posted
I think most of us have a tendency to believe that by 30 we'll have it all sorted out, that everything will just fall into place.
Today I got hit by a process-server for the first time in 10 years and I guess that really this second summons is just the bookend to that first one, the tail-end of something I've been fighting for a third of my life.
It all fell apart last year. I'd been fighting off the various creditors, every cent extra I'd make in my second and third jobs seemed to go to pay bills or the outrageous amount of tax I paid for the privilege of working more than my alotted 38.5 hour week. But I hadn't managed to keep up with my tax anyway, and wound up hit with an $11500 tax bill with interest accruing. The tax agent had screwed up, but I didn't know that then. I had the tax department demanding money I didn't have, my credit cards were these endless pits that I threw money at to no discernable result.
I fought the taxman for a year until they finally started to threaten legal proceedings. I wound up seeing a financial counsellor who recommended bankruptcy. I also lucked into a new tax agent who I needed to help me figure out exactly what I owed - since even the tax department didn't seem to know. The original agents had forgotten to deduct quite a bit of stuff, so I needed to do some amendments to my assessment.
So we started the process. My Financial Counsellor, Brian, told me to just stop paying my credit cards and loans - and to forward them to him when they started to scream. I had to wait on the amended assessments from Tax.
The funny thing is that when I was still just hanging on, six months before the tax thing really flared up, I'd applied for a consolidation loan with the bank who held my major credit card and my personal loan. I'd not missed a payment in the entire time I'd been with them, the model custom. But neither they nor any other lender was interested in lending to someone so dangerously overextended - despite the fact that I'd coped that way for years and this would EASE my burden and allow me to at least think about starting to pay some of my tax.
Soon after I stopped making payments I got a letter telling me what a great customer I'd always been, offering me a load for any purpose - just enough to consolidate all the credit I had, leaving just the Tax debt as a seperate debt.
But by that stage it was too late. I was overdrawn, the tax department was bearing down on me and it wouldn't have made any difference anyway.
So we held off the banks for nearly three months while I waited for my amendments to come through from the tax department. By the time I got it back it was way too late to stop the process I'd started - and all my bank debts had been sent to debt collectors; an egregiously rude bunch of people. My tax agent had thought he might be able to reduce the debt from $11500 to around $6000. We got it back last week. I owe $400. I don't know how that miracle-worker did it, but I now owe virtually nothing on tax. If I'd known that three months ago I could've taken the consolidation loan and got the rest of this sorted in under five years.
But now it's pretty much locked in. Not inevitable, but certainly the next best thing. I can't pay the dept collectors who are demanding immediate payment so bankruptcy has become my only option.
And really, it's not that bad. I'm in bankruptcy for three years. I don't lose anything since I don't own anything. I'll have to make payments for the three years which should total less than a fifth of my debt. After that I'm free and clear. The bankruptcy will stay on my credit report for a further 4 years after I'm discharged from bankruptcy. The only unfortunate thing is that it will remain on the public record forever, although not part of a general credit check.
So I'll be 37 when I'm finally clear of this, two years later than if I paid it out myself. I won't have the ability to rack up more debt in the meantime, and I can stop working every waking moment. I'll probably even be able to save some money. Just do my job and take some time out. I have to ask permission to leave the country, but that shouldn't be a problem.
So it all goes down tomorrow. 5.30pm the papers get signed. I'm using this name that I've used only once - I'm a regular here and would rather no-one here knew that it's me.... at least until my next landmark. I just needed to vent and to mourn a little. It feels like failure, but it was my choice to stop the payments and start down this path and I am coming out on top at the end of all of this, so it's not all gloom and doom.
So.... ciao, beloved Jatraqueros.
...broadcasting under my regular handle will resume shortly...
Posts: 5 | Registered: Jan 2003
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posted
Friend, I've teetered on that edge for years. My hopes and prayers go out to you. Bankruptcy is always a rough end to things, but there is a reason that it's allowed in our system. And it sounds like that's where you are.
I hope this will allow you to gain ownership of your life again. There's nothing like being free of debt and I wish you many free breaths and the opportunity to take a day off now and then for yourself.
It will get better. And as a piece of advice, get an old coffee can and every week, put a $20 bill in it for yourself. I don't think your creditors can draft out of your bank account, but squirrel away a bit for a rainy day.
Take care and best of times are ahead. Sometimes hitting rock bottom is helpful, because once you are there you finally have solid ground under your feet.
Posts: 2848 | Registered: Feb 2003
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posted
Well, it's done. Thanks for your support Sopwith and Sara, it's appreciated.
My financial counselor, who I never met until yesterday, has been of enormous help. Turns out he's a late-50's caucasian buddist bikie with tats and a Harley to match.
I'm not yet certain whether buddist financial counselors are a good thing. While they're certainly more than reassuring they might be a wee bit less attached to material goods than the rest of us!
I feel much better now. I spent a lot of time talking about what's going to happen over the next few years and thought it might be of interest to those who are in a similar position, although laws on bankruptcy vary from country to country.
Bankruptcy is something that happens on a federal level and usually supercedes any summons or payment demand, as that's on a state level.
Many collection agencies will try to scare the pants off you if they think you're going to go bankrupt. They'll tell you that the bankruptcy will go on a register and will remain there forever.
