It is yet another reason to teach children to be independent thinkers throughout their lives and avoid or at least question tendencies of the herd.

If you haven’t been through it, you may not know that the divorce decree has no real bearing on what you’re responsible for paying. Your (ex)spouse may be “responsible” for making the house payments or the car or whatever, but if they don’t do it and don’t refinance, the creditors will come after you.

We went through this with my husband’s ex. Calls from creditors threatening to throw him in jail because his ex wasn’t making her car payment and they couldn’t find it to repo it. (No we didn’t have it.) Letters every couple months that his credit had suffered because she was late on her house payment. Finding out after about a year that the accounts he’d been making his payments on were all behind anyway because she wasn’t paying her half.

We were very careful about paying all of “his” debts on time and as agreed but it didn’t really matter in the longrun because her choices continued to affect him every day.

Quit claims deeds are meaningless. Divorce decrees are meaningless.

Since 50% of marriages end in divorce, I think this information should be a daily headline in the paper, but since that’s not going to happen, a GRS article could help.

Let me admit right up front that I’m with the anti-bankruptcy crowd on this one. Perhaps for a slightly different reason than any I’ve seen posted so far.

I believe with all my heart that your word of promise is your absolute bond. If you are a person of integrity you will always honor your word. I think deep down that is probably what galls many of us about bankruptcy – seeing the promises others have made thrown away.

Two thoughts on this: First, to those who say it is ok because the credit card companies are just big conglomerates and they can tolerate the write off… While others have made the points about the revenue loss for owners (many share holders are the everyday people like you and me) and the pass along of higher interest to those honoring their commitment, I believe that perspective is inherently wrong. The issue here is NOT who is affected by bankruptcy on the lender side but the fact that that borrower did NOT keep his/her word. They have violated their own integrity, they have cheapened themselves, hence the deep guilt people often feel in bankruptcy.

Second point, for those who have gone through bankruptcy for real desperate reasons – like Erin@80 – I have deep sympathy. My brother had a disastrous event occur and he too ended up choosing the bankruptcy route. However, remember you gave your word initially to repay that debt. If you choose to select a bankruptcy option I can respect that in desperate situations IF – and ONLY IF – you then work for as long as it takes to pay back every debt you had. A person of true integrity doesn’t walk away from their commitments even if the government gives them an out. In my brother’s case he could not find any relief to even restart his life – it was truly a desperate situation. By declaring bankruptcy it gave him the time to restart and in the last seven years he has repaid EVERY debt he had even though legally he had no obligation to do so. He felt that morally he was obliged because he had given his word – that in my mind is a man of true integrity.

By the way, if you choose such a road you will find some corporations have no way to take your money because it was written off. In those circumstances he donated the money to charities but he “paid” back every dime in one way or the other.

Andrew – if you want to honor your word and keep that place in your heart sacred – pay back every dime that you owe. Be a man of integrity, you will NEVER regret it.

Now we are traveling fulltime in our RV. . .and supplementing our lifestyle by working and volunteering in campgrounds when we feel like it.

Budgeting is not easy, but it is worth it!

It seems that people are remembering what a certain person said in response to their article, or that another person took a certain tone, etc. Then they are rehashing these conversations about past articles in these new posts.

I personally don’t think that’s really constructive, nor it is a compelling read for others. Can we just stick to the article at hand? I don’t think we need to go back in time to complain that Tyler used to be mean, or that Erica uses a maid, or that William loves his cat. We get it. We talked about it weeks (or even months) ago. Let’s all move on.

(But I love you all – seriously, I do – the comments here are the best – they are just getting OT).

Can it be that some readers really need to stop and understand that not everyone has had a perfect financial history, is that not why this site exists. Negativity needs to stop, positive restoration to our fellow readers needs to be enforced more often. Stop waisting my time and yours with all the name calling and bashing and give some constructive influence to Andrew instead of pointing out what he already has admitted doing. Andrew posted his faults don’t be a parrot and repeat only negative text, try to be human and help his future instead of killing him for his past.

I don’t know much about bankruptcy, but I’ll try to find somebody who does. Maybe for a guest post. Shara?

