Our Home Purchase Arrangement

We have been lucky enough to stumble onto something that we could not possibly have anticipated. Just five months after being discharged in bankruptcy, my wife and I will be moving into our very own home. It is a highly unusual situation the details of which I can only briefly discuss at this time.

My wife originally found the listing and quickly became very interested in the house. I spoke with the seller by phone and explained to my wife that I wasn't sure it was the right time or the right situation for us to buy. I told her that if something like this seemed too good to be true, it probably was. She emailed the seller and explained to her that we felt the timing might not be right and that we would have to pass for the time being.

The seller replied to my wife by email with some very encouraging, enlightening information. My wife and I discussed the situation further, prayed on it together, and told the seller that we had reconsidered and would at least see the home. We made our first trip to the home on the Saturday after Thanksgiving.

When we pulled up to the home, we were both pleasantly pleased with what we saw. The home is in beautiful condition, in a very nice subdivision, on a corner lot with a pond behind it. When the seller met us at the door, we were again pleasantly surprised. The seller was not what we had expected at all. And he had his wife with him (I should mention that the home was for sale by owner, and the owner is an investor). And again, when we entered the home, we were even more pleased. I later told my wife that, upon entering the home, I immediately had the feeling that it could be "Home" for us. I haven't had that kind of feeling since moving out of the home I grew up in.

We toured the house:

• 2200 square feet on a quarter acre lot
• Four bedrooms
• Two and a half baths
• A large walk-in closet off the master bath
• A two car attached garage
• A large bonus room over the garage, accessible from within the house
• A formal living room with fireplace
• A family room
• A dining room
• A breakfast nook off the kitchen
• A laundry/utility room that passed into the garage
• Plenty of closet space

We were both thrilled with the home and all that it offered, and felt very comfortable speaking with the seller and his wife.

While my wife spoke with the seller's wife and my kids explored throughout the house, I talked business with the seller. I was completely open with him about our situation -- the recency of our bankruptcy and what led up to it, where we stood on making a down-payment and closing costs, everything that I could think of that might impact our ability to purchase the home and/or his willingness to sell to us.

We concluded our conversation by telling the seller that we were very interested in purchasing the home, and leaving with all of the paperwork we would need to complete in order to facilitate the purchase.

We completed all the paperwork over the weekend and emailed it to the seller. I spoke with a lender and a mortgage broker on the following Monday. I was surprised to learn a couple of things:

• My credit score is actually pretty high considering the recency of our bankruptcy
• Our attorney did a very thorough job (much of it due to the information we provided) of capturing and recording our debt in the filing
• It was very possible that we would be able to secure a mortgage in six to eight months

Six to eight months, however, would be too far into the future to purchase this particular home. But we didn't despair. The seller had mentioned in the past that he was willing to agree to a lease-to-own arrangement if we couldn't obtain a mortgage at the time.

This is where the story becomes even more amazing. Without detailing all of the events in the process, let me say that this particular seller has been unbelieveable to work with. As we dealt with him very openly, he was been very open with us, as well. He told us that he had three other interested parties: two investors and a person who wanted to open a daycare in the home. As the subdivision's covenant does not allow for businesses to be operated from within the home, that cut the considerations down to two.

Clearly, the seller could choose between dealing with our difficult situation, or closing a quick sale with one of the two interested investors. He could probably have even worked out a reasonable price with one of the investors to make it worth his while. Instead, he chose to sell to us. As shocking as that might sound, the deal has already been done.

And there's more. We will be moving into the home soon on a one-year lease. During that one year, we will be earning rent rebates toward a down payment on the home. We have no security deposit to pay, and the lease will include a one year home warranty that will cover the entire property with only a fifty dollar deductible toward any necessary repairs. In approximately eight months we will attempt to secure a mortgage again, working with the same mortgage broker that helped us at first. In order to facilitate the mortgage and make us more credit-worthy, we will be securing the services of a credit repair agency (more on that in a moment), as well as opening a couple of lines of credit to contribute to raising our credit score. The seller will also report our timely payment of the rent to the credit bureaus to positively impact our credit score.

While I don't normally believe that a credit repair agency is the best way to go -- because a determined person can achieve the same results as an agency for virtually no cost -- I have agreed to such terms because it provides assurance to the seller that we are taking the steps necessary to make ourselves worthy of a mortgage in the timeframe desired. The credit repair agency could cost us anywhere from $400 to $700, but the seller will know that we are as serious about home ownership as we portray ourselves to be, and it's a small cost to pay considering all of the concessions he is making to work with us.

At the time of securing a mortgage at some point over the next year, the seller will provide to us a rent rebate that will satisfy a substantial portion of the required down payment. He will then assist with closing costs and the remainder of the down payment. We will then become true homeowners.