This is something that's true, but not necessarily relevant. Where I am, my period of insolvency will finish in 3 years. I'm not allowed to rack up any more than $3K in debt in the meantime (which would be hard, since there's no-one that would lend me money at the moment.) and the bankruptcy will stay on my credit report for seven years. After that no credit report will ever list my having been bankrupt. There is a register that contains information about you, such as traffic violations, which the bankruptcy is added to - but this again is a federal thing, and it costs to access the information. It's not something that anyone is ever likely to be in a position to hold against you, unless they're doing some deep digging.
I have to pay around 2K -3K per year to the trustees of my insolvency which is so much less than I owed that it's ridiculous. After that I'm free and clear.
I did a calculation of how long it would take me to pay all of it back on the interest rates I was paying. I would never be able to purchase a home or save enough for retirement. It would've been a struggle for decades to come.
Now I have relief, no more calls from the bank, no more struggling to survivve from day to day. I can buy some new clothes, I can go out to dinner.
While it's not necessarily a path that I would recommend if you don't have to, the main reason I avoided it for so long was the shame. Which is a pretty silly reason to stay miserable.
Posts: 5 | Registered: Jan 2003
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I'm sure that wasn't easy to do, I glad you went through with it and hope you stay with your current mindset... it's not something to be ashamed of, it got you out of a big mess, and now you're going to be able to have a normal financial life. Good luck!
posted
Anon, it seems like things will look up for you. Bankruptcy is a serious step but you seemed to need it. I'm glad to see you seem relieved now that you have signed the papers. I hope your luck improves!
Posts: 6316 | Registered: Jun 2003
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posted
BTW, do you have any 10-year-old cheese sandwiches lying around? Suckers are paying big bucks for them on e-bay--. Sandwich unloaded for $28,000Posts: 6316 | Registered: Jun 2003
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I bankrupted a decade back. Within a week after the papers were signed I was getting an unprecedented amount of credit card offers. I'm not sure of the logic there...
The two biggest things that helped me afterwards: only debit cards, no credit cards. Ever. Never spend money you don't have. And stick with cheap cars you can save up and pay for outright. Careful shopping and meticulous car care is way cheaper than car payments and obligatory full-coverage insurance.
Good luck!
[ November 26, 2004, 08:29 AM: Message edited by: Chris Bridges ]
Posts: 7790 | Registered: Aug 2000
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posted
Since you can't go bankrupt again for a long while, if you get credit cards and overspend, your assets are theirs.
Posts: 15770 | Registered: Dec 2001
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quote: I think most of us have a tendency to believe that by 30 we'll have it all sorted out, that everything will just fall into place.
Heh. I'm 32, and I'm certainly not there yet.
Good luck; I hope this works for you. Today I will be closing on a refinance that I believe will allow me to keep my house, so I know a little bit about taking drastic measures to get creditors off of your back.
quote: The two biggest things that helped me afterwards: only debit cards, no credit cards. Ever. Never spend money you don't have.
Actually, my debit card has been a huge factor is me not being able to pay my bills. My bank does not update their records fast enough, so the internet, telephone, and ATM all show me having more money than I really do. I use(d) the debit card so much, for all kinds of everyday purchases, that it was impossible to keep up with the record keeping, and I was dependent on their answers to know what I could afford. But their information was wrong, and they never declined anything. They would pay it our, and then hit me with their fees: $90 for going over (per item) and $60 per day I had a negative balance. Of course, there was no way to bring my balance positive until next payday, so I racked up a lot of fees that way. In the last six months, I have easily paid $2000 or more in fees. That's $2000 that I didn't have, and that made a tight situation worse. It was a spiraling situation, because that missing money made my finances tighter each month, and me more likely to go over on basic expenses, ad nauseum. As with anon's consolidation experience, it was making me more likely to stay behind the eight-ball, and it very nearly caused me to lose my house.
Once this refi goes through, I will be switching banks, first of all, because I know other banks keep more accurate balance information. But I will also be using my debit card a lot less. What I will probably do, at the risk of being mugged, is take out enough cash to have as pocket money, and use the cash for everyday spending. The only good alternative I can think of is prepaid debit/credit cards (as opposed to cards coming out of my checking account).
Posts: 13680 | Registered: Mar 2002
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posted
Good point, and I wasn't very clear. We get out a weekly allowance of pocket money for gas, groceries, fun, etc. Very easy to see what you can spend when it's, you know, right there in your pocket.
Larger purchases and monthly bills are debit card/online payments, and our banks update fast enough so that it's not a problem keeping track.
The point I was hoping to make was that we take every precaution to avoid spending money we don't, technically, have.
Posts: 7790 | Registered: Aug 2000
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posted
I'm in a similar boat; but since I actually found a job that pays a reasonable salary, I'm digging myself back to level footing.
I hope to be at least stable or be within sight of stability in the next two months.
As for the debit card, I have to ask myself (seriously) if this is something I want or something I need. But the "only spend the petty cash in hand and burn the debit cards" approach works even better.
posted
One tip for money management, with varying degrees of success:
Pick your smallest, non-recurring bill (by non-recurring I mean something that can be paid off). Start throwing any extra money you have, even if it's just a few dollars, at it until it's paid off.
Now that the money you were throwing at that bill and add it to whatever you're currently paying on your next smallest bill. Pay it off.
Now that all the money you've been paying on those two and add it to the payments on your next highest, etc, etc.
Tough to do at the beginning, and even tougher to keep using that money for bills when you really, really want to relax and enjoy having the extra, but it's amazing how quickly you can snowball finances in your favor for once.
[ November 26, 2004, 05:02 PM: Message edited by: Chris Bridges ]
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