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By KingHugh
January 21, 2003

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Why is it not good to declare bankruptcy? I read the statistics on how many American do it and that they then go on to get mortgages, buy houses, cars, etc.

Well, as one of the "bad people" who did declare BK I'll try and explain how it effected me personally. First off, I take full responsibility for having to file. I used to come up with 100 excuses for why I had to file. But, over the years, it's been 7 since I filed, I've learned a LOT about money and the responsible use of it. I got myself into trouble by falling into the instant gratification trap. Spend now, and pay later. "All I have to do is sign on the line?", "What could be better than that?"

As for the consequences, and mind you I have a good job, and make good money, so lack of income was not an issue in the following situations.

1) I needed a vehicle. Car dealers wouldn't touch me. Not even for a crappy used heap. I had to have my Mother co-sign a loan for me just so I could get a vehicle to drive back and forth to work. And even then I hadn't been cured yet, because I 'wanted' new, when used would have done just as well. So I ended up with a $500 per month car payment on a $19,000 vehicle lease. That's right, I paid that much to rent it for 2 years. They wanted $6?? per month to buy it. Imagine going to Mommy at 23 years old, and asking to co-sign, because you're a deadbeat and people won't loan you money.

2) Shortly after, even before 1, we tried to get renters insurance to protect our personal property. DENIED. Reason, credit rating. Had to call 5 different companies before we found one, and believe me, we didn't get the best rate.

3) Moved into a co-op community, trailer park. The old jokes all talk about the dregs of society living in trailer parks, well these people didn't like that stigma hence the application process to move in. Included background checks, and yup, credit history. SO after they did their investigation, I had to sit with my wife and kids in front of the board of directors and explain to 5 strangers why I filed bankruptcy, and why they should trust me to pay my rent on time, since I had demonstrated a lack of responsibility in the past.

4) Mortgage, HA!!! We applied to umpteen banks trying to get a mortgage, turned down over and over. We couldn't even get a loan to buy a trailer, in the afore mentioned trailer park. We were doomed to be renters forever.

5) I applied for a job. Armored Car guard. I am in law enforcement, and needed some extra cash so I called a company up. I was hired, immediately, over the phone. The boss faxed me an application to fill out as a formality, and even attached a schedule to it so I could see what shifts were available and sign up for some. There was a yes/no check box on the application "Have you ever filed bankruptcy?", well, I did so I checked yes. Faxed it all back and all was well. Few days later the boss calls me up. Hey, he says. You made a mistake on your application, you accidentally checked YES for the BK question. I told him it wasn't a mistake, and he apologized but rescinded the job offer. Sorry he says, but my bosses would shoot me if I let you guard their money. You're a risk. My answer was "Risk my ass, I'm a cop for Christ's sakes", no difference & no job.

6) Living today without credit is tough, and THEN that was the only way I knew. So I tried to get credit cards to "rebuild" my credit. Well, I must have killed a whole forest with applications for cards, and all the denial letters. Then when the offers would come, as desperate as I felt, I considered myself lucky to be offered a card with 24% interest, and a $100 annual fee, and a $250 initiation fee, and a $350 credit limit. Those are the cards where as soon as you get it, it's maxed out with the initiation fee, and the annual fee payable in advance, charged to your account. Then there were the secured cards, that pay you .6% on your deposit, but charge you 20%+ on your credit balance. I took the offers, because I "needed" a credit card.

Sorry, when I started this reply, I hadn't intended it to be so long. Just as I typed it all came flowing back to me. It is possible to recover though. I have a number of credit accounts now, all paid on time. I'm utilizing about 18% of my limit, but included in that amount is the balance on my "expenses" card. It's a reward card that I use for daily expenses and pay off at the end of the month. So the actual balance being carried is closer to 12%. We have a mortgage. When I bought my car last year I was complimented on my credit score, and given one of the best rates available for a USED car. But some of the stigma continues. My best rate credit card is a variable of 9.99%+prime. Which still isn't that great, but it's better than 24%. So I have got credit again after the BK, but it's been a L-O-N-G road.

I hope I've answered your question. I know the experience cured me. I'm not as "foolish" as I can be with my money yet, but I just joined this board about a week ago, and I've learned a lot already.

Take care.

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