So, all of this sounds too good to be true, right? I know. And much of it has been cause for long and serious consideration, and lots of prayer. My wife and I both feel that this is what God is leading us to do, and we feel that he has simply blessed us with a situation that is making it possible.

The seller isn't losing any money in the deal. He'll be making over $14,000 in rent over the period of the one year lease (before rent rebate). He will then be selling the home for approximately 94% of it's appraised value. There are certainly some tax advantages for him, and he has rented the property for the past two years for a total of over $30,000 in rent. While he isn't losing money in the deal, he is certainly making less than he could.

Now, I know that the skeptical reader might say that we're being taken. I can understand how one might have that point of view. But from where I stand, and with what my wife and I have said to each other, and with what I feel that God is telling us, I truly believe that this too-good-to-be-true situation is a gift from God. Only time will tell, for the skeptical, which is why you'll just have to keep checking back for updates.

Mortgage Update, And More

As I mentioned recently, my wife and I have decided to try to purchase our first home. This, of course, is an unusual thing so early out of Bankruptcy. We are learning that most lenders want you to be anywhere from one to three years AFTER Bankruptcy before they'll take a chance on a home loan.

We've spoken with one lender and one mortgage broker (sort of a lending agent who takes your credit info and shops around to see if he can find a lender willing to take a chance on you). The first lender was with Wells Fargo, and she was unwilling to take a chance on us so soon after discharge. She said that we didn't really need to worry about establishing any new credit at this time, but to just allow some time to pass before borrowing.

The mortgage broker gave us a different story. He said that our credit score actually isn't bad for being so early after Bankruptcy (more on that later). He said that the biggest concern he had was that we have not yet worked to reestablish our credit by opening a few new lines of credit (more on that later, too). He actually said that he felt he could get us signed up for a mortgage in six to eight months if we establish a couple new lines of credit and keep them current.

This mortgage broker actually provided us, free of charge, with a copy of the credit report that he ordered. He reviewed a couple things on the report with me that concerned him and referred me to a credit repair agency that can help me to correct them. Namely, there was a loan for the car that I surrendered back to the lender still reported on our report as open. This loan was indeed filed with the Bankruptcy and should show up as discharged. I contacted the lender and they claim that it is showing as paid off on their end, and that the error is with the credit bureaus. There was also a credit card still on the report as open that should appear as discharged. There is a prior auto loan on the report that was paid in full that still shows up as open. And then there's an item showing as open that I have never seen before. So I have four items on my credit report that need attention that are pulling down my credit score. I would not have known this without seeing my credit report.

Our attorney, as good as he was, never suggested that we pull our credit report again after the bankruptcy and review it for accuracy. You cannot sit still and just assume that everything will be correct on your report after your bankruptcy has been discharged. That is the most important time to become actively involved in ensuring that your credit report is 100% accurate and that you are taking the necessary steps to rebuild your credit. Again, this is something that our attorney did not tell us. Coming straight from bankruptcy, it's natural to think, "I'm never going to get a credit card again." However, that is exactly what you need to get -- get a credit card. One or two of them, three at the most. You get them, you use each one of them once, then you pay them off in full immediately. This will show them as active open lines of credit that will continually be reported as current, causing your credit score to increase.

The mortgage broker I spoke with actually suggested that I get a credit card, use it to pay the utility bill, then send full payment immediately to the credit card company. With most cards, if you pay it in full immediately you will incur no finance charges or interest. And since your just sending the money to the credit card company instead of the utility company, you aren't actually spending any extra money. He suggested we do this with two or three credit cards as soon as possible.

Bottom line is, it doesn't look like we are going to find anyone to finance us so soon on our home loan. What we did find, however, is a seller who is very much interested in helping people to realize their dream of home ownership, very interested in helping people in situations like ours to rebuild their credit, and very patient and flexible. He still has a plan to get us into this beautiful home that we have come to want so badly. We are currently working on a lease-to-own option that will allow us to sign a one year lease for the home, during which time we will open a few credit card accounts to increase our credit score, work with a credit repair agency and the credit bureaus to correct the errors on our credit report, and save up the necessary money for our down payment to purchase the home a year from now. At that time, we will once again contact the same mortgage broker, who we will stay in touch with throughout the year, and ask him to honor his word and get us financed for our first home.

So it looks like we will be moving very shortly into our very first home -- the first home that we will actually be able to call our own. Much closer to work. In a very nice community, with a very nice school district. And with all of the room we could possibly need until the kids are grown and move out.

So don't let yourself fall into the do-nothing trap that is so easy to fall into after a bankruptcy has been discharged. You must get active and make sure that your credit report is indeed correct, and take the steps necessary to begin rebuilding your credit. But open those credit card accounts with caution. Contact your bank first and see what they can do for you. Try to avoid secured credit cards and annual fees, if possible (I'll report on this as soon as we see what options are available to us). And, most importantly, DON'T spend any moeny that you don't have yet. Pay ONE bill with your credit card -- one bill that you would otherwise pay with cash or a check -- then send that same cash or check to the credit card company to pay it in full.