Another poster mentioned this before, but would you consider writing an article about the consequences of bankruptcy from different perspectives? Like big creditors versus small creditors, and those individuals who decide to file for bankruptcy?

My opposition to Andrew’s choice to file for bankruptcy is not from a moral or immoral, just or unjust standpoint. Everyone in this country has a legal right to file whether anyone else likes their reasons for doing so, or not. My concerns for people filing for bankruptcy in their 20s are about the long-term consequences.

What are the long-term ramifications? After their “time in the desert,” do those who file for bankruptcy still have a difficult time getting loans? If creditors are able to write-off bankruptcies, does it really hurt them at all? Bankruptcies are inevitable, so how do creditors plan for potential bankruptcies on the part of their customers? What is life like after filing for bankruptcy?

From second-hand experience, I know that filing for personal bankruptcy is pretty nasty. Money, credit, and debt are tools used to help people reach their financially-related goals. As we get older, most of our goals will include the use of all three, but bankruptcy makes it very difficult to accomplish anything. Any time is a bad time to declare bankruptcy, but it is extremely harmful for those in their early adult years. Our 20s thru our 30s is the time that we truly grow up, and make decisions that we’ll be stuck with for the rest of our lives.

I figured that Andrew’s post would be pretty controversial. What I am surprised about is neither Andrew, nor any of the other GRS readers, really talked about what personal bankruptcy means in the longer-term for those who chose to file.

These questions are not just for J.D., but for all GRS readers. I think having the facts about personal bankruptcy would truly enhance the debate.

As a previous guest poster, I’d say that the comments around here to get a little inflammatory around here — a bit more than you might realize.

In my case, I wrote about a wedding I had in Las Vegas, a venue we chose in order to minimize the costs that my fiance and I would incur. In the comments, I got flamed pretty good for “cost shifting” some expenses onto our guests. But in writing the article, I was hoping to launch a general discussion about the financial aspects of wedding planning. Traditionally, the bride’s family pays. Why is that? Is it outdated? If the family can’t/doesn’t want to pay, then what? Run off to the JOP? Sure. But what about the family and close friends who want to see you get married in some sort of ceremony? It would have been nice to have a civil discussion on what weddings really are, their place in present society, and the financial aspects of them. But really, I mostly got flamed. Heck, one poster said she was happy she didn’t marry me, simply because I couldn’t have afforded to provide her the wedding of her dreams. (I bit my tongue on that one and didn’t flame her back. My comment would have been censored anyway.)

As for the current columnist and the BK issue, well, I’ve been in his shoes, although I never filed bankruptcy. I have no shame in admitting that if I didn’t get a parental loan with very generous repayment terms, I would have gone the BK route, too. As one person put it, when the calls just keep on coming, and no amount is enough, and the threats to sue just pile up in the mail, it’s pretty easy to want to make it all just stop.

And the funny thing is, once you account gets sold to a junk debt buyer, the original creditor has already taken the hit. Any agreement or bk filing no longer affects the company who lent you money — the people who take it on the chin have purchased your debt for pennies on the dollar. So I don’t buy into the rhetoric that says a BK actually screwed any deserving party out of any real money. The “screwing” happened the minute the debt stopped being paid.

As for “nameless faceless corporations,” I hold stock in many financial institutions through the mutual funds I purchase through my 401k. When the financial sector takes a hit because people don’t pay the obligations, my stock takes a hit right along with it.

Further, I also lent money on Prosper, and my efforts have earned me a negative return. I have mixed feelings on that. Yes, people should live up to their obligations, but I lent money to people with crappy track records and a history of not meeting their financial obligations. Whose fault is it that I lost money?

So in my short lifetime on this planet, I’ve been the delinquent debtor/defaulter, almost filed for BK, and have become a lender and a shareholder of a nameless faceless financial corporation. Making blanket statements about the morals of those who choose to file BK is very rarely that black and white.

Yes, I am the same William from the other article. I didn’t take your previous remarks personally, I am just trying to understand your point of view.

