I’ve covered last year that we were trying to close on a house and needed to pay off a credit card to fix our debt to income ratio.
Honestly, last summer was a mess. Mr. Brickie was working like crazy and we were barely keeping our noses above water paying credit card minimums.
We messed up and didn’t spend responsibly. It started with taking the family to Disneyland for my brother’s wedding and just kind of going into that “we dug a hole, so who cares?” mentality.
So, yeah, don’t do that is the big moral of the story, I guess.
Except… we’re going to get out of a majority of our bad decisions.
My “Not Very Good” Original Plan
We stopped paying the credit cards that were only in my name and kept paying the cards that were in Mr. Brickie’s name. The theory: My credit would be destroyed but his would stay good. Last year when we were trying to close on the house, the loan officer recommended putting all the credit cards possible in my name only so his debt to income ratio would look good for the loan.
It also makes sense he would be the only one to get the mortgage because he’s the only one with income.
So almost all the cards have been only in my name for over a year at this point. My credit, until today, was around 450.
One thing you learn when your credit is 450? It didn’t change who I was as a person and it didn’t affect my life.
Well, maybe it did affect my daily life a bit. Check out yesterday’s missed call list.
As someone who generally makes really well-thought-out and thorough plans, this one (I have to admit) was WAY half-assed. The only plan I had was to pay off Mr. Brickie’s cards and then go back and pay off my collection balances one by one until they’re all fixed. It seemed like a good plan at the time. Looking back, this was very much not a great idea.
Random Fun Lady Person Gives Me Serious Food for Thought
I was at a friend’s surprise birthday party a few weeks ago. Some of the guests were people I’d never met before. They were really genuine, funny, fun people. I’m glad I met them and had a chance to get to know them. Plus, it’s always awesome to see a friend getting presents at a surprise party.
Someone at the party mentioned credit card debt and one of the friends of my friend I’d never met before gets so excited and starts describing how the other person with credit card debt should file for bankruptcy! How it’s not a big deal, how it saved her ass, how everyone should do it. She was 100% selling it.
I gave Mr. Brickie a look and he was confused and had no idea why I was giving him a look so I had to bring it up again later. He immediately shut me down saying it would ruin our credit and was a no-good, terrible, very bad idea.
I asked him why.
We rode the rest of the way home in silence. He did eventually say that his issue was destroying our credit when we are still trying to buy a house.
I did a bit of Googling and informed him that we didn’t both have to file. I could file on the debts solely in my name and we’d just keep the cards and debt that were in his name.
There is no good way to express with words how absolutely shocked I was when I was reading up on bankruptcy and learned all the effort we had put into taking him off most of the cards the year prior (solely at the request of a loan officer for a totally different reason) was going to be helpful in getting this done.
We would be able to discharge about 71% of our total debt without doing anything to his credit score. So the income and good credit rating would be “owned” by the same person – the person getting the mortgage.
Finding Out if My Research was On Point
The only way to find out if what I was reading was true and if we would really be able to file a Chapter 7 and erase all this debt was to make an appointment with a lawyer.
We ended up calling the lawyer the lady at the party raved about and I think it was a good call. We met with the lawyer and the only hiccup in the road was when he asked if my kids were boys or girls and I said they were all girls and he said (I’m using quotes but my memory isn’t perfect so it’s paraphrased.)
“I used to think women were made evil based on what they went through in life, but now having kids (and grandkids? I can’t remember if he said grandkids…) I know they’re born that way.” Then he looked me dead in the eyes and asked, “Why are girls born evil?”
Y’all … I had vowed to be on my very best behavior in this meeting. Even so, I felt my mouth opening without me thinking a clear thought and I heard myself say, “If men weren’t born weak I guess we wouldn’t have to be born evil, would we?”
Yeah, so that’s me.
If you’re one of those people who think about arguments later and think of the perfect thing you wished you could have said in the moment? Stop feeling bad. I say the zinger in the moment and then wish I’d have just choked and not said anything.
The lawyer didn’t say a thing, turned back to the computer, and resumed asking us questions about our history, property, and other things.
Sidenote: In what universe do you look at a woman and ask why women are born evil? Like, what did he THINK I was going to say? Did he think I was going to agree with him? Laugh and trash my kids? Not realize he was including me in the comment? I know Indiana is the land of internalized mysogony (also the crossroads of america) but damn, did he really think I was going to throw my kids under the bus for his joke? No, sir, no sir, no sir.
Maybe he’s used to people agreeing with whatever he says because he’s a lawyer, but he even talked bad about his own law school. It was a trip.
Overall, though, he was a friendly, decent type of person. It was just that one….no, wait…there was the other thing where he tried to school me on insurance and I had to explain what a moral hazard was and he acted like I made the term up and I had to explain it was a legal term you learn when you get licensed to sell insurance.