Be smart. Be aware. And be credit-worthy once again.

Post-Discharge Update

All has been quiet here since our bankruptcy was discharged on August 2. We received maybe a phone call or two from debt collectors, but once I notified them on the phone that we had just been discharged in a bankruptcy, they simply asked for the bankruptcy case number and left us alone.

This week we received on letter from a debt collector stating that the last they heard we were going through a bankruptcy. They asked for information about the bankruptcy and threatened to continue pursuing collection of the debt until they receive our response. My guess is that type of behavior is bordering on the limit.

The big news is, my wife and I have found a home that we are attempting to secure financing on. This is the biggest challenge of all, I think, for the recently discharged. Most mortgage companies insist upon anywhere from one year to three after a bankruptcy before they will give you any serious consideration for home financing. We have already had one lender tell us that the best thing we can do right now to secure a home loan in the future is to just wait.

But we got quite lucky this time, I think. The home we are looking at is for sale by owner. The owner is an investor, and he seems to be quite helpful in helping us to secure the necessary financing, etc., to purchase the home. In fact, if financing turns out to be impossible at this point, he is willing to sign a lease with us to rent the home for a year pending our purchase of it at the end of the lease.

This is a beautiful home with all that we have been looking for. While the deal hasn't been secured yet, it is looking very good.

So there is hope after bankruptcy. I have one thing to day: it's so nice not to be contacted by debt collectors anymore, and it's nice to actually have hope for the future that we didn't have when we were in financial ruin. I guess that's two things.

Freedom From Debt!

Received the following in the mail this week:

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF XXXXXXXXXXX


DISCHARGE OF DEBTORS

It appearing that the debtors are entitled to a discharge,

IT IS ORDERED:

The debtors are granted a discharge under section 727 of title 11, United States Code, (the Bankruptcy Code).

BY THE COURT

Dated: August 28, 2007

JUDGE XXXXXXX X. XXXXXX
U.S BANKRUPTCY COURT

It's that simple. Seems like a pretty plain letter for such a major event in our lives, especially considering that it cost us $1500 to get here.

Stay tuned for regular posts on the aftermath of bankruptcy, such as new car loan and home loan offers, etc. We are hoping to purchase a home next year, and have heard many tales of how difficult that can be with a bankruptcy. Check back for the real story.

A Bankruptcy Story

No matter why you might file for bankruptcy, or how much you might try to avoid it, sometimes it is forced upon us by factors beyond our control. In the end, you do what you have to do, and things usually work out for the best.

From MSNBC.com:

When staying alive means bankruptcy
Health insurance didn’t keep cancer-stricken California woman solvent
By Mike Stuckey, Senior news editor, MSNBC
Updated: 6:17 a.m. ET Aug 15, 2007
In our second Gut Check America vote, readers rated health care as the issue of most concern for them. After a false start in Oregon, we found reader Kathleen Aldrich, a Lompoc, Calif., resident who wrote to us about how her battle with cancer drove her to bankruptcy, even though she had health insurance. Here is her story:

LOMPOC, Calif. - Kathleen Aldrich, financially ruined by two bouts with ovarian cancer, is not who you might assume she is.

She raised three kids as a single mom. She worked hard for years. She had good jobs. She paid her bills. She lived in a nice house and drove a nice car. She had a decent credit rating. She had health insurance.

Now she has a record of bankruptcy and is the embodiment of the fear that nags at millions of U.S. families: that they are but one medical calamity away from losing everything. Like Aldrich, they — and perhaps you — could be.

“I didn’t do anything wrong,” Aldrich says thoughtfully, sitting in the neat, pale green living room of her tiny stucco duplex in the middle of this mostly middle-class American town. “I don’t see that I did.”

Just turned 50, tall and blond with a quick smile, Aldrich is gratefully in remission for a second time from the ovarian cancer, the No. 5 cancer killer of women. Despite “feeling like a little black cloud follows me around all the time,” she has a lot to live for, from a budding long-distance romance to a precocious 6-year-old granddaughter named Alyssa.

A cat named Jack and a great boss
She has a friendly Maine coon cat named Jack, a boss she adores and a grassy park nearby where she can stroll for miles as the long summer evenings unwind in Lompoc, a flat checkerboard between the bumpy brown California hills to the east and the Pacific Ocean to the west. The town, best known for a federal lockup that has housed the likes of junk bond king Michael Milken and Nixon confidant H.R. “Bob” Haldeman, also is home to Vandenberg Air Force Base, diatomaceous earth mines and 42,000 residents.