Sorry, I probably didn’t phrase that as coherently as I had hoped but you figured out what I was driving at. Thanks for clarifying.

We have all made mistakes financially, some big, some small. I can cast no stones. I am glad that you have learned from all of this and I wish you the best going forward. The best time to make a mistake is when you are young and there is still time to recover.

Yeah, I think Andrew knows how much of a shocker his story is. I suspect even just laying it all out like that was a useful exercise for him. Anyway, I may not have learned anything strictly NEW here (yes, avoid balloon mortgages; yes, don’t take on credit debt; all old news). But I definitely did see the ways that problems can pile up. It sort of makes the point that you should avoid any ONE debt vice. Better not roll the dice and say “well, if I just take on this one item…” because who knows when the next random event will strike (breakup/divorce, hurricane, medical disaster… who knows what).

That said, I think Andrew should consider the fact that as of this post, he hasn’t yet done a single thing to turn his behavior around. He has made a budget; but he has yet to live by it. He just knows it could theoretically be done. The proof will be in the pudding. Perhaps continuing to journal about his progress will help him to keep himself in line (that trip to Germany may have sounded somewhat sane at the time but I hope he knows how very bad it was in writing it out!).

Also, on a technical note: $10,000 is a lot for an emergency fund in your circumstances (though, maybe you foresee future surgery/medical issues, in which case, have at).

And, also consider the consequences. You have taken a lot of actions in your life on the “GO BIG OR GO HOME!” philosophy. They failed. Your savings plan is also on the “GO BIG OR GO HOME!” philosophy. What happens if you deviate a little? Will you fall off into another “OH WHAT THE HEY, LET’S GO BIG OR GO HOME!” direction if you fall off the wagon? The “SLOW AND STEADY” philosophy might suit you better here.

It’s an interesting relationship that I NEVER thought about until a recent episode of Biggest Loser, where Suze Orman (I think that’s her name), predicted last year’s winner based on their financial stability and credit report. I thought that was kind of crazy, but then I thought about it… there probably is truth to the fact that when you don’t feel very good about yourself, you find unhealthy ways to make yourself feel good. Buying things, going out to eat a lot, etc.

So I think it is reasonable for a person to spend a controlled amount becoming healthy, and it probably contributes to their financial situation in the long run!

(I myself have decided to leave my gym, but invested about $80 in dumbbells, DVDs and a home step up box that I can use at home. I know it’s not always that easy for guys though!)

Once again the point being made wasn’t that businesses don’t know the risks. It’s that creditors aren’t faceless corporations but often people you know and work with. It isn’t always Chase Bank. Sometimes it is your brother-in-law the plumber, just doing his best to get by and keep his business growing. He made a business decision, but once again, the losses have to be covered by the little guys as well as the big guys.

There is no free lunch. Writing off debt means someone else pays. As a society we have accepted that as an alternative to things like debtors’ prison, but it does mean individuals are often hurt who have to cover those small business losses.

I try to intentionally write generally about my experience because I know each case is different. I don’t mean to imply that every bankruptcy is gaming the system because I don’t think that, and I try hard to distinguish between specific comments to the writer/posters and general statements about bankruptcy. I simply try to give perspective that sometimes seems lacking: creditors are people too.

If you don’t like being an unwilling creditor then why do you lease housing to others? Surely you did the research beforehand and understood the risk involved as much as you talk about understanding your finances and making wise decisions.”

I’m sure that sounded a lot more coherent to you than it does to me. The logic I was using for bankruptcy was more specifically: just because something is legal doesn’t mean it is ethical or just. But I’m assuming you are asking just because I ‘can’ be a landlord does that mean I ‘should’. I have learned a lot about myself: my tolerance for risk and where on the spectrum I am as far as taking business decisions personally (or not). I agree that just because someone has the means doesn’t mean they have the temperament to be a landlord. If you are following my posting as closely as you imply you notice that I bring up my landlording experience to make a point. Since the same points keep being made I keep rebutting them in the same way. I always make a point of saying that I am not bringing it up in order to complain as I have gone into the business consciously. Though I understand after reading it a couple times it might seem so, I restate for the benefit of people who HAVEN’T seen it before, or once again make the point of evil credit companies who lend too much money like they are the only debtors in bankruptcy. I understood going in what I am risking by handing over such a valuable asset to a person I have barely met. Your implication that I went into it without my eyes open is flat out wrong, though as with most new experiences I have learned plenty as I go. But there is a LOT to know. More than is reasonable before you go into it. The things I have learned about evicting someone in the middle of bankruptcy the management team I hired (they manage a few hundred rentals) didn’t know. I do my best to do my due diligence with background checks etc. But those aren’t infallible and I accept that.

