Is there a "downside" to filing personal bankruptcy?

[bevgray]

Bingo! DH has a very high clearance, as did I when I was military. I would never, ever consider filing bankruptcy.... I would man up and pay what I owe; because I am a decent, honest person.

I am assuming you are very young and are just speaking thoughtlessly. I hope your life remains very lucky and you never suffer from job loss in an economy where there are no jobs. I also hope that you never suffer from a catastrophic illness where you must choose between expensive medicines to save a loved one or paying your American Express on time.

Since your husband has very high clearance, I am assuming he is either military, a government employee, or a contractor. Careful, even the most loyal military personnel or sacrosanct government employees (i.e., the 1970s) can go through a RIF. In the 1980s, the government contractors were engaged in enough mischief that Uncle Sam lowered the boom and contract houses disappeared over night; leaving a lot of bewildered employees standing on the corner without even a pink slip for comfort.

Unfortunately, "decent, honest persons" are declaring bankruptcy every day for the very reasons cited before. Not everyone is an irresponsible deadbeat. Honesty and decency have nothing to do with it.

In point of fact, with a Chapter 13 you do have to "man up and pay what you owe". You just don't have to pay accruing interest.

I don't mean to sound harsh and that is not my intent. But it really irritates me when individuals always assume those in financial difficulty are there because of frivolous spending or deliberate fraud. We are in the middle of a very nasty recession, if not a baby depression. Folks who did all the right things for their entire working lives are finding themselves on the brink of disaster. A few hundred years ago, people were sent to debtors' prison (women and children often were sent with the husband). In debtors' prison, there was no way to work to repay the debt so entire families would just sit and rot. At least in our country we have a means to help people get back on their feet.

Are there habitual abusers? Certainly. I suspect they are in the minority. Like anything else, we only hear about the failures or the ones who abused the system. But for every fraud, I suspect there are many "decent, honest" people who have taken their second chance and made something of it.

 

[bookgirl]

New laws mean you have to show cause. You can not file because you have no money, you have to have a medical emergency, you have to have a recent job loss through no fault of your own (you may get to if you've been fired but it seems like there was a clause about that), if they catch you charding up then filing they will excepmt those purchases or make you take them back.

Also:

Any time you file and CC companies or any consumer debt is written off then the company effectivly has given you money, the IRS requires you to report this income (the company will send you a 1099 form for your taxes), you then have to pay the taxes for the merchandise just like it was actually cash.

If you do not claim it and they find out (the companies do report to the IRS) you are looking at fraud and a ton of fines as they are retroactive to when you didn't claim, not to when they catch you.

If you do not have the money to pay the taxes, the feds don't care, they will not forgive they do not get included in bankruptcy and they will sieze any new assets faster then you can say 'leech'. Any future money you are eligible for from the govenment will be held (tax refunds, or rebates). Any future money you apply for can be held to a lien, in some states you can have permits and licenses held.

I wouldn't file bankruptcy if you can avoid it.

 

[golfgal]

The bad part of filing for bankruptcy, ESPECIALLY over credit card debt? How about having to live with your bad decisions? And knowing you screwed the credit card company so they don't get their money, so then they raise interest rates on everyone else so they can recoup some of it. And the fact that it stays on your credit report for 7 years. And the "stigma" that comes with it when people know you've filed for bankruptcy.

I don't think anyone who gets in trouble with credit cards should be able to file for bankruptcy. You charge and charge and charge then try to take the easy way out and file for bankruptcy. No. Pay your bills like everyone else. I think it's ridiculous they allow credit card abusers to file for bankruptcy.

Personally, I can't imagine anything GOOD coming out of making the choice (taking the easy way out) to file for bankruptcy.

Do you really think someone that racked up credit card debt and goes out and gets more "stuff" prior to filing is really going to care. If it were going to bother them, they wouldn't have done it in the first place.

With everyone from employers, to insurance companies to banks checking credit reports having a bankruptcy on your report is just not wise. For many insurance companies (health, life, disability) having a recent bankruptcy is an automatic decline for any policy applied for just to add one more downside.

 

[momrek06]

$170 is NOT enough to settle a $11,000 job. I am so, so sorry. I wonder if he didn't have the job lined up all along... what scum.

SCUM!!!

We are finding out that the individual responsible for getting SCUM the job was an old acquaintance from a previous job. You know when an article goes into a newspaper and at the bottom you can make comments about the contents of the article ... well, it is ALLLLLL coming out in the comments how SCUM is SCUM and only got this job because of this acquaintance ... ITS NOT PRETTY AT ALL. DH and I did get a chuckle out of the newspaper's COMMENTS. BUT I did tell DH that we cannot let it consume us ... he is SCUM and that is that.

