Is there a "downside" to filing personal bankruptcy?

[Diz_knee62]

We're giving serious consideration to doing this, and were wondering if anyone knows of a reason not to. In the past few months, I know three people who have done this, and everything seems to be, well, pretty good!

1. A family member just filed, after incurring $57,000.00 worth of credit card debt. Almost all of the debt was foolish stuff, like charging things they should have never charged, and being terribly irresponsible. They filed, and all of the money that the WERE sending to the CC companies is now their own. Plus, they were not obligated to "give back" any of the stuff that they had purchased just before filing. They've just purchased a huge flat-screen TV and one of those credenza-things for underneath. They're also getting ready to remodel their bathroom.

2. My neighbors filed about 1 1/2 years ago. I don't know how much debt they had prior to filing, and since then, have had several cars re-posessed right out of their driveway in the middle of the night. A few days ago, they pulled into their driveway with a brand-new SUV. They are driving to Disney in a few weeks.

3. Another neighbor filed about 2 months ago. She, too, is relieved that she filed because she was about $40,000.00 in credit card debt. Right before she filed, she bought new furniture, so now it's hers.

Am I crazy, but I just don't see the "bad" part of all of this. No, they can't use credit for a specific amount of time, but that's pretty do-able if you ask me. And any purchases made over the internet can be made by using a debit card.

Can anyone tell me the downside of all of this? Just trying to prepare myself.

 

[Janet Hill]

It stays on your credit report for 7 years.

I guess this isn't such a big deal right now as the government seems to be encouraging and rewarding bad behaviour for spending too much. It seems like people go out get everything they want on credit and file bankruptcy. This sure does increase disposable income.

 

[Holly]

Yes. The downside is that the rest of us have to pay for it.

 

[clarabelle]

What about the ethics of it? How do you feel about not paying your bills and spreading your burden out to your fellow man?

 

[DawnCt1]

Yes. The downside is that the rest of us have to pay for it.

What about the ethics of it? How do you feel about not paying your bills and spreading your burden out to your fellow man?

I absolutely agree with that. Not having access to credit for seven years is also a problem. Many companies are doing pre employment credit checks prior to hiring. If one is in need of a job, gets a great offer, and then has their application tossed out because they filed for bankruptcy, I would say that is a HUGE problem. Whatever happened to personal responsibility?

 

[Hoodie]

DH filed right before we met. It's still on his credit report (depending on type it will stay on for 5 years). He's been diligently building back his poor credit, largely with assistance from my fabulous credit score. If he didn't have my score to piggy back on, it would have been much harder to do.

Downsides: horrible credit score which leads problems. Expect no credit cards, difficulty getting a checking account (and therefore a debit card), obviously no mortgage, problems with getting ANY loan - car, school, etc.

And the big one....many jobs do a credit check for new applicants and it's an automatic disqualifier. My husband was able to rebuild his credit score to a pretty decent level, but still can't apply for certain jobs because of the bankruptcy filing.

 

[horseshowmom]

Whatever happened to personal responsibility?

Like Elvis, it has left the building...

 

[brerrabbit]

The biggest downside of it is that it perpetuates the whole something for nothing mentality that has gotten the US Economy into the shape it is in today. Why does a person deserve to be rewarded for being completely irresponsible with his finances? As others have said it is not free, the responsible people who pay their bills and sometimes struggle to do it pay for it in the form of higher prices. There is no such thing as a free lunch! Someone always pays for it.

Man up! Be responsible, pay your bills, live within your means. I don't relish the idea of buying deadbeats big screen TV's.

 

[Green Tea]

Is there a "downside" to filing personal bankruptcy?

Is there an upside?

 

[Christine]

Is there an upside?

Apparently...in each of those examples people are getting over and getting stuff without paying for it.

 

[ICF]

We're giving serious consideration to doing this, and were wondering if anyone knows of a reason not to. In the past few months, I know three people who have done this, and everything seems to be, well, pretty good!

