Wow, and thank you for sharing this story to everyone on this website. I can't imagine the heartache you went through, but again great comeback story!

FrankN wrote:

Lexie wrote:

FrankN wrote: Totally get that. if you dont mind me asking, what % of your debt were you able to cut as a result of bankruptcy.

We were able to cut all credit card debt. We kept the mortgage and had no car payments at the time. We paid off the bankruptcy within a certain length of time (I don't remember how long because it was 11 years ago) and operated with cash only for many, many years. Our credit score has rebounded and we get cc offers in the mail every day. We operate with a couple of cards but we're sure to pay them off every month now.

incredible story, glad to hear you came out alive and better! Again only if you don't mind providing, but I think its very helpful for readers (and myself), how much credit card debt $ were you able to cut away?

I'm ashamed to say this FrankN but it was close to $150,000.00. We did manage to keep the house and cars. (We had no car payments at the time). It was a time we really had to evaluate our situation and decide where we were going. To this day, our kids don't know about this. Maybe one day I'll tell them but not yet.

Lexie wrote:

FrankN wrote: Totally get that. if you dont mind me asking, what % of your debt were you able to cut as a result of bankruptcy.

We were able to cut all credit card debt. We kept the mortgage and had no car payments at the time. We paid off the bankruptcy within a certain length of time (I don't remember how long because it was 11 years ago) and operated with cash only for many, many years. Our credit score has rebounded and we get cc offers in the mail every day. We operate with a couple of cards but we're sure to pay them off every month now.

incredible story, glad to hear you came out alive and better! Again only if you don't mind providing, but I think its very helpful for readers (and myself), how much credit card debt $ were you able to cut away?

FrankN wrote: Totally get that. if you dont mind me asking, what % of your debt were you able to cut as a result of bankruptcy.

We were able to cut all credit card debt. We kept the mortgage and had no car payments at the time. We paid off the bankruptcy within a certain length of time (I don't remember how long because it was 11 years ago) and operated with cash only for many, many years. Our credit score has rebounded and we get cc offers in the mail every day. We operate with a couple of cards but we're sure to pay them off every month now.

Pinky wrote: I totally agree with Wanderer that I do not trust the mortgage industry. I have offered ARMs myself and after I did an extensive amount of r4esearch, I turned them down as well. It all sound really good on paper but when you get into the meat of the agreement you might be screwing yourself.

You definitely need to have a good sense of the ARMs. I really looked into a 7/1 as I wasn't planning to be at my house for more than 7 years.

I totally agree with Wanderer that I do not trust the mortgage industry. I have offered ARMs myself and after I did an extensive amount of r4esearch, I turned them down as well. It all sound really good on paper but when you get into the meat of the agreement you might be screwing yourself.

Wanderer wrote: In truth, I did not fully understand the FHA ARM Mortgage. It looked good because it had lower starting payments and in my mind wages would increase enough to stay even with the monthly payment requirements. It was a tough way to learn I did NOT know what I was doing!

Thank you for opening up about this because it makes perfect sense! My school loans get sold and I hate that too. Often my payments are "lost" but I've always had my confirmation number and proof that I've paid at the ready. It takes up a lot of unnecessary time and there is too much room for error.

In truth, I did not fully understand the FHA ARM Mortgage. It looked good because it had lower starting payments and in my mind wages would increase enough to stay even with the monthly payment requirements. It was a tough way to learn I did NOT know what I was doing! Since that time and several houses later, I am smarter and often will refuse mortgage options that may be too good to be true as I do NOT trust the Mortgage industry. Their track record leaves much to be desired. Many a company has offered me a refi to my present mortgage and I have refused (they say they have better terms) but, I have reservations and will not risk a refi since I have at least a basic understanding of my present day mortgage. To make me more nervous, my present day mortgage has been sold four times in seven years which creates an uneasy feeling in me. Even more scary is that my mortgage has been sold and serviced by credit collection firms (their telephone tells me this every time I have called and gives me all the disclaimers about whatever I say will be recorded and may be used for collection purposes). Now my payment record is spot on and that is no thanks to them selling the mortgage four times and giving me a whole 15 day notice of the sale and the need to continue to pay my mortgage on time. Yeah ... trust I don't!

