Do I Regret Filing for Bankruptcy at Age 23?

It’s been over three years now since I filed for bankruptcy. Do I regret filing bankruptcy? No, I don’t. I really did not want to file bankruptcy initially. In fact, if you look back at some of my posts in mid-2007, I was very adamant about not filing.

I realized that was more about my pride than making the right choice for my family and myself. Pride does that sometimes. Could I have avoided filing chapter 7? It’s possible. If I had known that my income would dramatically rise a year or two after the point I filed, it’s possible I could have avoided filing. Or gone with a chapter 13. The problem is that filing made it all possible for me to reset, to get a fresh start. And my income was down to next to nothing when I filed, so it was hard to see at the time a larger income stream on the horizon.

Do I recommend filing bankruptcy? In the right situation, yes.  It’s not for everyone. The 341 Meeting is strait awkward. The whole process isn’t fun at all…but for me, it was worth it.  I’ve been telling more and more people in my life about my bankruptcy filing. I think if you can recover well from it, it doesn’t have to be this horrible thing over your life forever.

I think it’s also about how you view yourself. Yes, you screwed up, but tell me, who hasn’t? Yeah, my mistakes were bigger than most financial ones, but you know what…it’s not life or death. It really isn’t.  And I think with the way the economy is and the whole housing crisis, I think filing for bankruptcy has less of a stigma than ever.  This doesn’t mean I think it should be a first option. It should always be the last resort. But once you’re at the last option, take it and move on with your life.

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What have been the consequences in the last 3 years since filing?

Since I committed to a cash-only lifestyle, the effects have been minimal. The largest has been housing. Every housing situation I’ve found since filing, has been non-conventional. I’ve avoided management companies and rented directly from owners. That’s the only way to even have a shot at a decent apartment.

What happened to your credit score?

Well, like most people looking at filing, I was way beyond on lots of debts. So my score was already in the crapper. I think I hit 472 even before filing.  I applied for a few “rebuilding” type credit cards right after my bankruptcy and I think that was a good move. I never keep a balance on them (the limits are only $300 and $500), and they seem to have helped my credit score recover a bit (I’m above 680 now, I was below 500 post bankruptcy).

So three years later, my credit score is actually looking really good. I have no bad debt, one small federal student loan, and a few good credit lines with no-late payments. 700 FICO here I come.  Not that I will be using that score anytime soon.  I think if I wanted to buy a home at some point, I will run into issues having the bankruptcy on my record.

Any advice for someone thinking about bankruptcy? Meet with 2 people: 1. a consumer credit counseling person to see if a debt management plan could help you avoid BK and 2. A bankruptcy attorney. They are obviously going to push you in the filing direction, but nearly all BK attorneys will do a informational meeting free.

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Also, the bankruptcy paperwork is a bear. It will take work for you to fill out all the details correctly. Don’t skimp spending time on this. Your attorney can help guide you with the paperwork, but ultimately it’s your responsibility to make sure you fill it out with all the correct details.

Lastly, ironically…the cost of filing bankruptcy isnt’cheap. Expect to pay at around $1,000 on average to have an attorney handle your bankruptcy case. Can you do it on your own? Yes, but I would never recommend it. You’ll end up shooting yourself in the foot, and the stress is not worth it.