 

[wvjules]

New laws mean you have to show cause. You can not file because you have no money, you have to have a medical emergency, you have to have a recent job loss through no fault of your own (you may get to if you've been fired but it seems like there was a clause about that), if they catch you charding up then filing they will excepmt those purchases or make you take them back.

Also:

Any time you file and CC companies or any consumer debt is written off then the company effectivly has given you money, the IRS requires you to report this income (the company will send you a 1099 form for your taxes), you then have to pay the taxes for the merchandise just like it was actually cash.
If you do not claim it and they find out (the companies do report to the IRS) you are looking at fraud and a ton of fines as they are retroactive to when you didn't claim, not to when they catch you.

If you do not have the money to pay the taxes, the feds don't care, they will not forgive they do not get included in bankruptcy and they will sieze any new assets faster then you can say 'leech'. Any future money you are eligible for from the govenment will be held (tax refunds, or rebates). Any future money you apply for can be held to a lien, in some states you can have permits and licenses held.

I wouldn't file bankruptcy if you can avoid it.

That is not true when it comes to filing BK. If you settled with a CC for a lesser amount then they can send you a 1099 for the difference but NOT when you file BK.

 

[ShesAPirate]

Am I the only one here who thinks you guys got trolled?

Nope, you're not alone at all! That was my first thought.

 

[Darsa]

I would never, ever consider filing bankruptcy.... I would man up and pay what I owe; because I am a decent, honest person.

Wow, what a horrible thing to say. I refer people to attorneys as part of my job, and the number of calls that I get from people looking for bankruptcy has jumped quite a bit. However, I'm not hearing people who sound like they're trying to pull anything over; they sound like they're desparate, backed into a corner, and have no other alternative. I'm sure there ARE people out there who try to buck the system and get something for nothing, but it's completely unfair for so many of you to generalize that all people who file for BK are lowlife scumbags who want to live off of others.

 

[MushyMushy]

I've known quite a few people who have filed both chapters 7 and 13. Only one of them did what the op said, but the attorney was the one who told her to do it. She ended up buying necessary things for her home that she knew she'd not be able to afford to replace for a while.

Other than that, the people I knew had job losses or medical bills.

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.

I'm probably one of the few on this board who will agree with this 100%.

 

[arminnie]

Then you probably don't know the same types of people I'm familiar with. Each and every one of them upstanding citizens who paid their bills on time and would have never in a million years considered filing bankruptcy until the unemployment and underemployment dragged on for 6, 7 and 8 years.

I can understand being medically disabled for that long, but WHY would someone have let themselves stay under or unemployed for years and years and years?

There is no great job source at all today, but as recently as 3-4 years ago there were many parts of the U.S. where employers were BEGGING for employees. Sometimes one has to relocate. I've done it. I even went to work in Pittsburgh, PA which was hell on earth - but I needed a job so I did it.

I went through the oil bust in Texas in the 80s. It was awful. Housing prices were cut in half or more and layoffs were just as bad as Michigan today. Yes I know people who did have to declare bankruptcy, but I don't know anyone who spent 8 years (almost a decade) just sitting around waiting. I had to cash out my retirement funds, pay the penalty and taxes. I was dead broke and in debt in my 40s. I know what it is like to go bust. Bankruptcy would have protected my retirement savings, but I'm not judging those who do have to declare. But you are responsible for what you do going forward. I made unbelievable sacrifices to go forward. I don't understand just being passive about being in a bad situation.

I have NO sympathy for someone who declares bankruptcy more than once.

 

[bookgirl]

That is not true when it comes to filing BK. If you settled with a CC for a lesser amount then they can send you a 1099 for the difference but NOT when you file BK.

Oh, okay my bad. A friend told me they got 1099 after thier BK, they must have done a settlement in there somehow....

 

[chicagodisneyfan]

Wow, what a horrible thing to say. I refer people to attorneys as part of my job, and the number of calls that I get from people looking for bankruptcy has jumped quite a bit. However, I'm not hearing people who sound like they're trying to pull anything over; they sound like they're desparate, backed into a corner, and have no other alternative. I'm sure there ARE people out there who try to buck the system and get something for nothing, but it's completely unfair for so many of you to generalize that all people who file for BK are lowlife scumbags who want to live off of others.

sorry - filing for BK is slightly scummy, but more STUPID

How many times do you read that someone does not have health insurance because they are healthy and do not feel like paying premiums?

How about people who live outside their means?

Or refinanced their homes to buy boats?

