Bankruptcy

So I'll be 30 in August, and my financial issues have become a major stressor in my life. I have about $9000 worth of debt that I've been carrying for a while and just received a garnishment summons. I'm not financially independent and often need help from my dad to make my rent every month. I am of the mind right now to file for bankruptcy and just start over. My dad doesn't like the idea however, and thinks it will do more harm then good. He says even if I file, that I still wouldn't be able to afford my living expenses. His idea is that he helps me pay off my debts and says we can do so in a year. But if I do this his way, he wants to know the ins and outs of any money I spend, I have to clear ANY purchase I make with him.
I have multiple issues with his idea. This isn't the first time he's told me he would help me, in fact I brought up this same idea a year ago and he told me not to file, that he would help me. We haven't made any progress. Furthermore, I'm not comfortable having him that involved in my finances and quite honestly I've been trying to distance myself from him for a while now (our relationship isn't as strong as it used to be years ago before he got remarried).
I have no idea what to do? Has anyone had experience with bankruptcy? Was it helpful or hurtful in your experience?

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I would probably try to look at it as a learning experience and get my Dad's help. My stepson had to do that with his father, they met once a week and my husband helped him make a budget and stick to it and every week he'd bring over his paycheck and they'd sit down and apportion it. If you haven't learned to manage money then you still won't know how just by doing all the work of filing for bankruptcy which I think would just add another level of stress and complexity to the situation. I'd take a year and work with your father and try not to take it personally, but more like a "school" year. It might help you become closer to your father again, too, if you want.

I guess it depends on whether or not your father is using it as a means of control...

I don't have any experience with bankruptcy, though know people who have used it as a tool to help start over. They were at a point where even making changes in spending habits wasn't helping get them out from under the debt...

If it's a control thing on your dad's part (as it would be with mine),then research the different types of bankruptcy & talk to people about it, and other potential options.

I am filing Chapter 7 and I have a hearing scheduled at the end of August, about an hour and a half from where I live. This has been my experience so far:

I have a ton of debt from credit cards because two years ago I had just a whole bunch of bad things happen that cost me a lot of money. I met with a financial coach through my employee assistance program and I guess I didn't realize how bad it was until I just could not make the payments and even what I tried to negotiate with the credit card companies wasn't working. Anyway...

My coach talked to me about Chapter 7 and Chapter 13. Chapter 7 wipes out all your debt and stays on your record for 10 years. Now the thing is, if you file Chapter 7, you can't file again for 8 years I believe. Chapter 13 means that you have a payment plan where you have to pay back your creditors within 5 years. I am not sure though because I am filing Chapter 7.

Anyway, the experience has not been easy. My financial coach gave me a referral to a law office and I got a free 30 minute consult and 25% off of the lawyer fees to file. I ended up paying $1300 over 5 installments because that's what I was able to afford. The law office sent me a checklist and a 30 page questionnaire to send back along with the items on the checklist. The questionnaire asks you to list your assets - things like your house or car if you have them, approximate values, household items and what you could get for them at a yard sale, creditors names, addresses and phone numbers and outstanding balances, any bank accounts, mutual funds, retirement accounts, etc. I also had to provide a copy of my Social Security card, a copy of my driver's license, the deed to my house, the title to my car, payoff quotes for my mortgage, 6 months worth of bank statements and pay stubs, statements for my retirement accounts...it was exhausting. If you think that giving your dad info on your finances is rough, this is not going to be any easier. They also want to know how much money that you bring in and what your monthly budget is.

I cannot stress the importance of getting a good lawyer enough. The law office that I was referred to went out of business and, oddly enough, are going bankrupt themselves. My case was shuffled off to another law office and I had to send all of my documents again. Then a third time when my case was sent to a local lawyer because my case "fell through the cracks." Then, when they have enough info, including the completion certificate for your credit counseling class, then they file the petition. I don't know what was up with this paralegal at the law office, but I had to send back the petition numerous times to be corrected. She had me taking in $800 a month and spending $2600 per month, then in another section of the petition forgot one of my 401k accounts, and then took six months of pay and entered it like that six month amount was my monthly pay. What a mess.

Once your petition is filed, you are scheduled for something called a 341 hearing. I haven't had mine yet, but I understand it takes about 5-10 minutes and they ask you a few questions and then you are done. Your creditors would be invited to attend, but from what I understand, they almost never do.

I don't mean any of this to scare you, but it can be very tedious, depressing, and frustrating. $9000 isn't all that much, all things considered. Depending on what kind of debt you have, you can make some sort of payment arrangement. If it's medical, send them $25-$50/month. You can also try to call credit card companies and get a debt settlement where you pay a fraction of your debt over 3-5 years. And, if your father is truly willing to help, that's another option that you have. Exhaust them all before you file.

Hope this helps.

Im not going to comment on the offer from your dad. Because i just dont know what to recommend there.

But i can tell you about my husbanda bankruptcy.
He went thru a divorce before we got together and had almost 30k in credit crd debt.
He didnt have any mortgage, car loan, student loans etc. Just credit card debt from the divorce.

He got a great lawyer for $1200 who handled almost everything.

