Curious about Bankruptcy

[sobini93312]

What do the courts do when you file? They look at your income vs
debt? Do they sell any of the things you own? So if you get into
debt by buying a motor home and some jet skiis, do they take those
things and sell them to pay some of the debt or is your debt just
wiped out and you get those things free and clear?
I am not insinuating that ANYBODY on this list does this. I was just
curious and the thread is going through right now.

Kathie
Central California

[Michelle Young]

Hi Kathie,

I just saw your post go through, and I've been down that road, so I'll
tell you from my own experience with the understanding that the
laws have changed since my husband and I were forced to file in
1985.

We had found ourselves in a rather strange situation. Three years
earlier, we had graduated college, and I had been hoping to go on
for all the fancy letters that move one toward a Ph.D in English. It
was the era of Reaganomics, 1982, and jobs were scarce. So were
scholarships for students wanting to go on, especially if they weren't
fortunate enough to come with a family with fat wallets.

I had received awards for my academic achievement to no avail. I
couldn't get scholarships to go on. My husband, then still my
boyfriend, from another culture (Cantonese, born in Hong Kong),
had tried to make use of his degree only to be told he wasn't good
enough, qualified enough, and it was hinted that he probably didn't
speak the language well enough even though he'd been in this
country since he was 6.

Completely by fluke, we found ourselves in business with my egg
rolls. My mother had loaned us the $10 to try to sell a few to keep
going. Suddenly, we found ourselves with a $100,000 corporation,
marketing more than 200 dozen egg rolls a day to major frozen
food distributors, colleges and universities and fine dining
restaurants. But we grew too quickly, a curse on a start up
company like ours, in a food industry where much in the way of
politics goes on. We had a huge kitchen with a large freezer, the
works. Even Hunt's Company was shipping Sunflower oil to us to
keep up with supply and demand. We had employees because I
had been able to do 20 dozen a day on my own, not ten times
that. We were working 15 hours a day to try to keep up.

When I say the company exploded, that's putting it mildly. We
grew and grew but were unable to keep up with the demands of
an ever-more demanding market. People loved the eggrolls,
even though they were selling in the fine dining restaurants for
$1.75 *each.* They wanted more.

Meanwhile, the ninth largest supermarket chain in the nation at
that time wanted to move the eggrolls from the local market to
their national chain. Our investors wouldn't hear of it, and in a
matter of days, our company came to a screeching halt.

As it happens, this was about three weeks after our wedding,
and my second son was on the way, to be born in 1984. With
work doled by the pittance, temp jobs for my husband, we were
so broke, we had to request assistance from the Hilburton Fund
for our son's delivery. All that, and we had over $100,000 in
debt and were barely surviving. We kept trying to find a way
out of debt, and the interest kept piling higher.

We weren't frivolous, but let's be honest, who needs a walk-in
freezer in a rented house? The size we needed would have
filled one room.

And so we filed. I was terrified we'd lose the car. We had barely
anything as it was, and we needed the car for my husband to
find work.

The judgment came in July 1985. And in the interim, we lost
nothing, and the collectors stopped calling as each was notified
of the filing. We were also mortified and afraid we would never
be able to start over again. (This time, being alone, I have
nothing, so bankruptcy isn't an issue for getting back on my feet.)
But we did, and we rebuilt, and while it wasn't easy and not everyone
was willing to trust us, we did rebuild, slowly, one day at a time, and
we lost not one iota of what we had...just the debts. We gained a
chance to start over again.

Was I glad we did it? No. I was embarrassed and then some. But
on retrospect, it was the only alternative we had at that time. This
isn't a decision one makes lightly, nor is it a decision others can
make for you. You have to do what's right in your mind and heart
and be committed to rebuilding because you really don't want to
do it again.

I refuse to judge another for such a decision. There are always
mitigating circumstances that outsiders can't possibly know. It
was a tragic day in our lives, but it was right at that time. Whether
that's still the case with the change in the laws, I honestly don't
know. I've heard one has stiffer regulations to follow today.