Or unmarried, pregnant again by another man?

Or pregnant when you cannot afford the kids you have?

Filing BK is problematic. With the credit checks run during the employment process, we would never hire someone who filed. Shows a lack of morals too - you incurred debt and oops just not going to pay it back. Not trustworthy or someone I want to associate it with.

I would have more respect if after someone gets on their feet they at least attempted to pay back previously discharged debts.

 

[Holly]

sorry - filing for BK is slightly scummy, but more STUPID

How many times do you read that someone does not have health insurance because they are healthy and do not feel like paying premiums?

How about people who live outside their means?

Or refinanced their homes to buy boats?

Or unmarried, pregnant again by another man?

Or pregnant when you cannot afford the kids you have?

Filing BK is problematic. With the credit checks run during the employment process, we would never hire someone who filed. Shows a lack of morals too - you incurred debt and oops just not going to pay it back. Not trustworthy or someone I want to associate it with.

I would have more respect if after someone gets on their feet they at least attempted to pay back previously discharged debts.

Okay, well, I strongly disagree with bankruptcy filings as outlined by the disgusting examples provided by the OP, but I don't think that it shows a lack of morals in many if not most cases.
We know that one of the biggest reasons for bankrupcty is due to medical costs. I have a hard time classifying someone who goes into major debt for the health of themselves or a child as lacking morals.

Personally, I feel that the laws need to change. I know that the OP gave extreme examples but in reality this does happen and the system is abused. It's too bad that people who should legitimately qualify for debt relief due to extreme circumstances (like health) are thrown into the same barrel with the ones who just have no personal accountability.

 

[mhsjax]

sorry - filing for BK is slightly scummy, but more STUPID

How many times do you read that someone does not have health insurance because they are healthy and do not feel like paying premiums?

How about people who live outside their means?

Or refinanced their homes to buy boats?

Or unmarried, pregnant again by another man?

Or pregnant when you cannot afford the kids you have?

Filing BK is problematic. With the credit checks run during the employment process, we would never hire someone who filed. Shows a lack of morals too - you incurred debt and oops just not going to pay it back. Not trustworthy or someone I want to associate it with.

I would have more respect if after someone gets on their feet they at least attempted to pay back previously discharged debts.

Never mind, not worth it.

 

[chicagodisneyfan]

Never mind, not worth it.

Yep - feel the same way about corps who take government bailouts and Donald Trump. Both are stupid and in my mind lacking morals.

 

[mhsjax]

Yep - feel the same way about corps who take government bailouts and Donald Trump. Both are stupid and in my mind lacking morals.

YOu know, sometimes things happen to good people, not saying
Donald is a good person, but there are decent people that file. Not the ones that the OP is talking about, but sometimes bad things do happen. I would be careful, you never know what can happen and to be so judgemental is really inviting Karma

 

[mhsjax]

Yep - feel the same way about corps who take government bailouts and Donald Trump. Both are stupid and in my mind lacking morals.

ok you answered and I refuse to get into anymore conversation about this.

 

[Darsa]

I agree with you mhjax; it's not worth trying to get people to stop generalizing that apparently EVERYONE who files for bankruptcy is stupid, and EVERYONE who doesn't have health insurance so they can pay for frivolous things like food, electricity, phone is stupid, and everyone that owns a home refinances it to buy a boat. Stupid, every single one of us do that apparently.

It's very, very true that we're lying in the bed that we've made; however it's not fair to take a brush the size of the whole country and paint liberally with it. Not cool at all.

 

[DawnCt1]

Am I the only one here who thinks you guys got trolled?

Even if we all got "trolled", its a worthwhile discussion. I am sure that there are those; in fact I know that there are those, who feel that erasing bad debt isn't a bad way to go. If they are thinking about that, then I think the folks here gave them a little bit to think about.

 

[chicagodisneyfan]

Y. I would be careful, you never know what can happen and to be so judgemental is really inviting Karma

Its not like I am throwing rotten tomatoes in front of people exiting the courthouse after filing BK. Nor am I advocating people wearing a red letter on their clothes that says Bankrupt!

Just answering the OP's question - giving my opinion.

And its funny - you are talking about being judgemental.

 

[mhsjax]

Its not like I am throwing rotten tomatoes in front of people exiting the courthouse after filing BK. Nor am I advocating people wearing a red letter on their clothes that says Bankrupt!

Just answering the OP's question - giving my opinion.

And its funny - you are talking about being judgemental.

I am not the one saying stupid and lack of morals when talking about people who file BK. While yes some of these people are lacking in morals, not all are I am sure. You can't make a blanket statement like that.