Surviving Filing for Bankruptcy
When some people think of filing for bankruptcy, they imagine losing everything, and spending the rest of their lives penniless. While you may think that filing bankruptcy means giving up any hope of financial success, I can assure you it does not. Filing for bankruptcy is one of the best decisions we have ever made. There is life after bankruptcy; even life that includes being able to get mortgages and credit cards.
After I required emergency life-saving surgery while not covered by medical insurance, my husband and I were swamped with $50,000 of unpaid, uninsured, medical bills. At the time, I was a stay at home mom, and my husband worked for a small town police department in rural Indiana, so the amount of bills we were faced with was more than we even made in a year. When the collection agencies started calling, we decided to file for bankruptcy. If you are contemplating filing for bankruptcy, here are a few guidelines based on our personal experiences.
The first step is to find an attorney. An attorney will help you determine if filing is the right decision for your situation. They will also help you decide which type of bankruptcy is right for you. We found our attorney through an ad in a local paper. When you decide on an attorney, call to schedule and appointment and actually show up! We made the initial appointment a few times and were too embarrassed to keep it. Don’t fall into the mindset of thinking you are the only person who has ever been in your situation. People file bankruptcy everyday, and your lawyer has seen worse situations than yours. After you actually meet with your attorney, and you see how routine it is for them, you will feel an amazing sense of relief.
After the first appointment, or in some cases before, you will need to start gathering up all your bills. If some of them have gone to collection, this can be a little confusing, so double check to make sure you have everything. When we were sorting through bills, it was tempting to set a few small ones aside thinking we could “go ahead and pay those” so we didn’t have the embarrassment of turning them into our attorney. Our attorney laughed when we told him about that. His advice to us was that it would be silly to file for bankruptcy and not get rid of all the small ankle biting bills we had accumulated.
After you give your attorney all your bills, and it is determined which type of bankruptcy if right for you, he or she will file your case. After that, you will get a case number. This is an important number. It is the number you will need to give all the bill collectors the next time they try to call you for money. At this point, you will want to pick up the phone to talk to them, because in most cases, after you give them your case number, you will never hear from them again. If they do continue to call even after they have your case number, give them your attorney’s name and number. This helped in the case of one overly zealous collection agent we were dealing with.
One of the things we agonized the most over was our day in court. We had to make one court appearance throughout the entire process. Once again, it was easy to fall into thinking that we were the only ones who would be before the judge, and that the judge was going to single us out or humiliate us in some way. This scenario couldn’t have been further from the truth. There were many people in court that day, in exactly the same situation we were. The entire process was more like an assembly line than an individual court case. It was not embarrassing or humiliating, and it didn’t even take place in a regular courtroom. Our attorney answered a few questions, and it was over in five minutes or less.
A few weeks after appearing in court, you will receive a large packet of paperwork from your attorney. It will include proof that you are protected from your debtors through bankruptcy, and a schedule listing each and every company or individual you filed bankruptcy against. The schedule is important. You may need to refer to it several times throughout your bankruptcy. If a debtor would attempt to collect on a debt, the schedule listing your debtors will be proof that you no longer owe them anything.
So, what happens next? Life happens, and time passes. Within a year of filing bankruptcy we had a credit card. While there was a steep application fee, a low credit limit, and an undesirable interest rate, we were on the road to re-establishing our credit. After making several on time payments, we gradually received offers with more reasonable terms. The more responsible you are with credit after you file bankruptcy, the more offers you will receive. In my experiences with loan officers, I have learned that your financial behavior after bankruptcy if more important, and can hurt you worse on your credit score, than the fact that you actually filed. So, remember to be responsible with any credit offers you accept after bankruptcy.
In the eight years since we filed bankruptcy, we have purchased a new vehicle, obtained a mortgage for our first home, and are currently working on refinancing our home at a lower interest rate. During this time, we have never regretted our decision to file for bankruptcy. While it certainly was not our first choice of financial plans, it gave us the fresh start we needed after the road of life took some unexpected turns.
