Sweet Relief

I have to say that after our first visit with our lawyer in deciding to delcare Chapter 7 bankruptcy, I experienced a couple instances of utter relief.  First of all, just the act of making a decision (even though I knew it was going to crush us) was liberating.  It felt good to take a forward step and stop dithering in uncertainty.

Also, immediately after the meeting, I was able to confidently pick up the phone when creditors called and say, "I'm sorry, because of financial difficulties, we've decided to file Chapter 7 bankruptcy.  I've been advised to refer all calls of this type to our lawyer."

And voila - gave them lawyer's name and phone number (sometimes address too) and that was that.  For the most part, everyone was VERY NICE about it.  These customer service reps were suddenly trying to put me at ease, make me smile and two even said, "We look forward to doing business with you again in the future." 

It was a very different experience than I'd anticipated.   It led to more peace in our lives, as the phone line hasn't been lighting up like a Christmas tree for the past three weeks, and when it does ring, I can answer it in anticipation that it'll be a friend or family member or someone whom I want to talk to.

I'm sure there's more stress and uncertainty and grief down the line, but for right now, I've enjoyed our June reprieve.

It Really Feels Like Drowning

I kind of find it ironic that one of my greatest fears is drowning - literally.  I've never been a strong swimmer, and when water rushes over my head, I lose all sense of place orientation and flat out panic.

So when you hear the phrase "drowning in debt," it's amazing how accurate that is.  When the creditors call, you get the same completely disoriented feeling, the flailing and thrashing around, the inability to breathe...you realize that you're drowning in debt.

This was the feeling I had this past winter/early spring.  By that time, I'd given up on even attempting to pay any credit cards.  Up to this point, I'd felt a moral obligation to at least send them $20 a month.  But that didn't even make the minimum payment, we were still get socked with late fees and over the limit fees and inceased interest rates....it was a sickening cycle. 

NOT sending in the $20 a month was also sickening. Frankly, I felt I was in a no-win situation.  At first, I'd answer the phone when the creditors called and we'd do a little dance where they'd offer some "reduced" payment, I'd say that I couldn't even make that, they'd say there was nothing they could do for me, and the following week, they'd call again to go through the same ritual.  I got to the stereotypical point of not answering the phone (unless it rang after 9 p.m., because I knew they weren't allowed to call after 9).

During this time, my husband was job searching, aggressively, as is his habit.  He is an excellent job candidate and doesn't like sitting back and collecting unemployment. 

Finally at the very end of March, he was offered a job - less money, but eventually good benefits and, perhaps most importantly, in a field he thought he would enjoy.  The other catch was that it was just part-time to start out. 

By the time he started work in April and I tried to put together some kind of household budget based on his new income, it was time to face facts.  We knew we needed to do something to get out from under the debt we'd incurred.

It seemed we were faced with two choices:  1) negotiating charge-offs with all the credit cards or 2) Chapter 7 bankruptcy.

The primary reason I was strongly considering the charge-off option was because at least then I'd feel like I was paying something (albeit a reduced price) for what I'd charged over the years.  I started out trying this with a smaller card that we had.  The total amount on the card was something like $767.  Actually, the card issuer contacted us first about a settlement offer.  They would consider it paid in full if we paid $483, which they wanted either as a lump sum or over three months (at $161/month).  I took the three-month option, because, while $161 a month was a pinch, $483 all at once was out of reach.

Evaluating that experience led me to believe it wouldn't be so horrible going this route with all the creditors.  But reality was, I couldn't do it with everyone at once.  It would have to be a one at a time deal.  And I don't think the last creditor in line would be so patient as we tried to pay off everyone else.  Also, I don't think we'd get away that cheaply with any of the other creditors, as their balances were much higher. 

We talked about borrowing a big lump sum of money from my mom to take care of charge-offs.  This option left a really funny feeling in my stomach.  I don't know why I was okay accepting her help in paying monthly car payments, but asking her to buy our way out of consumer debt?  That felt like shirking responsiblity.

Also, in researching the charge-off option, we realized that any debt that was written off would be counted as income at tax time next year.  And we probably wouldn't have the money to cover the taxes then, which would lead to more borrowing from the National Bank of Mom.

So we met with our lawyer at the end of May to discuss Chapter 7 bankruptcy.  Why didn't that feel like shirking responsiblity?  Because we are going to be punished for it.  Big time.  (Is this some form of latent Catholic guilt rearing its head?)

The End of the Beginning

I've been trying to sum up the "how we got to where we are" story as concisely as possible, but  it's been a long road. 