Oh, and when he heard Mr. Brickie was a bricklayer he said he’d put him “on his list” because he’s going to be building a new garage soon. To Mr. Brickie’s credit and because he has social skills I severely lack, he laughed and smiled and didn’t say anything. Until we were in the car. Then he had a whole lot to say about it.
I was proud of him. It was such a power move. I’m working on being more like that.
So I guess it was not the most professional series of interactions I’ve had. Not the worst, by far, but a bit off-putting in hindsight. I don’t know. As someone who can rub people the wrong way I’m willing to let all kinds of personality quirks slide as long as the job I’ve paid someone to do gets done. He came with recommendations. It is what it is and I’m moving on.
The Latent Guilt of it All
I’ve listened to Dave Ramsey for years and years and years. Not enough to stay away from credit cards, I guess, but long enough to believe that bankruptcy is a bad and terrible thing you should only do under dire circumstances. Although, to be fair, I’ve never gotten clear on what those dire circumstances are. I think one was losing your house but we rent so how does that apply, like, ever? It doesn’t.
There was never an example I heard in all my listening that let me know whether or not we were under the “only under these certain exceptions” category.
One of the biggest issues I had with choosing to file bankruptcy is the feeling of being a failure.
I felt like doing this was terible and I should buck up and, I don’t know, do something else? I had no other ideas but felt like this was not a good one.
Then I remembered money isn’t real and we live on the brink of becoming a dystopian society, and no one was going to give a crap if I filed bankruptcy. I’m literally no one in the grand scheme of things and I’m not robbing anyone or comitting fraud. I’m doing a thing available to me in order to make my life and honestly the lives of my children … better.
In fact, it would make me worry less which will make me a better person. Not worrying means I’ll have more time to be there for other people who have real issues.
When we stopped paying on a majority of my consumer credit we were saving to get through winter. You all know winter is traditionally the leanest time of year for us.
On the day of filing I had to have less than $600 total in all bank accounts (savings and checking) and some categories had piled up a bit. For example. I save $60 a month in a “Subscriptions” category that covers everything from the Playstation Plus yearly membership (Always get it on Black Friday, y’all!) and the registration for the cars at the DMV. It covers the Costco membership (I’m keeping it because renter’s insurance through them is over $200 less than the closest competitor annually so it literally pays for itself + almost $100 dollars more!) and a bunch of other annual expenses.
There’s an insurance category that holds the $13 a month for renter’s insurance and the $103 a month for auto insurance because we pay those annnually and bi-annually (respectively).
You get the picture.
Saving for winter was the REASON I had $1380 to pay the nice lawyer man for his services as well as the $20 charge for the first bankruptcy course and the $15 for the second bankruptcy course.
But I paid some bills and got that balance down. It broke my heart to do it, but I did what I had to in order to get these papers filed.
Be Warned! Tax Returns are Up for Grabs
If you’re thinking of filing a Chapter 7 (I don’t know anything about Chapter 13, so I can’t speak on it) you need to be aware that timing is everything.
The lawyer gave us the option of waiting to file later so we could get our tax return and spend it before filing. That would keep the return from being confiscated by the court’s bankruptcy trustee.
We were planning on saving it and using it toward the down payment, but with the reduction in credit card payments (we were still paying on many of my cards before I filed bankruptcy) we will be able to save that down payment much more quickly.
But we couldn’t file until we had spent the refund and we might be put in a position to prove we spent the refund on bills, home improvements, and car repairs or other necessities. Pre-paying bills way out was not acceptable. It was never said or implied but I got the feeling people find ways to hide the money. I haven’t Googled it because we chose to file and if they want to take the refund they can take it. Earned Income Credit is exempt and I’ve heard from several sources that since I made no income only part of the “refund” portion would be taken since it’s not really “my” refund because it wasn’t “my” income.
I cannot find a source online that can give me the formula to calculate that number so it’s a mystery at this point. I’m in Indiana so we don’t use federal guidelines and I read the whole portion of the Indiana State Code (Including such reviting bits as 34-55-10-2 and 34-55-10-2(c)(11) which gave me no clarity.
So we might sacrifice most of our tax return in this whole process and I won’t even bat an eyelash because it’s worth it.
You Can Only File Every Eight Years
The lawyer told us we would get credit card offers the day the two years after bankruptcy is up. I told him I’m never opening another card again. We have the ones we’re keeping through Mr. Brickie and that’s more than I’m comfortable with, even.
The lawyer laughed. I’m not judging, I can understand why. I bet a lot of people go right back to what they were doing before. The thing is our financial position is so much different now we don’t need credit cards. Our savings “muscles” are really well developed now. We’ve done the work on ourselves and our priorities to know we won’t be slipping into those old, bad habits.
