Tuesday, August 27, 2013

Life after Chapter 7

I had a comment on my last post about life after filing bankruptcy.  The person was surprised that we have been able to buy a new truck and go on a trip to Disney so soon after filing.  I'm happy to share our experiences.

Before we filed bankruptcy we had roughly $30K in debt.  Credit cards mostly.  There were some medical bills thrown in there.We were paying close to $900 a month in minimum payments.  In 2011 I had signed up with a debt management company who negotiated lower interest rates on my cards, but my payment to them was still $595...the other $300 went to DH's credit cards that we didn't include on the DMP.  Our mortgage was almost $2K as well.  All of this was "fine" while DH was working.  And I say "fine" meaning we were scraping by.  Once he was let go in December 2011 we had to pinch every penny.  When our tax refund came in we relied on that to pay our monthly debts.  When that was gone we used up my bonus and savings.  We made it until September before we knew we were in trouble.  No job, no money left.   The summer was lean for us...we didn't go anywhere or do anything that cost money.  I remember going to our Village festival and trying to scrape up $21 so Lexi could ride some of the rides.  She got to ride 7 rides for that money (this year we spent $20 on an unlimited ride band that went from 1-5 and she must have rode 50 times). 

Deciding to file wasn't an easy choice.  We knew that by filing it would follow us for the next 10 years.  But we had our house...and we were planning on keeping it. 

Up until we filed, all of our bills had been on time.  Yes, we had alot of debt...and our debt to income ratio wasn't good...but we only had a few instances on our credit reports of being 30 days late.  And by few, I mean less than 10 instances in the whole report.  So when the attorney told us to stop paying everything in order to afford the $1350 fees, it went against everything that I was taught.

Anyway, we filed in November 2012 and at the same time, I applied for a mortgage loan modification with our mortgage company.  Our bankruptcy (bk) was discharged in February 2013 and our mortgage modification was finalized in April.  We no longer pay the $900 in monthly payments...and our mortgage was reduced by $400.  DH started a job in January...so we have his income (1/2 of what I bring home) now. 

Our cars were a 1997 Ford F-150 and a 2005 Ford Escape.  The 97 wasn't very reliable, but we didn't want to give up the truck...it came in handy for a lot of uses.  When we bought the new truck (it's a 2009) we weren't even sure we would get approved for the loan.  Turns out, my credit score only took a 100 point hit so I was still above 600.  Our loan is at 8% through Ally...so we didn't get a great rate because of the BK.  Our monthly payment is $341, plus $60 per month in insurance. 

Because DH didn't work at all in 2012...our tax refund was substantial and I received a good bonus.  That money hasn't been touched...some is for Disney, the rest stays in savings. 

I've researched and researched for Disney.  Our whole trip is costing us just over $3K for everything...airfare, hotel, transportation, park tickets, dining.  Everything except souvenirs.  Even that, I've been purchasing things here (Disney store, Target etc) to take with to give to Lexi so that we save on the cost of things. 

In all, after filing we reduced our monthly costs by $1300...added a $400 expense (truck)...so that nets us positive $900.  We try to save that money every month...but it's still hard.  We went for so long without that it's nice to be able to have again.  We're by no means splurging on things...but we're not as tight with our money as we were in the past.  The one thing we don't do is have any credit cards.  The truck payment will rebuild my credit...the mortgage will help as well...but we do need to get DH a card so he can start rebuilding his credit score.

You'd be shocked at how many pre-approval offers for credit cards and car loans we received in the 60 days after our BK discharged.  It was INSANE!  They all went in the trash.

So that's it.  If you have specific questions...feel free to comment, or send me a FB PM.

1 comment:

Familyofthree said...

Our attorney advised the same thing "just wait, if you file once discharged EVERYONE wants to give you credit!"

We are like you have a HUGE debt to income ratio issue and zero savings from the baby--we're thinking of giving up my car to help things...but I don't see any other way than to file. My score however can't go anywhere but up...I hope!