With all my heart, for those who do find they're forced into such
a decision, I wish them well and hold them in my prayers because
it's a tough road to start over again.

I hope that helps to answer the questions, Kathie.

Warmly,
Michelle

[sobini93312]

All I can say is ....WOW.... This is what I feel bankruptcy is for!!
I am glad that it helped you. It is very hard to judge someone for
something they have done, that others disagree with, without knowing
the whole story!!
I live in a neighborhood, middle class, where everyone ownes toys.
You know the kind I am talking about the quads, trailor, motorhome,
boat, jet skiis. In any combination. They also drive two brand new
cars. These are the people that I am wondering about, the ones that
get in over thier head, right in front of thier eyes. If you get
what I mean.
I think that Bankruptcy is a very personal thing. But I do have a
side of me that gets mad when people buy, buy, buy and then have all
this stuff and then go bankrupt to pay it all off. But there are
always circumstances to every story.
It would be nice of China to maybe tell her story and people would
understand better. I was kind of taken aback by the way she wrote
that this is something they are doing to get ahead in life. So she
can get her house and car etc. I do understand that things happen in
life that are totally beyond our control. I think she got very upset
about the 'tone' that other people were talking in and didn't
understand the 'tone' that she was writing in. Maybe it was just me
but she sounded very glib in some of the things she said.
This is just my opinion and not intended to offend anyone.

Kathie
Central California

[Nancy Ann]

My parents just finalized Bankruptcy this month. They filed chapter 7.
My mother was so upset by all of the stress of filing that she got very
sick for a while, but she is improving now that most of it is over. My
parents are in their 70's and were living on my father's pensions and
social security. They both have medical problems and they had been
charging drug prescriptions and medical bills for quite some time. It
finally caught up with them and my Dad was paying the minimum payment on
his credit cards by getting cash advances from another one. They were
$45,000 in debt. When my Dad showed me how much their payments were and
what he made, I couldn't believe they had been making it for as long as
they had.

They went to a credit counselor and they told them that they were too
old to set up a pay back plan, and were advised to file bankruptcy. I
loaned them the $800.00 it cost in fees to file. $800.00 is a reduced
fee because of their age. It can cost several hundred more than that for
the fees, including attorney fees.

They rent an apartment so they were safe to file chapter 7. If you own
a home you can be forced to sell it with chapter 7. Chapter 11 protects
your primary residence, but doesn't "wipe the slate clean" like chapter
7 does.

They had to get together every document that relates to their finances
including taxes, all bills, insurance, pensions etc. They were allowed
to keep their car if it wasn't worth over a certain amount. They could
keep one account open if they wanted too. You are only allowed a certain
amount of things. You can only have so much money in tools, household
goods, jewelry, savings etc. If you had charged something to your cards
in the last 3 months it can be repossessed. One thing to remember that
surprised them, is that if you are a co-signer on a loan for someone and
you file bankruptcy, you can ruin the credit of the person you co-signed
for as well as your own. My sister found that out the hard way because
my Dad had co-signed on her car.

The companies that they owed money to drove them crazy with phone calls.
My Dad finally started telling them that he had filed bankruptcy and
most of the companies were very understanding. My Mom and Dad had
always had great credit and paid all their bills.

After your attorney files the papers for you, you have to wait on a
court date. It takes several months to get everything finalized. When
you go to court you can potentially have to face all of your creditors
in court. They have the right to fight the bankruptcy and they can
demand that your house be searched for any sellable goods. Mom and Dad

were lucky and none of their creditors showed up. The attorney told
them that he didn't think any of them would show up because Mom and Dad
didn't have enough money to fight for.

It was a terribly traumatic thing for them to go through. It was very
embarrassing for them. It isn't a fun thing to do, but in some cases it
just isn't avoidable.

Something has to be done in this country about the soaring costs of
prescriptions and health care! The instances of bankruptcy being filed
by seniors is skyrocketing and health debt is the main reason for it.

Sorry this was so long, but I thought since I had just gone through this
with my parents I could shed some light on it.

Nancy Ann