absolutley right! My daughter was 9 when she received a card through the mail-I think it was Discover...Can you imagine??? Just too easy today to get caught up in the cc hype-at such a young age too!

 

[LuvOrlando]

It's interesting that no-one responded who has any experience with the subject.

I suppose I could take this to mean that the banks were successful in making people think Bankruptcy is useless... maybe it is and MTV was just off? Considering the number of people unemployed and the prominence of foreclosures this is fascinating to me. I'm gonna do a bit of research I think... wonder what I'll find?

 

[STLDisney_Freak]

Actually the bankruptcy courts are flooded right now and some are even behind in granting discharges for the bankruptcy filings. All you have to do is check your local bankruptcy court and you can see the massive amount of people that have 341 meetings lined up. A 341 meeting is a meeting of creditors and it is a requirement in bankruptcy filing.

 

[flying_babyb]

I am 24, and in enough debt that I should probally file bankruptcy. I chose to work more and pay off my debt.

 

[Maridw]

My DH & I filed Chapter 13 two years ago and we are actually paying 100% back. When we went to the attorney, we made too much to actually file Chapter 7.

Since then we have had the worry about my DH not getting his security clearance renewed, and the possibility of him losing his job. We no longer have any credit cards and so the only things we actually pay other than our bankruptcy are our mortgage (so we would not lose the house) and we only have 5 more payments on my car. We do have our basic utility bills, but everything else went on our bankruptcy.

We got into this when my DH retired from the service and didn't get a job for over 6 months. We tried to see if the credit card companies would work with us and they wouldn't. After we filed bankruptcy, they were falling all over themselves to work out a payment plan for us. We just told them sorry we asked you to work with us and you wouldn't so we had to do this.

 

[Free4Life11]

It's interesting that no-one responded who has any experience with the subject.

I suppose I could take this to mean that the banks were successful in making people think Bankruptcy is useless... maybe it is and MTV was just off? Considering the number of people unemployed and the prominence of foreclosures this is fascinating to me. I'm gonna do a bit of research I think... wonder what I'll find?

Actually I think it's more of a DIS stigma than anything! Any person who admits they filed bankruptcy on the DIS, well, God bless them!

 

[wvjules]

I'll bite. These kids won't have this hanging over their head the rest of their lives; only the next 10 years. Hopefully, they will have learned to manage credit better. I know I did.

I filed for BK a few years ago. I filed Chapter 7 which absolved me of all debts. However, I choose to do an affirmation of debt with my house and my car so that I could keep them.

I know everyone likes to blame the evil CC companies but the individuals need to take responsibility as well. The person you saw profiled in the show had to know that there is no way she would be able to pay back $50K debt making $15,000 per year. That is common sense.

 

[flying_babyb]

i have a freind in that situation. Shes 10,000 in debt and makes 7200 a year....

 

[cteddiesgirl]

Yes I know, but I thought there was SOME limit to the stupidity of the practice. Apparently, I was way off the mark

Still, I don't think these kids, who were largely taken advantage of IMO, should need to spend the rest of their lives with this hanging over their heads.

I am wondering if anyone has any experience with this? Has it helped anyone, changed anyone's life for the better, or hurt anyone more than the debt would have? I mean, if you stop paying your bills long enough doesn't that do just as much damage to credit as the filing in day to day life?

Yes, you were way off the mark. I was given so much credit even though I was young, in college and no job. I only ever worked during the summers and never while in school. Yet I was given over $2000 limits almost right off the bat. And eventually, my credit limits were upped to $10,000 on a couple of cards.

I ended up with 2 cards with $10,000 limits, 1 card with aN $8800 limit, and a couple more with still over $5000 limits. Not including the cards from various stores. And that was all before I was 30. And I've never made over $32K a year in my life. Mostly, I've made less than 29K per year.
Even when I lost my part time jobs (due to closing) and ended up with creditors calling me constantly, I would routinely get more applications in the mail wanting me to get credit.

I ended up with huge debts. Some due to my own stupidity, and some due to medical bills.

As for being able to file bankruptcy and discharging all your debts, yes you can still do that. It is supposed to be somewhat harder now. I believe you absolutely have to go through a certain amount of time of credit counseling first though.

I was unable to a few years ago because I moved to another state and their laws were quite a bit different. Now, I still can't because I can't manage to save enough money to afford to file.

Actually I think it's more of a DIS stigma than anything! Any person who admits they filed bankruptcy on the DIS, well, God bless them!

Precisely. Usually, if anyone here admits to filing bankruptcy here, they get jumped on by at least half a dozen or more posters.