Wanderer wrote: Tough call as you need the roof over your head, food on the table and a means of transportation to go to work in many communities. See your point on overwhelming and follow the concept of the house first. Some of the decisions are personal and very specific to a person's financial status at the time. If you got into one of those questionable mortgages of the early 2000's then it is hard to stay in the house. I got into an FHA ARM that increased 7.5% a year for five years (did not know any better) and had to sell and get out. My wage increases did not come anywhere close to the mortgage and little did I realize the mortgage was only to get the first payments low enough to get me in the door where it almost broke me (fortunate to sell the house for cash and get out).

Wanderer, how did the bank get you to agree to those terms? Did you know what it meant at the time? It isn't polite for me to ask and I understand if you don't want to answer. I know that plenty of intelligent, rational, cautious, thrifty borrowers agreed to terrible terms so something had to happen to make it seem okay. I don't believe that many people were too stupid to read their paperwork before signing, which is the common answer you hear from some people who try to justify the disaster faced by many Americans.

Totally get that. if you dont mind me asking, what % of your debt were you able to cut as a result of bankruptcy.

There comes a point in time when there is no choice. Our credit card debt was insurmountable. A lot of this cc debt was due to interest. We had no car payment. We chose to keep the house and let the wolves take the credit cards. Bankruptcy was one of the best things we did, although it did not seem like it at the time. Our kids were out of the house by this time and they still don't know what we did to keep things afloat. You just do what you have to do.

That article was written in 2009! It's hard to believe the economy has been this bad for so long. Even 7+ years later I can understand why consumers are defaulting on house payments while attempting to keep up with car payments.

Both vehicles and houses come with additional lifetime fees, but it's significantly more expensive to own a home, especially when you add in the yearly tax fees. possible HOA fees, and insurance. You have to do yard maintenance which often requires fuel and oil. And if something goes wrong, you likely can't afford to fix it. Home ownership in, general, takes up a good amount of time. You can live in the home for quite awhile before the foreclosure process is finished. During that time you can hustle and save as much money as possible to fall back on.

On the other hand with a car, you're paying gas, maintenance, insurance, and other possible fees but the bills aren't as large and don't all hit at one time. A car will get you to work and can take you to food pantries, employment agencies, educational programs, libraries, and other resources that can help. You can live in your car if necessary. Car maintenance doesn't take up much time plus, you're more likely to work out a deal with a local mechanic or friend than you are with a bank. The consequences of missing a car payment hits quickly as dealerships have installed kill devices to make the car unusable. Unlike a home foreclosure, the repo process comes swiftly and consumers have few protections.

FrankN wrote: If you cannot lower you interest rates, I would still recommend to pay the balances with the highest rates first (or small balance items).

I'd also suggest that they pay down any which don't have early repayment penalties. Furniture loans and the like can really hammer people who pay them off early.

That is in theory true, but a lot of the times restructuring to lower your interest rates requires huge hits to your credit score. Its always a good idea to initially call your credit card company to see if they will lower your interest rates, but a lot of the times they will not. A complete restructure/consolidation of debt may negatively impact your credit score. If you cannot lower you interest rates, I would still recommend to pay the balances with the highest rates first (or small balance items).

I think the car and phoneline are a must for most people if they want to work. It is a case of having to spend money to make money.

I know many people focus on clearing the credit cards first because they have a higher interest rate, sometimes ten times as high as a mortgage so they will build up quickly if they are aren't completely clear. The problem is that unlike secured debt, it is easily written off or marked down. If you are tackling debt it makes sense to restructure first to get the interest rates as low as possible, particularly with credit cards. Otherwise you're paying more than you have to.