I'll start with the ugly. Since I've last posted, we've been sued by two creditors, Discover and Citicards. Discover was willing to work out a payment plan with us but Citicards refused. I offered them a settlement of $4,000 (I had $2,000 and was going to take money out of my 401k again). They refused saying that they wanted $800 a month payments or a $10,000 lump sum. My next step was to call consumer credit counseling in my area to see if they can help us set up some sort of debt management plan. They would have needed a monthly payment of $1800 a month in order to help us. The counselor called the law firm responsible for Citicards collection of our account and again they refused to negotiate the payment. By this point, I'm in tears and so upset with our situation.
That 2 months of not getting a paycheck in late 2008 has really impacted us and I now personally and painfully know what the terms "living paycheck to paycheck" means. The counselor looked over my entire budget and she said that there is no way I can pay them back and that at this point there is nothing for me to do but file for bankruptcy unless I was willing to work 24/7 to pay on the debts. After all the numbers were added up including all the interest and penalties, we owed over $68,000.
I fought filing for bankruptcy so long and kept holding out for the next bonus, next tax return...the next something. I finally realized that I had nothing else to give. After another 3 or 4 months, my husband finally convinces me to consult with several attorneys and they all tell me the same thing, "If you don't file bankruptcy now, it will get worse and in 2 years your unsecured debt will be well into the six digits because the credit card companies will continue to tack on interest and penalties." I did not sleep soundly at all during the months of March, April, May, June or July. I tried to negotiate with citicards daily and their answer was always, "No, we want what we want. Borrow from your neighbors, borrow from your friends. Stop paying your mortgage. Basically, do whatever you have to to pay us money for your credit card debts." After crying almost daily and not sleeping at all, I finally cave and retained an attorney in mid July. I'm ashamed to admit that we failed at paying our credit cards off. We failed at managing our money.
Our attorney recently filed our bankruptcy because Citicards served me with paperwork saying that they were going to garnish 25% of our net income in the next week. Because of that our lawyer filed an emergency petition of bankruptcy. But in order to pay him, we had to not pay the mortgage. So that means that our 2 paychecks in August and September will go towards catching up the mortgage again. I am so sad, so disgusted and so angry at our situation. Prior to the job loss in 2008, we were able to manage and pay off our debt and it only took 2 months to bankrupt us. So, if you are reading this post and you are in any position to save and be responsible...please do so because like I said, 2 months of no income for one person bankrupted us.
Now for the bad. I am petrified of ever being in this position again. So much so that I have become a tight fisted miser. I have stopped getting haircuts, I have stopped buying clothes and wear the same things over and over to work, I have stopped buying food at work and getting daily coffees. In short, I don't spend a cent unless I have to on bills. I am also completely jaded towards any and all banks. Yes, I borrowed that money and yes some of it was used to buy plane tickets. But for the most part 65% of what I now owed was all in interest and penalties. I used the credit cards to buy groceries and to pay for utilities when I didn't have the money to. I stress out about our family and friends finding out that we filed bankruptcy. I worry about my boss or co-workers finding out. I stress out about this happening to us again if we don't have adequate savings. In short, I am a mess and I have yet to find a way to deal with all the stress of the past few months. Because I fear that I may become further depressed, I've booked an appointment to see a counselor so I can have someone to talk to who does not judge.
And, finally some good. The same day we were forced to file bankruptcy, I earned a promotion and a pretty hefty pay increase. Because we had to provide so much information on our spending and bills for the bankruptcy paperwork, this forced me to de clutter all the paperwork in my office. I am now clean and organized. I'm still sad and depressed but...at least I'm cleaner now.
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