TO "B" OR NOT TO "B"

At least four times since our financial bottom fell out we’ve met with lawyers to discuss the possibility of bankruptcy. The first time was with a lawyer in Oneonta, New York when we still had the house in Andes. The lawyer we had used in Andes for the sale of our store had recommended the Oneonta lawyer as the best bankruptcy lawyer in the area. We set up a meeting with him assuming he would be less expensive than any bankruptcy lawyer in the city. The first consultation was free, this is the hook most bankruptcy lawyers use. His solution was to file three separate bankruptcies: one for Rick, one for me, and a separate bankruptcy for the business. The individual bankruptcies we could file upstate but the he wanted to file the business bankruptcy back in New York City. The initial costs on this: $10,000 ($3,000 for each individual bankruptcy and $4,000 for the business). This really made us feel as if we were chasing our tail. We thought we couldn’t afford bankruptcy, so bankruptcy went on to a back burner while the calls from creditors and collection agencies became a way of life. Every time the phone rang my heart would race a little faster and my stomach would fill with another cup of acid.

As the financial hole we were falling into became deeper and deeper I became more paranoid, not opening mail and avoiding calls from numbers I didn’t recognize. This is never a good idea but for me it was an impossible cycle to break. As much as I wished things to go away the more the situation worsened and more desperate things became. I did take my head out of the sand long enough to get another recommendation from a friend about a bankruptcy lawyer in the city. The results were similar to our upstate lawyer’s recommendations but the price tag was still out of reach. We were just too poor to be able to file. This is the point where the handwriting on the wall had become clear. “Stop the insanity, face the music and try to start over.” This was our tipping point. We packed our bags and moved to Wisconsin.

Now we started looking at what we could do from Wisconsin. The research began in earnest. If you are considering bankruptcy you need to figure out if you want to file for a chapter 7 or a chapter 13. In a chapter 7 you give up everything you have in exchange for eliminating all of your current debt with no leans being placed on any future income you might make. In a chapter 13 an arrangement is made where you can keep your home and things like your car but you then have to make payments out of income you make post bankruptcy. Since we owned nothing of value: no house, no car, no Picasso, the choice should we decide to “B” would be to cast our fate to lucky number seven.

Now there are four roads you can take to filing for “B-ville”.  Here’s what I found out:

1.    You can get the forms and file them yourself. Apparently the files are available free by going to the appropriate government online sites or local agencies. There are additional sites that will allow you to download the forms for a nominal fee. The upside to this is the cost – there are no huge lawyer fees. You still have to pay filing fees but these are not very significant. The downside is the forms run to sixty pages and the success rate for self-filing is about 10%. We knew we wouldn’t have a chance if we went down this road. What with the way we left the city we are still carrying around our receipts in the proverbial shoebox.

2.    The next step up in the DIY method is to purchase software that will take you through the filing process. This is not much of a step up, the obvious questions I could answer without the assistance of any software program, it’s the ones that demand knowledge of the actuary world that would have me stumped. Here’s where I would start punching the keys on my computer and pulling out what little hair I have left, and the success rate with this form of applying is about the same as method one.

3.    In option number three you can up the ante and the cost by purchasing equivatent software to method number two but it also comes with a phone number to a real person who will supposedly assist you in your filing for the big “B”. You’re still plugging in the information but at least you have someone who can answer whether to put the list of Rolex watches in column A or B.

4.    The final option is to hire a bankruptcy lawyer to do the work for you. This is the best route to success but by far the most expensive. So far this one has remained out of our current financial reach.

The should we or shouldn't we file cloud has been hanging over our heads for over two years. Churning our stomachs with fear and angst. We’d paid into the system for decades and then with one major illness our financial security was wiped out. It turned our world upside down. I found myself constantly looking over my shoulder for the next debt seeker to knock on my door, call my cell when I'm sitting with a perspective client, or scream at me over the phone about my irresponsibility. As the calls became more insistent and threatening my hopes of recovery diminished proportionately. And then slowly the calls began to tapper off.  It seems that most of our creditors have either given up on collecting or they found a soul and another less disgusting job.
Here in Wisconsin we’ve met with two new bankruptcy lawyer: one who has encouraged the bankruptcy but looked at it in realistic financial terms and the other who introduced us to” stale debt”. Stale debt is where the lender drops all rights to collecting the debt after a certain time has expired. This usually happens six years after your last payment or interaction with the lender. As I understand it, the bank or creditor will then claim the debt unrecoverable, call it "stale debt", and then wipe their slate and then yours. The wait time for the debt to disappear is roughly six years. Six years of which some of our debt has already had two years of going stale time. A bankruptcy remains on your record for ten years and the stigma of bankruptcy can hang around forever. Waiting out the creditors is sounding more and more tempting. For now we’ll continue to get our house in order and screen our phone calls for unrecognized number while we continue to research the ways and hows of to "B" or not to "B".