Why Bankruptcy

My wife and I have struggled for several years with bad debt. From not being able to buy a cell phone or car to having to settle for less than perfect housing because no one wants to rent to someone with bad credit. I can understand their thinking: if we aren't credit-worthy, we aren't risk-worthy.

But how does a couple get out of the debt hole and ever rebuild their credit? The high cost of living and providing for a family of four makes it impossible to put a dent in the mounting bills. First we owed a hundred, then a thousand, then ten thousand dollars: with the high interest rates and late fees the hole just keeps getting deeper with no end in sight.

Then came the phone calls: collection agencies calling at all hours of the day, from the early morning to late evening. Many of them rude and forceful, several others automated recordings demanding we call them back. When the phone started ringing at 6:00 pm every Sunday, I told my wife it was time to do something.

We've tried several different debt repair methods over the past few years.

Budgeting only works when there's enough money to meet the budget. When the bills add up to considerably more than your income, a budget is useless.

Credit counseling services want so much money for themselves that payments aren't actually applied to your existing debts for several months. And they call themselves "non-profit."

Debt consolidation loans are only available to people who managed to build up a little home equity before falling into the debt hole.

After arranging an "agreed judgement" with the first creditor who sued us and then receiving a second suit in the mail, we started talking seriously about our options.

Bankruptcy has always been at the bottom of our list of options. We knew it was there, but always felt like it was in some way wrong to file bankruptcy, erasing debts that we rightfully owe. We heard so many stories about how long a bankruptcy stays on a credit report, but then unpaid "write-offs" can stay there just as long. Our biggest deterrent was how judgemental my wife's parents are: if they hear about our bankruptcy, they'll never let us hear the end of it.

Then I learned of one of my own employees who filed for bankruptcy and built a brand new home just one year later. We would both love to own our own home. One of my wife's friends -- a very religious woman whose husband is a Christian Minister -- opened up to my wife about their bankruptcy. (More on the Biblical perspective of bankruptcy in a future post.)

With two kids whose futures we want to adequately prepare for, it soon became apparent that bankruptcy might be our only reasonable choice. My wife was still concerned about what her parents would think, but I convinced her that our children's futures are more important than her parents' opinions, and we made our decision: we would file for bankruptcy.