But her life is hardly idyllic. Two years and four months after her second trip through the hell of chemotherapy, Aldrich is embarking on the painful new journey of trying to rebuild her life and her credit rating. The bankruptcy has quashed all thoughts that she might someday retire. More immediately, it has left her unable to obtain thousands of dollars of work on her teeth, which likely were weakened by the powerful anti-cancer drugs.

And it has left deeper wounds of shame and guilt over having to walk away from unpaid bills after a lifetime of responsible living.

Aldrich’s situation is "asinine" but increasingly common, said Dr. Deborah Thorne of Ohio University. Thorne, co-author of a widely quoted 2005 study that found medical bills contributed to nearly half of the 1.5 million personal bankruptcies filed in the U.S. each year, said that ratio has likely worsened since the data was gathered.

Bankruptcy in the light of large medical bills is “unfortunately the only choice many people have," she said. "They will never in their lifetimes pay them off.

“To talk with these people again and again is so frustrating. They’re such thoughtful, kind folks who are being set up by the system we have now. What’s most appalling is they’re ashamed.”

Like Aldrich, Thorne said, three-quarters of the individuals in the study who declared bankruptcy because of health problems were insured.

"When the illness began ... they were floored," she said. "They assumed incorrectly that if you have health insurance that you’re fine and that you’ll get the treatment that you’ll need and not have to mortgage the farm to pay for it.”

In the beginning, that assumption appeared accurate to Aldrich.

She was working at a credit union when she was first diagnosed with cancer in 2001. Her employer-paid insurance covered most of her expenses as she underwent surgery and her first round of chemo, which continued well into 2002. She changed jobs later that year, carefully paying her own insurance premiums through a COBRA extended health benefits program until she qualified for the group plan offered by her new employer, a title company in Montecito, an hour down the coast.

But while she was on leave for surgery to repair hernias and a bowel obstruction caused by her first operation, she was laid off. Once more, she used the COBRA process — established by a federal law that lets employees who lose their jobs maintain their health insurance for up to 18 months by paying their own premiums. Again, her insurance paid most of the bills.

Aldrich had landed a new job as a processor for a Lompoc mortgage company when her cancer returned in 2004. Though she didn't have health insurance through her employer and her COBRA benefits had been exhausted, she had continued to buy health insurance, paying $533 a month.

She underwent more surgery and returned to chemotherapy treatments at Santa Barbara Hematology and Oncology, a large medical practice in the area. As the nausea and hair loss subsided in the spring of 2005, she began to receive bills from the practice that eventually totaled more than $15,000.

Where's the $7,000 cap?
Aldrich was stunned, since her policy with Blue Shield of California had a $2,000 annual deductible and a co-payment schedule that was supposed to cap her maximum annual “out-of-pocket” cost at $7,000 when using a “preferred provider,” as Santa Barbara Hematology is.

Still dazed by the chemo, she said, she tried to get the bill corrected, calling both the medical practice and Blue Shield. When nothing seemed to work, she turned to her sister, Mary Beth Fisher, a registered nurse for 35 years who spent the last part of her career in administrative jobs for medical practices, handling plenty of insurance matters.

“I said, ‘I know you can get ahold of someone who can help you get through this mess,’” Fisher told MSNBC.com. In the end, though, she said all they got was the run-around from both the medical practice and Blue Shield. “It was always ‘talk to another person, put your request in through e-mail.’”

Fisher said that in her experience, case workers are available on both sides to help resolve such problems. “I was astounded that she wasn’t offered that kind of assistance or support," she said. "… It really was that nobody would talk to you.”

No help from Blue Shield
Fisher believes the source of the problem was that the oncology practice had been paid more for the same services under Aldrich's previous insurance policy and did not change its billings to reflect the terms of its contract with Blue Shield, Aldrich’s new carrier. But she said Blue Shield did little to make the change clear to the doctors group.

Blue Shield spokeswoman Elise Anderson said privacy laws prohibited her from even acknowledging that Aldrich is a Blue Shield client, but she was confident the company’s customer service process works well.

Lynn Humphrey, administrator of Santa Barbara Hematology, also declined to discuss Aldrich’s case.

According to the sisters, Santa Barbara Hematology sent Aldrich’s case to a collection agency just a few months after the dispute began and refused to discuss the bill after that, a common practice in collections cases. Then, they say, Aldrich was dismissed as a patient for being “a pain.”

The sudden severing of the relationship with the young doctor whom Aldrich still reveres as the woman who twice saved her life was particularly painful.

“I was so devastated and embarrassed,” she said. “Was I a pain during chemo, the whole time? Am I a piece of crap or what?”

Fisher stated repeatedly that she was not looking for any kind of handout for her sister. Seventeen years older than Aldrich, and Aldrich’s guardian after their mother died when Aldrich was 14, Fisher said, “I told Kathleen she had a part in this." She owed money for her treatment. But not any more than $7,000, they believed.