 

[LuvOrlando]

Actually I think it's more of a DIS stigma than anything! Any person who admits they filed bankruptcy on the DIS, well, God bless them!

Interesting too. How is it we live in a world where unemployment and buying an overly expensive home are ok to talk about? Where amassing outrageous amounts of debt and losing tons in Investments is ok. Yet, the only salvation many people have is taboo?

I mean we just bailed out entire industries that subsequently paid for bonus' with our kids' futures yet regular people feel ashamed to ask for a personal bail-out... a pittance in the scheme of Trillions? It makes my brain hurt

I think most people will avoid the filing if possible, but if they can't then they shouldn't feel bad about it. Maybe I would have felt differently before we started bailing out companies. But at this point, this is just how I see it. I am interested from an Economists perspective. After all, if saving companies from debt can help them by freeing up income, wouldn't the same practice on small scale help individuals in exactly the same way?

To see the volume in the courts wouldn't tell me anything about the outcome, the data is too sterile. Statistics by themselves aren't very useful... you need to get a feel for the emotions behind the scenes to get a beat on what's going on.

 

[cteddiesgirl]

Interesting too. How is it we live in a world where unemployment and buying an overly expensive home are ok to talk about? Where amassing outrageous amounts of debt and losing tons in Investments is ok. Yet, the only salvation many people have is taboo?

I mean we just bailed out entire industries that subsequently paid for bonus' with our kids' futures yet regular people feel ashamed to ask for a personal bail-out... a pittance in the scheme of Trillions? It makes my brain hurt

I think most people will avoid the filing if possible, but if they can't then they shouldn't feel bad about it. Maybe I would have felt differently before we started bailing out companies. But at this point, this is just how I see it. I am interested from an Economists perspective. After all, if saving companies from debt can help them by freeing up income, wouldn't the same practice on small scale help individuals in exactly the same way?

To see the volume in the courts wouldn't tell me anything about the outcome, the data is too sterile. Statistics by themselves aren't very useful... you need to get a feel for the emotions behind the scenes to get a beat on what's going on.

Well, I think part of the problem with the DIS is that people here get upset hearing about people filing bankruptcy or having other financial difficulties when in the person's signature it plainly states they are planning a trip or 2 to WDW. Which I can totally understand.

If you can't afford to pay your debts, you really shouldn't be taking vacations. Especially to WDW.

 

[Planogirl]

I personally see nothing wrong with people taking a vacation if they now have their debts under control and they pay cash. Once you file for bankruptcy, it's done and you move on IMO.

Many file due to overwhelming medical bills too. Those people get my full sympathy.

 

[cteddiesgirl]

I personally see nothing wrong with people taking a vacation if they now have their debts under control and they pay cash. Once you file for bankruptcy, it's done and you move on IMO.

Many file due to overwhelming medical bills too. Those people get my full sympathy.

Of course. If you filed a year or more prior to planning. I was talking more about people presently filing bankruptcy or planning to while still planning a vacation in the near future.

Trust me, I know about medical bills. I have some from 8 years ago that I still can't pay. Yet, I'm certainly not planning a trip anywhere.

 

[Becky2005]

We tried to see if the credit card companies would work with us and they wouldn't. After we filed bankruptcy, they were falling all over themselves to work out a payment plan for us. We just told them sorry we asked you to work with us and you wouldn't so we had to do this.

This is what ticks me off. DH was laid off in 2003, me being a SAHM & found out I was pregnant the same day. Let's just say it was a stressful day. He got a severence package and I really didn't think it would take him that long to find a job (Ha! I was wrong!). I called the mortgage company up to see if there was anything we could do, not that I didn't want to pay them but see if they could let us skip some payments and put them at the end of the loan or something. Not a single thing they were willing to do UNTIL we were 3 months late on the mortgage and then they might not depending on your income! UMMM....that was the whole point of me calling, we were trying NOT to be late on the mortgage.

And it's any wonder why people don't pay? Since the mortgage company wasn't willing to work with you until you were already in over your head. Basically we just refinanced to one of those payment option loans which I know is totally horrible but it worked for us since they weren't going to help us out. I do find it quite amusing that we have had them practically beating down our door to change our mortgage since it looks bad on their books now.

We haven't had to file bankruptcy but I could see how it could easily be the last resort option since the companies don't want to work with you until it's too late. I do think that may have changed somewhat now since the new ads to get you to buy a new car is that they will take care of your payments for 9 months if you lose your job.

I know you can still do it fairly easy. I think now there are just a few more steps to go through than before.