He showed up to court, it took 10 mins of questions from the judge and that was it.
His credit is fairly good now after a few years and he has no credit cards. His only debts are our 2 cara in both of our names. The house is in my name.

I guess if your debt is more complicated, then it will be a harder experience. And some debt cant go away with bankruptcy.

Also, claiming bankruptcy doesnt make you better at spending money going forward. It is a last resort.
I would recommend a professional who can help with budgeting and finances before any decision is made.

There is a government program you can look up that offers financial advice for $50 i believe. I called them once but didnt end up going. But they mailed me a form which had me break down all of my spending to the dollar so they could advise on how to do better with money going forward.

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I'm in Canada, so the laws are different but I can share my experience. 9000, probably sounds like a lot of money, but really it isn't that much, and could be paid off over time. I had 44K in credit card debt. I tried to negotiate a payment plan, that would have seen me paying off a much smaller portion of the debt over a 5 year period, but on my income even that was impossible. In ON, it costs $1,500 to file, which I was able to pay upfront. If you don't have the money, they'll take it out of any tax returns you get in the future until it's paid.

I had to fill out a ton of questionnaires about assets and income. And every month I had to submit a statement about how much I made and how much I spent. I was limited to earning 1,800 a month. Any more than that would have gone to my creditors. I had to attend credit counseling classes, which were actually helpful. I also had to go before a receiver general and answer a bunch of questions, which was kind of hard. After 9 months of doing everything I was supposed to, I was discharged and could stop sending in the monthly statement, and my debts were discharged.

The bad part is it wiped out my credit rating, and will stay on my record for 9 years. But it was really my only option at the time.

If you can avoid it I would. you don't need to start out adult life with that on your record. If it were me, I'd accept my Dad's help in paying it off, and work with him, to develop a budget I could stick to. It may seem controlling and unpleasant at first, but it will help you in the long run.

splitimage

I am not going to go into anything lengthy but if you have a car you have a loan on, you make sure you talk to a lawyer and see if you can keep your car and have the payments refinanced, or whatever, most of all if it is your only way to get to work. If it is all unsecured debt like credit cards talk to some of the BBB a+ agencies on debt consolidation. You can not take out anymore credit cards while in the program, but they can get you out of debt in a few years instead of 30 like some credit cards. Think about what all you have and what you don`t want to lose if you file bankruptcy. They can nore or less come into you house apt, etc and take whatever they want, depending on what state you live in..... Check some of the consolidation programds out, you have nothing to lose.

I've been through it (bankruptcy) and it's not the end of the world. But I don't know if I would go through it over $9000, which is not really big money these days.

You've got a dependency problem. You were dependent on credit. Now you are being lured into deepening dependency on your dad. If you don't break that habit now, you never will. Cut those living expenses down to what you can afford. Start listening to Suze Ormond on television, and buy some of her books.

You are right to not want your father knowing all your business. So stop telling him everything, and stop having him bail you out every month with contributions toward your rent. He's keeping you from finishing the job of growing up and being your own person. He's really not helping you by wanting to keep you financially dependent on him.

In regards to your dad, it depends on how good your relationship is and how well you would deal with him doing that. Leaning on experience is a useful thing. It could also make you resent him. That is a tough balancing act.

As for the bankruptcy, I had to do it in 2004(chapter 7) and hated doing it at the time. For some reason that I can't remember, the VA withheld a ton of my disability pay for years and was too messed up to work so I fell behind and with fines and all that it became too much to overcome. The process wasn't nearly as horrible as I thought. I used a bankruptcy lawyer, but he only charged $150+filing fee and the hearing was quick and painless. Unless outright fraud is suspected or a home loan is involved, creditors don't typically show up to contest it. At least that is what my lawyer said in 2004.

One of the best parts of filing is that all your creditors are notified and they have to cease collection activity. That was a huge stress off me.

It cleared out debts that I would never be able to repay and really did give me a fresh start. From that point on I was really careful with credit, never letting it get to the point where it could overwhelm me again.

It is true that it sticks on your record for 10 years but that didn't negatively impact me a whole lot. Less than a year after, I got a new auto loan @ 8%, not great but I was surprised with such a new bankruptcy and kept up with the payments and paid it off on time. I was also able to get some credit cards and carefully build up credit and have been careful with those ever since.

Right before the bankruptcy went off my record I had a 650 FICO score and it is now around 750. I would still have a sub-400 if I had not filed and wouldn't be currently pursuing a VA home loan.

Debt consolidation can wreck your credit more than a bankruptcy, with the added bonus of still being in debt. You really have to do your homework with these types of programs.

I can't say which would be the way to go, I can only give you personal experience. Find a bankruptcy lawyer that offers free consultation as a good starting point.

Just remember, neither way is the end of the world.

MDD with Psychotic Features, Dysthymia, GAD, Cluster C personality traits - Not taking any meds

That was very good posting, qwerty68. Congratulations on your current,nice FICO score. It seems you've made the very best use of the bankruptcy option to achieve what that option was intended to help people achieve.

I hope you post lots more on financial threads. We can learn a lot from you.