Aldrich and Fisher say they continued trying to work the problem out with Blue Shield, the medical group and the collection agency over the next year. But on July 24, 2006, the collection agency sued Aldrich, seeking nearly $20,000 in debts, attorneys’ fees, court costs and interest. The lion’s share of the total was the $15,239.52 that Santa Barbara Hematology claimed it was owed.

A short time later, Aldrich said, a sheriff’s deputy showed up with the paperwork to attach her wages from Santa Fe Mortgage, where she is the sole employee of owner Fred Bittle, a loyal supporter throughout her ordeal who pays Aldrich more than the going rate specifically so she can purchase health insurance. The prospect of having her $3,820 in monthly pay drastically reduced to satisfy the debt was nightmarish for Aldrich.

Her bank account already had been wiped out as a result of her unemployment and periods when her medical treatments had robbed her of the ability to work full time. She also had borrowed more than $15,000 from Fisher and another sister and had no way to repay the $7,000 she agreed that she owed other than a little at a time.

Nothing in the bank
“I have no savings,” said Aldrich. “I probably have 10 bucks saved. I live paycheck to paycheck.” Her No. 1 goal was to keep up with the premiums on her health insurance, and she remembers thinking, “I might as well quit my job if they’re going to garnish me because there’s no way I can make it.”

After consulting with an attorney, the sisters came away believing that the only solution was for Aldrich to declare bankruptcy. “He said, 'This is such an incredible mess that I don’t think you can afford the amount of money that it would take if we could ever figure it out,’” Fisher said.

“I did not want to do that,” Aldrich said. “That is not how I was raised.” She tried to figure out how to pay the judgment, to avoid the blemish of bankruptcy any way that she could. “I was willing to drive a crappy car. I’m not very materialistic. I was even at one point looking to just rent a room somewhere to cut costs,” she said. It seemed hopeless.

So, swallowing a bit more of her pride, Aldrich borrowed $1,800 more from her sister to pay the legal and court costs for the bankruptcy. Her debts were discharged in U.S. Bankruptcy Court in April, including the $15,239.52 billed by Santa Barbara Hematology. In total, the medical group was paid more than $74,000 for Aldrich’s treatment, which got so expensive that her final round of chemo cost nearly $17,000, according to copies of billing records filed in court.

A familiar situation
Aldrich’s attorney did not respond to MSNBC.com’s request for an interview, but a well-known California lawyer who specializes in medical insurance cases said Aldrich’s experience is not unusual.

“We see it all the time in our practice,” said William Shernoff, who said insurance companies often leave patients on their own to deal with medical providers who bill too much. “None of these carriers go out of their way to help these people. They’re just looking after their own interests, and they don’t seem to have any consumer-friendly people out there trying to assist their customers. They take the first opportunity they can to get rid of any problems, especially if it’s going to cost them money.”

Shernoff doubts that a recent announcement by the California Department of Insurance that it will score Blue Shield and other big carriers on a "healthcare report card" will do much to help consumers.

Blue Shield stands by its service
Anderson, the Blue Shield spokeswoman, said the carrier has a clear path for handling customer problems. “On anybody’s card there is an 800 number, and you call that 24/7,” she said. "There’s a whole process. The key is you start with the customer service number, and anyone at that number should be able to help you.” Calls placed by MSNBC.com to the 800 number were answered immediately by Blue Shield representatives.

Thorne, the Ohio University professor, said that a larger problem illustrated by Aldrich's case is the out-of-control nature of health-care costs and insurance. "We already spend enough in premiums and co-pays that to be asked to pay tens of thousand more for health care is asinine.”

Indeed, Aldrich was paying 17 cents out of every dollar she took home for her Blue Shield policy when she ran up the disputed charges. And she recently got a “birthday card” from the insurer stating that now that she has turned 50, her monthly rate will rise to $619 — just slightly less than her $650 rent. In any year that she needs any major treatment, she’ll be liable for an additional $7,000 in deductible and co-payments, meaning that she would have to devote $14,428 — well over a third of her take-home pay — to health care.

It’s hard for Aldrich to talk about her situation without strong emotions, and some tears, surfacing. But she does not want to be seen as a pity case. She sees herself as a cautionary tale for average Americans: “It can happen to you.”

Her sister agrees, saying that the moral of this story is for people at all levels of the treatment and billing process to pay close attention to details and, especially, to listen. “They don’t realize how critical it is to be exact, what a nightmare it can be for someone else,” Fisher said.

Amid the photos of family and friends, there's a sign on the wall over the TV in Aldrich's little living room. “BELIEVE,” it says, in 6-inch letters carved out of wood. And despite all that has happened to shake her faith in our health care system and doctors’ offices and insurance companies, Kathleen Aldrich still believes.

She believes in working, in getting up and going to the office every day and doing the best she can. She absolutely believes in paying her $619-a-month health insurance premium. She believes that someone is watching out for her. And she believes in love.

