Bankruptcy = Failure
Growing up, I gained the understanding that it was important to earn money, spend money, and never have to ask another person to help with expenses. At the same time, it was fine to use credit cards to buy things with no money in the bank and it was fine to finance vehicles. Of equal, maybe more importance, was the credit score. Ones credit score must always be in a range that was high enough to impress others, especially new lenders of credit.
The cycle of working, buying, and paying was one to be proud of. The ability to say, “I pay my bills each month” without mentioning that ones credit card balance(s) was way more than could ever be paid off in a lifetime.
About 10 years ago, my credit card balances reached a point where I did not want to open the mail. I dreaded going to the mailbox and I would hold my breath as I opened each of more than 5 credit card statements each month. Leading to the arrival of the bills, I would think, “I have not spent that much” as I recalled $10 and $20 dollar purchases that never added up to “very much” in my minds calculator. Each bill told a very different story.
Where I recalled “not spending very much”, the statements indicated that I had spent several hundred on each card. I began making smaller payments to each creditor to ensure that I was able to make all the payments. After about 5 years, I knew I was drowning and there was no more money to go around. No matter, I could not come to terms with filing bankruptcy.
How could I admit to anyone that I had failed at managing my finances? How could I live in the world with a credit score that would be hammered to shreds after filing bankruptcy? My decision at this time, to lessen the embarrassment, was to enter a debt consolidation program. Right now, as I typed “debt consolidation program”, I was hit with the realization that in some ways, with credit, I was a type of addict and yes, I needed a program.
Debt consolidation provided a crutch that kept me afloat for a short time but I was still struggling. I was struggling to make any real dent in my debt, which at the time, without student loans and mortgage, totaled over $50,000. As the housing market continued to get worse and there was no equity in my home for the “next” refinance, I knew I had to file bankruptcy. I had a second mortgage on my home that was costing me several hundred each month and the house was not even worth the balance on the first mortgage – not even close.
Based on my income, it was time to truly enter a recovery program and I filed Chapter 13 bankruptcy. With an attorney, I created a repayment plan that lasted 5 years. Let me tell you, the first 3 years of the plan was brutal but I am not asking for sympathy. I got myself into this and I went to my knees and beyond to dig myself out.
Having lived for so long with credit cards as my “emergency fund”, Chapter 13 was an awakening. There are no credit cards or credit. Every purchase that I made was with cash. In the beginning, I might start a weekend with $600 in the bank to get me through two weeks. After a weekend of going to the store to buy a “few things” I would check my account on Monday morning and find that I had spent over $500.
I had no understanding of what my real problems were. I thought that all I needed to do was make my payments, get through the bankruptcy, and start to restore my credit so that I could have credit cards again.