1. A family member just filed, after incurring $57,000.00 worth of credit card debt. Almost all of the debt was foolish stuff, like charging things they should have never charged, and being terribly irresponsible. They filed, and all of the money that the WERE sending to the CC companies is now their own. Plus, they were not obligated to "give back" any of the stuff that they had purchased just before filing. They've just purchased a huge flat-screen TV and one of those credenza-things for underneath. They're also getting ready to remodel their bathroom.

2. My neighbors filed about 1 1/2 years ago. I don't know how much debt they had prior to filing, and since then, have had several cars re-posessed right out of their driveway in the middle of the night. A few days ago, they pulled into their driveway with a brand-new SUV. They are driving to Disney in a few weeks.

3. Another neighbor filed about 2 months ago. She, too, is relieved that she filed because she was about $40,000.00 in credit card debt. Right before she filed, she bought new furniture, so now it's hers.

Am I crazy, but I just don't see the "bad" part of all of this. No, they can't use credit for a specific amount of time, but that's pretty do-able if you ask me. And any purchases made over the internet can be made by using a debit card.

Can anyone tell me the downside of all of this? Just trying to prepare myself.

just because nobody else quoted the entire thing, and I'm sure this will be a fun thread!!

 

[wvjules]

Actually it stays on your credit report for 10 years for a Chapter 7 BK filing. You can also get credit immediately upon discharge (sometimes even as soon as you file).

There are also rules about large purchases being made on credit right before filing. I don't believe all of those people made those purchases then immediately turned around and filed. The BK courts wouldn't allow that to happen.

 

[Planogirl]

Some people file due to job loss and medical expenses. It's not only people who buy big screen TV's and new cars and so on. I just wanted to throw that out there...

 

[Mermaid02]

We're giving serious consideration to doing this, and were wondering if anyone knows of a reason not to. In the past few months, I know three people who have done this, and everything seems to be, well, pretty good!

1. A family member just filed, after incurring $57,000.00 worth of credit card debt. Almost all of the debt was foolish stuff, like charging things they should have never charged, and being terribly irresponsible. They filed, and all of the money that the WERE sending to the CC companies is now their own. Plus, they were not obligated to "give back" any of the stuff that they had purchased just before filing. They've just purchased a huge flat-screen TV and one of those credenza-things for underneath. They're also getting ready to remodel their bathroom.

2. My neighbors filed about 1 1/2 years ago. I don't know how much debt they had prior to filing, and since then, have had several cars re-posessed right out of their driveway in the middle of the night. A few days ago, they pulled into their driveway with a brand-new SUV. They are driving to Disney in a few weeks.

3. Another neighbor filed about 2 months ago. She, too, is relieved that she filed because she was about $40,000.00 in credit card debt. Right before she filed, she bought new furniture, so now it's hers.

Am I crazy, but I just don't see the "bad" part of all of this. No, they can't use credit for a specific amount of time, but that's pretty do-able if you ask me. And any purchases made over the internet can be made by using a debit card.

Can anyone tell me the downside of all of this? Just trying to prepare myself.

In these cases it kind of seems like stealing.

 

[C.Ann]

The down side for me would be guilt.. I was raised to believe that you are responsible for paying your debts no matter what - even if it means having to sell your home to do it (which I did).. In my case we went under when my DH was diagnosed with cancer (and a multitude of other health problems) that resulted in huge medical debts over the course of 10 yrs.. Once he passed away, there were many that I simply could have refused to pay (the house was never in his name - I purchased it before we were married - and my lawyer advised me that I couldn't be held responsible for "his" debts).. I chose to sell my home and pay off the debts anyhow.. For me, it was the "right" thing to do - even though it nearly killed me because it was my childhood home..

I didn't worry about the consequences in terms of credit because I don't use credit cards, have never had a car payment, and have never had a mortgage.. "Pay as you go - unless you're going for good.." (My late father's favorite saying..)

However, I don't know what your personal circumstances are, so I won't judge your motives.. I'm just sharing what the "downside" would be for me..