“I had some pretty dark times during chemo,” she recalled. “I spent a lot of time alone. I asked God, and I told him the one thing that I wanted to do was to love again, to feel how it feels to be in love and to have a companion.” She gazes fondly at a picture on a nearby table of a handsome man posing in the cab of a truck with a happy dog.

“I met Richard last year. It’s a wonderful feeling to have a companion again and look forward to the little things in life that some couples maybe take for granted. I feel pretty good about the way my life is right now.”

© 2007 MSNBC Interactive

URL: http://www.msnbc.msn.com/id/20201807/

The Standard Legal Lingo

I got an email from my Attorney today explaining the court order I received in the mail yesterday. He writes:

This is the standard language in the no asset order. What this means is that the trustee is not going to take any of your assets. It also means that secured creditors are free to pursue their claims in state court if you are in default on a home loan or car loan. As long as you are not in default then you may keep the secured property that you are reaffirming on with a secured creditor. This order just means that the chapter 7 trustee is relieved of further duty. It is not the discharge of your case, which will come in the next 30 to 60 days.

The good news, is we don't currently have a car or home payment, so there's nothing for creditors to go after. The bad news is, we still have another month or two before this whole thing is behind us. Can't wait to get it over with!

ORDER IN NO ASSET CASE

We received the following court order in the mail today from our Attorney:

In reliance upon the Trustee's Report of No Distribution, the Court finds that the property of the estate, if any, should be abandoned and that secured creditors with nonavoidable, perfected security interests in any such property should be granted limited relief from the automatic stay as more specifically set forth hereinafter.

THEREFORE, it is ORDERED that the scheduled property of the estate, if any, shall be, and hereby is, abandoned; and it is

FURTHER ORDERED that secured creditors with nonavoidable, perfected security interests in any such property shall be, and hereby are, granted limited relief from the automatic stay to pursue their valid claims against such property in accordance with applicable law; and it is

FINALLY ORDERED that the Trustee is hereby discharged of his/her trust in the above-captioned case.

THE AUTOMATIC STAY REMAINS IN FULL FORCE AND EFFECT EXCEPT AS SPECIFICALLY SET FORTH HEREINABOVE.

Dated: August 02, 2007
U.S. BANKRUPTCY COURT

Of course, all that legal mumbo jumbo makes a whole lot of nonsense to me. It sure doesn't sound like our debts have been relieved and our bankruptcy discharged. I sent an email to our Attorney for clarification. More on that as soon as I get the details.

Debtor Education

One of the most annoying parts of the new bankruptcy law is the requirements for pre-filing counseling and pre-discharge debtor education. My wife and I recently spent two hours doing an online pre-discharge debtor education that is required before our bankruptcy will be discharged and our debts relieved. The law requires two hours of training, to be done in person, on the phone, or online. To be honest, there really was nothing there that we found beneficial in any way.

I guess they have no idea what level of education a person has who has filed for bankruptcy. So they've written the training for the lowest common denominator.

Either way, it's done, and we should be only a matter of weeks away from getting a fresh start. There are many places to get this online training, but we chose Springboard, a non-profit consumer counseling company, because they had the best prices and the easiest to use website. In fact, for people returning to them to complete the debtor education after using their service for the pre-filing counseling, they offer a $20 discount. And, while many counseling agencies charge both spouses in joint filings, Springboard charges one low rate for both.

It was essentially painless, though time consuming.

Meeting of Creditors

We had our "Meeting of Creditors" this week, which is basically this: the bankruptcy petitioner and his/her/their attorney meet in the office of a court-appointed trustee with any creditors that may wish to dispute, prevent, or otherwise discuss the bankruptcy proceeding. It's intended to be an opportunity for creditors to show why they beleive that they should still be repaid the debt that is owed to them. In this case -- as I suspect in most bankruptcy cases of individuals or couples -- there were no creditors in attendance.

The meeting went something like this:

9:00 am: My wife and I arrived at the government building (it didn't even take place in an actual courthouse) thirty minutes prior to our scheduled hearing. We were the first people to arrive, including attorney and the trustee. We began waiting in chairs in the hallway.

9:15 am: The trustee and his recorder arrived.

9:18 am: Another petitioning couple arrived and seated themselves in the hallway.

9:20 am: Our attorney arrived and suggested we go into the trustee's meeting room. My wife and I took a seat in the waiting chairs in the meeting room while our attorney discussed another client with the trustee.

9:25 am: Noting that there was no one else in the meeting room, including the two petitioners that were scheduled before us, the trustee called us forward to begin our hearing.

The hearing process included presenting our driver's licenses and social security cards so that the trustee could verify our identity. We then stated our names for the record. We rose our right hand and were sworn in. The trustee then reviewed our bankruptcy petition, asking a few questions about an automobile loan and the automobiles we currently own, as well as one or two minor debts. He reviewed our income tax statement from last year (which my attorney had forgotten to print for the meeting, but had the TIF file I emailed him on his notebook computer, and the trustee reviewed the file on his computer).