The filing officially happened Friday and I already had a notice from a car dealership trying to sell me a new car on Tuesday. (Monday was a mail holiday or it probably would have come Monday!) I laughed.
I think there has been more laughter during my bankruptcy than during most but who knows. Maybe everyone always laughs and I’ve just been unaware of the humorous aspects this whole time.
The big, huge super-boring plan is to save every extra penny.
Our first priority is to save up a down payment and get the mortgage for our place sorted. Then we’ll pay off Mr. Brickie’s cards (now that it won’t be a five/six year slog to do, I’m excited about paying them off). Then get the car paid off.
It was a huge blow to us that we missed out on having our closing last year because Mr. Brickie was laid off for the season three days before our closing date and it tanked the whole closing. I’m hoping we are able to look back in five years and see it was really for the best.
I know we’re in a much more solid financial position today than we were at this time last year. Even more so now that we’ve chucked some debt in the bin.
I’ll update the process and if anyone has any questions, feel free to ask on FB or in the DMs on Insta or Twitter. It was a lot less drama than I originally anticipated.
Of course I haven’t gone to my court date yet so maybe that will be the drama? I don’t think so, because I was on the bankruptcy subReddit and everyone is saying it’s kind of a perfunctory meeting to verify the information.
I’m going to blog the journey and give any information that might be helpful for others who decide to file bankruptcy. I know things are different in different states.
I wasn’t writing because I knew I was making bad decision after bad decision and didn’t want to say anything until I had figured out what we were going to do to get out of the end result of all these poor decisions!
This probably isn’t the best end result but it takes the financial noose from around our necks pretty effectively. Oh, I didn’t tell you the total yet. While I don’t have an exact number due to the costs and fees escalating from the moment I quit paying the cards, I can tell you we’re in the general ballpark of bankkrupting about $70k in consumer debt.
Oh, funny story. The morning of my final appointment I got a Credit Karma alert that a collection agency put something on my credit report. It was a medical bill. Now, I can tell you right now I had $0 in medical debt at the time and I was shocked because I pay my medical bills. I’m not proud of that or whatever it’s just a fact and my local hospital is very generous with payment plan lengths. More the luck of the draw of hospitals rather than me being a saint for paying medical bills, you know? So there was no reason for me to be in collections for a medical bill.
I told the secretary at the office in passing and she immediately started typing and added that bill to my filing! It was only $106 and I had planned on paying it that day but yeah, put that on there. Had they just sent me a normal bill I would have taken care of it. Now they won’t get anything.
We also still have our student loans. Those aren’t going anywhere. Those are on the list to pay down after we pay off the credit cards, the car, and the house. Yes, they’re the last priority because honestly my number one goal once we buy this house is to pay it off in record time.
That might be a pipe dream, but we’ll see.
Stick with me and let’s go on another financial journey!
In the meantime, we’ve been using YNAB (You Need A Budget) and recommend it to anyone and everyone that wants to track expenses and do better handling their finances. I always tell anyone who talks about money….
We might have made bad decisions and I might be filing bankrupcy but we’ve NEVER been in the negative on any of our accounts since I’ve used YNAB. You better believe it’s the number one tool that keeps us from ever going negative!
Bonus Tips That Didn’t Fit Anywhere Else
- If you don’t have $1400 up front to pay the lawyer, there are forms you may be able to file to pay the fee in installments. Look for Application for Individuals to Pay the Filing Fee in Installments online. I think there may even be a fee waiver. Ask your lawyer.
- If you’re feeling REALLY bold, you can also file pro se (that means without a laywer) I do not recommend this option. I repeat: I do not recommend this option. It can be done, though. The site to use is Upsolve and they are legit but if you can use a lawyer, do that, because filing bankruptcy is all about the paperwork.
- If you have a lot of assets or stuff (boats, ATVs, collections) you may not be able to file a Chapter 7. We don’t make a lot of money and have two cars worth like $3k each. Plus, we rent and don’t own a home. So we’re basically perfect candidates.
- Most bankruptcy attorneys give a free consultation so get in there and ask some questions. Don’t like someone’s vibe? Go to another one. Get your consultations and if it’s right for you, get to filing!
- If someone acts like you’re a bad person for filing bankruptcy keep in mind that attitude is about them and how society has gotten into their head, it has nothing to do with who you are as a person. No one knows your life. Do what you need to do.
- Last but not least, don’t make the decision lightly! You can only do this every eight years so if you jump right in and run up more debt you could get taken to court and your wages could be garnished if you get behind. Please use bankruptcy to make your life better and not to put yourself into a worse position in four or five years.
On the bright side, it seems filing bankruptcy has already helped my credit shoot up. The irony does not escape me. I got this email today. The last line made me laugh so hard.