Friday, July 13, 2012

Our bankrupcty ordeal

Next month it will be 2 years since we filed for bankruptcy.  I have to say it was one of the hardest, lowest points in my life.  For us, it was a very long drawn out process, which didn't make it any easier.  I'm not sure if it was just our situation, a lawyer who was taking on too many clients and/or dragging it out on purpose to get more money, or just the fact that we filed in the period of record bankruptcy filings. A combination of all of the above, most likely.

We first knew we were going to be in trouble in the spring/summer of 2008.  What should have been Dh's busy time was not. Dh was just not working enough hours anymore (the start of the recession for us) to keep up with all his business loan payments. We defaulted on one equipment loan and it was repossessed the summer of 2008.  We were waiting to be served papers, but nothing seemed to be happening. That fall we had a consultation with a bankruptcy attorney. Dh's work had picked up some and without the loan payment on the repossessed item, we were making it at that time.  The attorney said not to do anything with regards to starting the bankruptcy process until we were actually served papers by this finance company.  Also, at that time, with Dh still working and keeping his business going, it looked like we would qualify for a Chapter 13 type, where we would make payments over 5 years to repay a percentage of our debts and keep our assets.

Winter of 2009 came and Dh's work slowed to very little (as it always had) but he hadn't worked enough the prior 6 months to build up a reserve to make his equipment payments through the winter. Dh told his equipment finance company he wasn't going to be able to make payments for at least several months. He told them to come and take the equipment, there was nothing more he could do.  We still had received nothing from the company (a different company) that repossessed the piece of equipment the prior summer.  Dh sat all winter and so did his equipment and this finance company did nothing to come and get it.  They called a few times and each time Dh told them to just come and get it. By that time he had lost all hope.

Spring came and the recession hit our local construction industry like a tornado. The big construction company he did most of his sub work for layed off 90 of their 100 construction workers. Most all of their equipment was sitting, not working. They certainly weren't going to hire a sub, nor was anyone else. There was no work for Dh and he couldn't resume his equipment payments, as he had hoped to do.  Summer started and he found a little work here and there.  By mid summer the finance company finally came and repossessed the last piece of equipment. He closed his business down. Several more months went by and still we had not been served by the company from the repossession a year earlier, nor anything from the recent repossession.  Though we were getting collection phone calls.

At this point we also could not pay his business credit cards or his line of credit loan with his bank, so the phone was ringing off the hook all day with collection calls. Those drove me nuts the most, but dh handled most of them - 6 days a week from 8am to 9pm.  Sometimes, when I'd be up early on Saturday mornings (I couldn't sleep much) and everyone else was still sleeping, I'd just turn the ringer off on the phone so I could get a hour or so of quiet time.  Finally in November of 2009 the first finance company served us papers. 5 minutes later I got on the phone to call the attorney we had met with the year before. I had to leave a message on voice mail. No return call. I left 2 more messages. I could not get a hold of him. We were starting to panic because we didn't know how being served "worked" and it said we had 2 weeks to respond. Finally, I called a different attorney and we started working with her. The holidays made it take even longer.  But I had all my "homework" into her right on January 2, before her mid-January (2010) deadline.  Part of the homework consisted of literally listing EVERY thing we owned and it's value, down to a pair of socks, basically. We were told it would cost $1300 and would be approximately a 4 month process, so we should be filed in April.  She also told us, since dh wasn't working anymore, that we'd be better off to file a Chapter 7 bankruptcy. Chapter 13 didn't really apply to our situation anymore.  The problem with Chapter 7, though, was the possibility of losing some of our assets.  When you don't have much to begin with, it's disheartening to think you might even lose that. We were imagining being left with a crappy, falling apart house, with negative equity (still have that!) and one of our 10 year old vehicles.  At that time we didn't own a vehicle newer than 6 years old. We had 3 - an old 24 year old car that our son drove, an 11 year old pick up and my car of 6 years old. Plus we had some race car stuff.  We owned all, no loans on them. Also, just personal stuff in our home - nothing expensive or worth much, but the attorney just wasn't very helpful in calming any of our fears - I think she added to them, really.

From there she just dragged it out and out for weeks. We were supposed to file in April, then May...then June. Every time I would call she'd say "ok, I think you are going be filed with this group on such and such date" and then it never happened. We were going crazy by then.  I don't even remember now what all her excuses were, I was so stressed. One of her last "excuses" was since I had received a lump sum ($12,000) in December from my auto accident 4 years earlier and we needed to now wait 6 months after that date, so the court wouldn't use that money in determining our assets. And then she tried to blame the delay on us, saying she had just found out about it in May and we didn't disclose it to her in the beginning. I blew up! It was mentioned in our initial meeting and of course it was in our homework. She's the one who advised us what to do with the money! And then she drug it out longer by making me go back and detail what we spent the $12k on (per her instructions the December before, we were to spend it all - we couldn't have it in savings) By July it had gone on so long we ended up having to re-do much of our "homework". I had to get 3 more new realtor comps for our house Do you know how crappy it feels to have to call them up and "pretend" (this is what our attorney advised us to do) we want to list our house so we can get an estimated value?  and then to have to do it all again, a second time?  We had to get estimates and printouts supporting the value of all our other personal assets on anything worth over $500 - again.

Part 2 - coming next.......


  1. Eek!! I'd have padded my mattress with that 12K if it couldn't sit in the bank!! lol!

  2. sounds like an awful process. I'm so sorry you had to go through it.

  3. Bankruptcy should not be taken lightly. In our case, we had no choice either ..... job loss and high mortgage debt and collectors that hounded us day and night added up to BK relief. I was absolutely terrified when meeting the trustee and being questioned in the same room as all the other people who were filing BK that day .... it was an experience that I hope to never have to repeat.