Before we knew it, the trustee was rattling off something about it being a "no asset" case (which means that he has determined that we have no assets worthy of the court forcing us to sell to satisy some of our debt -- a good thing), and that he was recommending discharge of our debts and we should receive the final documents in 45 to 60 days.

9:30 am: My wife and I were once again standing in the hallway talking to our attorney about the final pre-discharge debtor counseling that is required and what to do about creditors who continue to send us demands for payment.

Which, by the way, might be worth mentioning. Not all creditors will discontinue trying to collect from you during a bankruptcy proceeding, even though they are required by law to stop contacting you. My attorney recommended that we first call the creditor when we recieve a notice and tell them that we have filed for bankruptcy and provide them with the case number. Then, he said, if they continue to contact us, we should forward it to his office so that he can send them a letter threatening to file against the creditor for damages if they don't cease contact.

It was all very interesting, very fast, and very painless. The hardest part of the whole process was finding a place to park the car outside the government building before the hearing.

Petition Filed

Our bankruptcy petition was filed approximately one week ago. Just in time to prevent a wage garnishment order and to hold off an attorney representing the company that towed away my car almost five months ago, looking to collect the balance of the loan after auctioning off the crunched up hunk of junk.

In fact, we've already received the date for the meeting of debtors, which is where we (meaning us and our attorney) have to present our cause for bankruptcy and justify why we should keep what personal belongings we have while at the same time being relieved of our debt. Just under a month away, it's the first ray of light at the end of the tunnel.

Garnishment

My wife had received a summons for a garnishment hearing that took place today. Interestingly enough, my wife has no income of her own, as she's home with the kids while I work. I didn't receive a summons, but the income that they wanted to garnish in her name was my income. I'm sure that's completely legal.

Anyway, our attorney went to the hearing for us and go the opposing attorney to agree to wait a week before filing the garnishment paperwork. This will allow him the time to file our bankruptcy petition this week, which will put a stop to the garnishment process. What makes this most worth mentioning is that the fees we paid to our attorney for the bankruptcy do not include such court appearances, but he took care of it for us anyway.

But That's Not All

But of course, there's more. Recently, we were called by a very rude creditor. When I told him that he would need to speak with our lawyer and gave him the necessary contact information, he rudely demanded to know why we had a lawyer. I ended up hanging up on him.

He called again today. The conversation went something like this:

COLLECTOR: May I speak with ...

ME: I'm sorry, she's not available right now.

COLLECTOR: Who am I speaking with?

ME: Why don't you tell me who I'm speaking with first.

He identified his name and company.

ME: I told you the last time you called that you would need to contact our attorney from now on. You have no reason to call here again.

COLLECTOR: Why your attorney?

ME: Is this a financial matter?

COLLECTOR: Yes. Do you have a bankruptcy?

ME: You'll need to contact our attorney from this point forward. His name is ... and you can reach him at ...

COLLECTOR: That isn't the same number you gave me before.

ME: That's his local number. I may have given you his 800 number before. Here's his local number again ...

COLLECTOR: Why do I need to contact your attorney?

ME: You can contact him from now on. Please do not call here again.

Then I hung up. I have dealt with several debt collectors during this process, and most of them have been both reasonable and professional. Very few have been rude like this "gentleman." It is impossible to accurately portray his rudeness with the written word.

Petition Progress

We finally signed our bankruptcy petition this morning. We met with our attorney, who had everything drawn up and waiting (of course). He walked us through what each page of the large packet was for, indicated where we were to sign on each page (and I literally mean we had to sign on each page), and asked us a few questions for clarification.

He changed some of the amounts we listed for expenses such as food, clothing, and normal day-to-day cost of living things, based on what his experience tells him is typical for a family of our size. In most cases, his changes increased our expenses.

The petition will be filed in a couple of days, and we'll be in court for our discharge hearing in 30 to 45 days. My wife has a garnishment hearing she was summoned for on May 7, and that will now be stayed due to our pending bankruptcy. It's all a great relief, but I can only imagine how the relief will come when our debts have finally been relieved.

Pre-Filing Counseling

One of the most senseless changes made to the bankruptcy law in 2005 was the requirement to go through pre-filing budget counseling. There are several ways to do it -- in person, by phone, or online. The cost ranges from $40 to $150, from what I can tell, depending on what "non-profit" group you choose to do the counseling.

We chose Springboard, and spent $55 and about 90 minutes going through a counseling that accomplished nothing more than convincing us that bankruptcy was indeed the right choice for us. I mean, look at this spending plan! If we're nearly $60,000.00 in the hole, we don't have much choice but to file bankruptcy.