 

[castleview]

Um yes. The examples you gave are of people who knowingly charged for things they couldn't afford and now are trying to skip out on paying it. I have debt and it sucks. But I'd feel very wrong bailing out and having the taxpayers cover it. You dig a hole, you get out of it. It's that simple.

 

[Northstar]

Well, I haven't been living in the US for quite some time, but the downside to bankruptcy, aside from what people have already mentioned, is that the court gets to appoint a trustee who can sell off all of your non-exemp stuff to pay towards your debts.

1. A family member just filed, after incurring $57,000.00 worth of credit card debt. Almost all of the debt was foolish stuff, like charging things they should have never charged, and being terribly irresponsible. They filed, and all of the money that the WERE sending to the CC companies is now their own. Plus, they were not obligated to "give back" any of the stuff that they had purchased just before filing. They've just purchased a huge flat-screen TV and one of those credenza-things for underneath. They're also getting ready to remodel their bathroom.



3. Another neighbor filed about 2 months ago. She, too, is relieved that she filed because she was about $40,000.00 in credit card debt. Right before she filed, she bought new furniture, so now it's hers.

Something is wrong in these two cases... possibly the people involved are concealing/misrepresenting facts about their bankruptcy to you, or possibly they misrepresented facts to the court, which would be fraud.

There was a new bankruptcy act passed in the last decade, I know, that made it harder to just "keep" all the stuff you'd charged to credit cards recently... there was a means test introduced for filing Chapter 7 (that meant people with more income and assets would have to go Chapter 13, and pay back at least some of the debt), and the stuff you could exempt from seizure and sale to pay your debt was reduced.

So definitely consult with an attorney about what bankruptcy would mean for you.

 

[eliza61]

I say this all the time but.....

Why now are we all shocked and surprised? For the last thirty five years the mantra in this country has been "buy now, pay later", "take your family to disneyworld", "the housing market will only go up" and "use your house as a piggy bank".
We have built an entire economomic system built on one thing, and one thing only. "consumerism" "buy now" "more, more, more"

Well, we now have an entire population that has learned that lesson well.

So please tell me, if we spent an entire life time of telling people to live "la vida loca" why should they feel any type of guilt or responsibility for doing exactly what we have been encouraging them to do?

And now we have a generation of kids who feel that the world owes them and Ipad and Iphone and that a 4000 square foot house is a "starter house". How many times do I read on the dis about a couple arguing because one person wants to save the money but the other person, usually the mom uses the piss poor excuse "the kids are only little once" to blow money they really don't have.

We've greated a society that feels a trip to disneyworld is some how a requirement for survival and now we're upset? gimme a break.

Personally, I think we are simply reaping what we sowed.

Op, pretty much there is not much "downside" to bankruptcy. there is no longer any stigma associated with it and since there is even a website that helps you walk away from your mortgage without a care in the world, how could you lose.

 

[Scurvy]

In these cases it kind of seems like stealing.

Kind of seems like stealing? You are being too nice. I don't think there's any other world for purposely taking stuff you know full well you don't intend to pay for.

ETA a downside: My sister in law declared bankruptcy several years ago. Of course she made sure to buy new furniture, a bigscreen television and game consoles, and take a big vacation just beforehand. She had a decent job at the time. Last year she lost that job. She finally got a new job as a temp after searching for a year. The position she's in now could become a full time, permanent job at the same company but she'd have to get clearance. So far, she hasn't managed to. She was shocked to find that the bankruptcy was a factor in that. I'm sure even if she had known she couldn't get clearance with that on her record it wouldn't have stopped her. She never intended to get a job that requires such a thing. Now she's stuck being a temp until some other job comes along.

 

[scrapquitler]

Some of the downsides (not even mentioning the morality of it):

it might be harder to get a job, car insurance, home insurance, etc because a lot of places do a credit check and make hiring decisions and decisions about insurance coverage/rates based on your credit history.

you will have a difficult time getting a credit card later, and that might make things like traveling and renting a car difficult.

A bank might hesistate to let you open a new checking/savings account

it stays on your record for a long time, and it might make it hard for you got get student loans for your child to go to college years from now.