At the beginning of this year (2010), in addition to worries of debt, we received a notice from the state that the state would be re-evaluating the need for child support for my stepdaughter (the child support enforcement agency had been dismissed from our case on the agreement of both sides early on in her life).

Now that we had her on state insurance, however, we somehow got flagged for this re-evaluation.  Ironically, the state summons arrived in the midst of the open enrollment period at my job, and after some investigation, I had already determined that it would be cheaper to insure myself and my stepdaughter through my work than through the state.  (Even though the state will cover any kid under 19, the premium is on a sliding scale based on income.  Even though we felt like we were circling the drain financially, we weren't as bad off as many other folks.  This is something we had to remind ourselves continually to be grateful for.)

However, the whole child support summons deal led to a sit-down in our attorney's office.  He was going to work to get the court date dismissed, based on the fact that my SD would be off the state insurance roll.  In preparing for our attorney meeting, however, we had to fill out an income/expense report.  The picture it painted was sooooo very ugly, in terms of how far in the hole we were at the end of each month. 

Seeing it in black and white was discouraging.  This meeting at the end of January was the first time that our attorney brought up the term "bankruptcy" as an option to eliminate our credit card debt, which had climbed to an ungodly number (over $20,000 at that point). 

The other option that he presented to us was to get the creditors to charge off a significant portion of our debt, in return for a lump sum payment.  He told us that obviously, my current strategy of paying a little bit here, a little bit there to each creditor wasn't doing anything to get us ahead.  He did inform us that any debt that creditors wrote off would be considered income for the following tax year. 

And even if he (or we) managed to negotiate a debt reduction from each creditor, where were we supposed to come up with various lump sums to pay them off?  If I can't make a $65 minimum monthly payment, I sure as hell can't pay off a $1,200 bill!  My husband suggested that in that case, we'd have to appeal to my mom (who most definitely has the money, as I've been privvy to some of her finances since my dad died).  That idea had even less appeal to me than ripping out my fingernails one by one.

So we left that attorney meeting with sunken hearts and swimming heads.  We knew we were facing a tough choice and there was no easy way out.

Three days later, my husband was laid off.  Again. 

The Belts Tighten

And then the NEXT disaster hit:  the awesome-paying job that my husband had found?  Closed its doors after he'd been with them for 14 months.  Sold the business, fired the employees, and he's back on the unemployment database, which is a MAJOR paycut.

During this time, I have to say that I was also searching for jobs, but was having no luck.  I'm sure much of that was due to some of my restrictions (i.e.  I suck at commuting, so didn't want anything more than half an hour away).

So, this brings us to last summer...which was a doozy.  I was juggling bills, we were trying to keep our worries from my stepdaughter (who's a natural worrywart) and attempting to be very, very frugal with what we had.  I can tell you the prices of some of our most commonly purchased items at all three grocery stores in our town.  I know when it's worth it to go discount and when it's not.  Oh, and we also got hit by lightning, which fried most of our computer and internet equipment (which was on a surge protector, but obviously didn't do much), along with our land line telephone equipment.  It was no small undertaking to get that stuff replaced either. 

My husband was aggressively job hunting, but nothing was turning up.  My mom, not knowing the whole, true picture, jumped in and offered to pay our car payments.  This was a huge load off my mind and I don't know if she's aware just how much she helped.  The feeling of putting her check in our account each month still sucked hardcore, though.

Now, I was really starting to feel like it was time to sell something... I was on repayment plans with two credits cards and the gas/electric company.  "Extras" were slashed from our lives.  Things were tight.  We had my stepdaughter on state insurance and were going around uninsured ourselves.  For someone who was used to quarterly dental appointments, this was a huge adjustment.

A little bit of sweet relief came in late fall, when my husband was offered a job.  It was less pay, still no insurance, but it was a job.  With all our credit cads maxed out, we were able to have a measly but memorable Christmas.  Whenever creditors called (which was often) for their payments, I tried to be hopeful and tell them that I thought we'd be dug out of our hole by March.

Once again, spoke too soon.

Something Major Going Wrong

I'd say by this point in the story, we've struck out, financially speaking.  Taking on two new car loans when we already have two mortgages and a bunch of credit card debt?  And no savings?  No one was going to be taking financial advice from us.

However, we were feeling comfortable with our decisions because all the payments could be made on time each month.

That is, until the hammer fell and one of my 20-hour per week jobs was eliminated in a budget shuffle.  Oh, and it happened to be the one that provided our family with the cadillac insurance.

Fortunately, we were able to shift over to the insurance at my husband's job, which was sufficient (but not what we were used to).  

