When I decided to get a divorce I called up a divorce attorney and explained the situation with my soon-to-be-ex and all the debt that we incurred. The attorney said the best thing for me to do was to file for bankruptcy. I was offended and told him I did not want to do that, because I felt like it was admitting failure and it would ruin my credit. He was very blatant and honest with me and said, “well, frankly, your credit is probably not all that great. And after you get a divorce, it will be worse, especially with all the debt that’s in your name”. He was right. My credit got worse as I tried to juggle paying my monthly expenses and the mountain of debt my ex left in my lap. It took me two years to finally decide that I was going to file for bankruptcy.
Over that two year period, I was barely getting by. My house was foreclosed because I couldn’t handle the balloon payments. My credit was shot and all I had was resentment about the debt I incurred because I agreed to have everything put in my name during the marriage. I had to think long and hard about how I wanted to deal with the situation.
Your situation may be different, you may have joint debt, but oftentimes women are left holding the financial bag after the divorce. You may be trying to decide whether or not you want to pay off your ex’s debt. I fell into the trap of feeling 100% responsible for the debt my ex racked up because it was in my name, but I was manipulated into much of it so I wanted a fresh start.
I decide filing bankruptcy was the fresh start I wanted after I researched and read a ton of articles, bankruptcy forums, and got as much advice as I could. I took a step back when I started to feel overwhelmed and guilty for wanting to file. I came to my senses after I looked at all of the wealthy people who filed for bankruptcy and had a fresh start. They were able to get back on top in terms of business and accumulating wealth. So my mindset was, if these people can file for bankruptcy and start over, why can’t I?
I went a step further and I remembered in scripture where there was a year of debt forgiveness every seven years. And there was a year of Jubilee every 50 years. (See Leviticus 25:8-13) Even God allowed debt relief and forgiveness.
I said, “well there’s this opportunity for everyone else to get a fresh start to basically reset their life and finances, so why not do it for myself?”.
Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid, while offering creditors a chance to obtain some measure of repayment based on the individual’s or business’s assets available for liquidation. (Investopedia)
You have three bankruptcy filing options. You can file chapter 7 for total debt elimination, chapter 11 for businesses restructuring, or chapter 13 which give you a debt repayment plan. I chose to file chapter 7 to eliminate my debt. I listed all the debt that I wanted relief from except my car. My student loans could not be included in it but everything else was included. I opted to keep the car and continue making the payments. I eventually paid the car off within two years or so. Without the bankruptcy, it would have been harder to pay off the car.
When you file for bankruptcy it remains on your credit report for 10 years. It can feel like a black mark on your report but believe me, it is not that bad. It stays on your report, but it drops off eventually and you get a financial fresh start.
You’ve probably heard that with a bankruptcy on your credit report you won’t be able to get credit for anything and you won’t be able to buy a house. You get so many messages from all these so-called gurus who tell you that bankruptcy a horrible thing. I don’t agree. I believe it is another opportunity for you to start over especially after divorce. Of course, how you use this fresh start is up to you.
The myth about bankruptcy is once you file, you will always have bad credit. Here’s an insider secret… that is not true. After I filed for bankruptcy, in less than a year, my scores it went up because those debts were no longer on my credit report. So again, bankruptcy is a chance for a fresh start
Now you have decided you will bite the bullet and file for bankruptcy. What next?
The first step is finding an attorney that specializes in bankruptcy. Get referrals from your network then call two or three of them to schedule a free consultation. When you think you have found the right one, discuss their payment structure and make arrangements to pay. It is not terribly expensive but then again it is not cheap either. Don’t be discouraged if it seems out of reach. There are things you can do to come up with the money like selling some of your valuables, work extra hours, or start a side hustle.
Once you raise the money and pay the attorney they will take you through a debt discovery process. You will need to make a list of all your debt, then get the company names and addresses. You will need to know all your balances. Your attorney will contact each creditor on your behalf. You will not have to speak to them again or be hassled by collection calls.
Your attorney will file the paperwork and you will be required to go through a financial management class. It covers what it means to file for bankruptcy, how you should be managing your money after the debt is discharged, and gives you strategies on not getting back into the same situation.
The next step is to go to a court hearing. It is a simple procedure where you go in front of the judge, answer a few questions then they sign the paperwork. During the six months after the hearing, all the creditors are notified that you have filed bankruptcy and the debt is discharged. You no longer owe the debts you listed in the bankruptcy.
It will take up to 10 years for the bankruptcy to fall off your credit report as mentioned before. In that time, you can begin rebuilding your credit now that you have a financial fresh start. You’re no longer consumed or held down by your ex’s debt and now you can establish new credit in your name.
Filing bankruptcy is good if you do want the fresh start. You now have the power to make good choices, manage your money, and create a spending plan that works for you. You are free to create a financial life and legacy that will sustain you and your children for the long term.
You might be wondering what my life looks like on the other side of the bankruptcy process. It’s been over 10 years so it is no longer on my credit report. I have not tried to buy another house since that time but plan to buy one next year. I bought a new car two years ago at an ok interest rate through an online dealer (Carvana). It was a super experience. I have the opportunity to refinance at a lower rate but I’ll wait until after I buy my house. I am still paying on my student loans and paying down a credit card. Other than that I have no other debt. I’m working in a field that I love earning income that supports me and my family quite well. My daughter is in New York at Columbia and my son is planning to graduate high school this year. I am happier than I’ve ever been in part because I got a financial fresh start.
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