Around ten years ago I was faced with filing bankruptcy. The United States was in the middle of a recession, and I was out of options. I was self-employed back then and had been doing quite well. Once the recession hit, everyone became afraid to spend money. My clients began to disappear overnight. I went from making good money to having almost none and it was frightening. These were just a couple of the reasons why I chose bankruptcy.
At that time, I was the primary breadwinner in my family. I was a new mom and had a daughter to think about. I worried about how this could impact her. Shortly after she was born, I sold my most prized possession out of desperation, a beautiful black Baldwin upright piano. It had been a college graduation gift from my mom and dad. The proceeds only made a small dent in the amount I owed to my creditors and bought me a little bit of time.
I had relied way too much on credit. I had extremely high debt with credit card companies, and they were not very forgiving. They were monsters who would call me incessantly and harass me. They would call my then-husband and even my parents’ house, where I had not lived in several years.
My ex-husband was not understanding at all regarding finances. Even though most of the money was coming from me, his chosen creative profession was not a lucrative one to say the least. He was very mean and cruel about the state of my finances, adding further to my extreme stress. I felt like I was in a state of constant anxiety, constantly walking on eggshells, and didn’t know how to overcome it.
Finally, I decided that the only option out of this mess was to file bankruptcy. Paying down my credit cards wasn’t happening and skipping payments was just creating more and more late fees. My credit score was plummeting because the situation had been going on for a while. I put off bankruptcy for as long as I could because I thought of it as a last resort. I was afraid that it would ruin me financially and make it impossible for me to recover.
Filing for Bankruptcy
Being completely broke, I decided to represent myself in the filing for bankruptcy. After some research, I learned that there are ways that you can do it yourself online. I found bankruptcy software that cost me less than one hundred dollars to access. This allowed me to enter all of my information into a program and then print the completed forms. I then had the proper paperwork to submit to the bankruptcy court.
My court costs were around three hundred dollars. I just checked current court fees for Texas, where I live. Now it costs $335 to file Chapter 7 Bankruptcy and $310 to file Chapter 13 Bankruptcy.
Keep in mind, this was just for the bankruptcy filing fees that I had to pay to the court. Had I hired an attorney to represent me, the cost would have been thousands of dollars! At the time, I didn’t have the money for an attorney. To this day, this sounds like a completely ludicrous amount to pay when someone is already broke and worried about grocery expenses! My total cost from start to finish was around $400. If you cannot afford to pay this, you should be able to request a fee waiver through the courts.
Once you file for bankruptcy, creditors are not allowed to call you or contact you in any way. It is illegal for them to do so! If they do happen to call, all you have to do is say “I have filed for Bankruptcy”. They may ask for filing details for their records, like a case number, but giving it to them isn’t required. Any legal actions that are pending against you from creditors should also stop once you file.
Bankruptcy Court
Bankruptcy court was uncomfortable for me, mainly because I chose to represent myself. When I showed up, everyone else had a lawyer except for me! That was weird, but it was nice to not have to pay the attorney fees.
My case was assigned a bankruptcy trustee, and this is whom I dealt with in court, not a judge.
Since I did not have a lawyer, I had to deal with the trustee myself and was forced to go last. The people who attend with lawyers will always go first, but it did not cost me as much money as they paid, so I was willing to deal with that. The trustee went out of his way to make my experience unpleasant and acted like a jerk. However, I am sure they are not all like he was. There were some mistakes in my paperwork that he pointed out, so I had to revise my paperwork and resubmit it.
Eventually, my Chapter 7 Bankruptcy finished processing through the court system and was discharged. The entire process took the better part of a year, but once it was done it gave me a clean slate with my credit. Chapter 7 wipes out all of your debt, with the exception of student loans and IRS debt. It also took away a lot of my stress and anxiety, which drastically improved my mental health.
Life After Bankruptcy
I truly wish that I had not waited so long to file bankruptcy. Bankruptcy is often discussed as a horrible, awful thing and I don’t feel that it was at all. It was an uncomfortable process but was not that bad.
Within a year, creditors started offering credit to me again. Reestablishing my credit was not difficult. I did end up with a slightly higher interest rate when I bought my next car, but that was to be expected.
Overall, banks and creditors seemed to be forgiving of my situation. Perhaps it was because I filed during the recession and so many people were going through the same thing.
After my bankruptcy was discharged and I was in financial recovery, I was able to rent a home, buy a car, and obtain more credit as needed. I did make a conscious choice to be more careful about spending money and actively tried to not utilize credit unless absolutely necessary.
Summary
If you are broke or scared financially, you should consider bankruptcy as an option. The laws are different based on the state that you are in, but it’s very doable. You can file on your own or you can hire a lawyer to manage it all for you. It may just give you a fresh start and a new perspective. Although it is not an ideal solution, it is a solution.