However I’m not sure about the logical leap that when someone walks away from thousands of dollars owed I should just shrug my shoulders and adopt a philosophical attitude of “Oh well, it happens.” As others have said, I have pity for these people who have ruined themselves. I am out a few thousand dollars that thank God I can afford
(if I couldn’t I wouldn’t be a landlord, some of that math done beforehand you were asking about) but I’d rather be me than them and I can say that of everyone who declares bankruptcy, whether they are gaming the system or not. But once again, I’m not sure what bearing that has on the fact that a) I was honestly owed money b) I wasn’t paid and c) It hurts for a small operation to absorb those kind of losses understood as a matter of doing business or not.

I am not sure who you are speaking of your ‘post’, but I’m assuming you’re the William with the cat? I’m sorry if you took my comments personally. At the time I posed a hypothetical on if people would feel differently about the extraordinary expense if you had filed bankruptcy, which I still think was a valid question. I specifically stated that a) you financed it at the time and b) I would be pissed as a landlord not getting rent so you could cover thousands of dollars in cancer treatment for your cat. That is true regardless of my preparedness for covering it. I admit to the flaw of being human as I think most people would agree with me (most don’t speak of ‘robbing Peter to pay Paul’ in a complimentary manner). Sorry about that. But I also believe I gave you kudos for paying it off and doing what needed to be done to do the right thing, even if they weren’t the choices I would have made.

We know the pain from the creditor’s side, how
about from the lender (or as the case may be, unpaid vendor)?

The part that bugs me about this the most isn’t that Andrew decided to delcare bankrupcy… it’s the fact he took a trip right after, which indicates the full magnitude of his situation didn’t quite sink in yet, but hopefully he has learned his lesson now. I shouldn’t judge… but it would be sad if in 1, 2, 5 years’ time he was in the same (or worse) boat.

I sure have made my fair share of mistakes, and the only reason I did not take the “easy way out” (bankrupcy) is because to me it ISN’T the easy way out. If there was a truly easy way out, would I have done it? Oh probably. Yeah, the fact I am almost out of debt now and I did it by working extra and being more frugal makes me feel proud of myself… but snapping my fingers and being debt-free much sooner would have been a lot nicer. I don’t have any regrets, and the lessons I learned while paying off my debts will hopefully be lifelong, as in I won’t screw my finances up ever again, but still.. an “easy” button would have been nice.

Anyways defaulting or declaring bankruptcy is within the law. If you really think that the law still allows immoral behavior, call your senators and campaign to have it changed. Personally, I think things such as walking away from an underwater mortgage is perfectly acceptable.

Also as a note it’s not like you can charge a big screen TV, declare bankruptcy and keep it. Andrew would have had to give up such things, that is if his girlfriend hadn’t first ran away with them. Also I’m betting living with his parents wasn’t just to save money, it’s rather hard to find landlords willing to accept you under those circumstances.

It is always good to look back and reflect on events which have shaped you; and realize you’re mentally stronger today for happening. Thanks for sharing.

By the way JD, I have been reading this blog almost everyday for the past two years and still find the posts positive, interesting and informative. Keep up the good work.

In regards to the anti-bankruptcy comments, I have to agree that the debt didn’t seem big enough to need to write off. There’s so many people that battle back from hundreds of thousands of dollars of debt…it just seemed like you jumped the gun. That’s an opinion, not a judgement…I don’t think you are a bad person, but that may be why people are getting so angry.

Good luck and thanks for putting your story out there. It takes guts to put your mistakes out there for everyone to see.