I still had my one part-time job, was able to apply for partial unemployment, and still managed to pick up some freelancing gigs here and there.  While we weren't in dire, dire straits, the belt (or should I say the noose?) was starting to tighten.

Back to minimum credit card payments, a late payment here or there.  Using the credit cards for anything not in the regular bill lineup (extra gas, extra dinner out, any extra thing needed for school, etc).  Christmas was put on credit.  And sooner or later, most of the cards were maxed out... 

The First Pinch

Summary of where we are in the journey:  Husband and I are both working 40 hours a week, I carry fabulous insurance for the family, we're living comfortably (but using credit cards for big stuff and paying more than the minimum but not the whole balance).

Then the emotional pinch:  my dad's stomach cancer, which was diagnosed in spring, was super aggressive.  He passed away four months after diagnosis.  I was in the beginning phases of both of my jobs, stressed from learning them and having to take unpaid time off.

As we headed toward fall/winter, my husband's family business seemed on its last legs.  They limped along for awhile and then at the beginning of December, my father-in-law shut the doors.  My husband began claiming unemployment.  I'd say that was the first financial pinch....I had to go down to paying minimums on credit cards (but, oh, still used credit to pay for Christmas gifts that year - STRIKE THREE!) and even paid some past the due date.

After two+ months on unemployment, my very aggressive husband landed a job.  And what a job it was!  $10/hour more than what he'd been making!  We breathed a sigh of relief and went car shopping.

What?  After what seemed like a year and a half of unstability, why would we go car shopping?  Well, it did make sense for his vehicle, because his old one was 13 years old and facing a HUGE repair bill.  At the same time, we talked about getting me a 4WD vehicle so that I didn't get stuck in our own driveway in the winter (had to call AAA twice to tow me out of my own drive that past winter). 

We found two used vehicles that checked out great, seemed to be a good price and went to dicker with using my Honda Accord as a trade-in.  Its value was somewhat reduced due to a messed up undercarriage (see: towing out of my own driveway), but we walked away with two car payments that we could conceiveably afford, as long as nothing major went wrong....

Starting Point

"Every new beginning comes from some other beginning's end..."

Bankruptcy is a scary term...scary to contemplate and scary to initiate.  But to give you an idea of how we ended up on this journey, we need to go back to the beginning of yet another journey.

Five years ago, I was single (about to be engaged), owned my own house, had a great job with fantastic benefits and had a moonlighting waitress job that I'd originally taken to pay back a loan to my parents, but kept because the extra cash allowed me a lot of personal financial freedom.  I even had a semi-healthy savings account.

Just about four years ago, we were newly married, both of us had sold our "single" houses and we'd purchased a fixer-upper in the country together.   And when we sold our homes, we were at just the right time in the real estate market.  We both made healthy profits, which we turned around and sunk into our wedding and the fixer-upper (with no regards to maintaining a savings account - if you're counting, this is strike one).

We enjoyed a honeymoon in Ireland that fall.  Soon after returning (like, within two weeks), I was called into a meeting at my great job and was informed that our entire marketing department was being outsourced and we were no longer needed.   OUCH. 

Once I adjusted to that reality, though, I realized I was in a lot better position that my co-workers who were taking the walk with me.  Because I had the most years of service, my severance packaged was pretty decent.  Salary and benefits would be continued for five months before I'd even have to look at unemployment.

I spent that winter adjusting to my new life as a wife and stepmom and supporting my husband in his family business, which was slooooowing way down (during this time, his paychecks were becoming more sporadic, and my severance was primarily supporting the family).

As spring drew near, I was beginning to panic and was applying to jobs, which may or may not have been suitable.  In the end, felt that I landed on my feet, because after one month of having to claim unemployment (a month during which business really picked up for my husband and he got overtime pay), I landed two 20-hour/week jobs, one of which offered cadillac benefits even for part-timers.

Once again feeling financially secure, I spent that summer dealing with our custody battle for my stepdaughter and my dad's brand new stomach cancer diagnosis.

Also during this time, I cashed in my 403(b) from previous great job in order to free up some cash for more house repairs.  STRIKE TWO!  STRIKE TWO!  At least I was aware that we'd be taking a serious tax hit and socked away 25% of it into a one year CD.

Since we were both feeling secure in our employment and had liquidated the money to finish up our house repairs, we began getting a little careless with the credit.  We took a family trip to Disneyworld (and I would not trade those memories for anything).  We put a lot of tools and home repair stuff on credit cards.  We set up an at-home office for me for some freelancing that I was doing.   And, at that time, we were able to handle all of our payments, have family nights out and not feel a pinch. 

But, oh, the pinch was coming....