The counseling describes the most common types of credit counseling available, so that you'll know what other options you have besides bankruptcy. Then it explains the most common types of bankruptcy (Chapter 7 and Chapter 13) to help you decide what you might do if you file for bankruptcy. There's a quiz at the end of each section, and a couple of the questions are worded so that if you actually answer them the way they sound like they should be answered, you'll be wrong.

Then there's the budget plan. WOW! You have to enter all of your income (the easy part), all of your living expenses, and all of your debts. It seems like we just did all of this for our attorney. It categorizes all of your debt in such a way that, for us anyway, we had to refigure things three or four times to get it where they want it.

All of this, at the cost of $55 (which, it seems, is a bargain), for a ridiculous little certificate that my attorney has to file with our bankruptcy petition. And we had to have separate certificates for my wife and myself.

Well, it's done, and we'll sign the paperwork next Thursday. I just can't wait to have the whole sordid affair behind us.

Bankruptcy Counseling

When Congress passed the new Bankruptcy laws in 2005, their goal was to eliminate bankruptcy abuse -- to keep people who could easily pay their bills from filing for bankruptcy over and over and over. I don't know if they achieved that goal, but they sure did make it difficult for people who truly need the relief that bankruptcy provides.

The next step in our process is Bankruptcy Counseling. My wife and I must each complete a pre-filing course that will help us with a budget, show us other alternatives to bankruptcy, etc. There are several "approved" credit counseling companies that can administer this training and issue the required certificate upon completion. Their fees range from $20 per person to $125 per couple. Some allow couples to take the course together while others require them to do so separately (and charging each as an individual). Depending on the company, the course can last from 45 minutes to two hours.

Then again before the bankruptcy can be discharged and relief ordered, a Financial Management Course is required. I haven't even looked at all of the details for it, but it again requires registration fees.

With the fees involved, it looks like we'll be starting our first course on payday next week. It's time to get this thing moving. We received a summons today for a garnishment hearing in the case that was recently judged against us. I'd really like to get this thing moving before that court date comes up.

Filing Soon

We completed our bankruptcy packet today. That's the long, long, long list our lawyer gave us where we have to declare all of our assets and debts. Literally all, down to the shirts on our backs. It's not an enjoyable process, but it has to be done before our lawyer can file the bankruptcy.

Another thing that has to be done is a phone call to some kind of pre-bankruptcy counselor. I don't know much about it at all -- it's apparantly part of the new bankruptcy law. I'll post more details when I have them.

Almost There

Our federal income tax refund arrived yesterday, and the first thing we did was pay the remainder of the legal fees for our bankruptcy. It was a good feeling. I have also sent most of the required documents to the lawyer and hope to get the rest finished up this weekend. That would mean that our case could actually be filed within a week.

Think what you will about bankruptcy, but I'm starting to see the light at the end of the tunnel, and it's a great feeling! A renewed sense of financial freedom is just around the corner.

My wife is concerned how her parents will react if they read the notice in the paper (think Marie from Everybody Loves Raymond). I sympathize with her, but I also feel that it's more important for us to get back on our feet and raise our family in a home of our own than worry about my wife's judgmental parents.

In the end, all will work out, and life will be much fuller for us.

Income Tax Refund

I did our Federal and state taxes today using one of the online free tax preparation tools recommended at IRS.gov. To my utter amazement, according to the final 1040A form completed online, we'll be getting a Federal refund of $3,422!!! Wow!

That will pay off the rest of our bankruptcy legal fees and get this thing resolved and behind us once and for all. It will allow us to buy a new bed to replace the twenty year old bed we've been sleeping on for years, and possibly upgrade our nine year old computer, which still runs on Windows 98.

In the process of completing our taxes, I discovered that I apparently made an error in our 2005 taxes. Instead of the $23 refund we received last year, we should have received more than $1,900. Needless to say, I'll be filing an amended tax form for 2005.

It's nice when things seem to go your way for a change.

Insurance Jam

I mentioned recently that my car insurance company (Progressive) notified me of a huge rate increase in my premium, and that I planned to change insurance companies.

First I called GEICO, which gave me a quote that was even higher than the increased premium Progressive was demanding. I then called Safe Auto and recevied a quote that would be $20 less than Progressive for the initial payment and $25 less each month thereafter. It sounded like the best deal I was going to get.

My Progressive policy was set to expire tomorrow night at midnight. So I called Safe Auto back today to start the new policy. Curious if the rate would be better with my wife listed as the policy owner instead of myself, I first asked for a new quote. The result was $10 more to start than Progressive wanted, and $5 more each month thereafter. The Safe Auto rep tried to tell me that it was different because of my accident last August, but I provided her with all of the same information I had provided for the first quote.

To top it all off, this Safe Auto rep was rude. Minimum coverage, maybe. Minimum customer service, definitely. I would not recommend Safe Auto Insurance to anyone.

Needless to say, I called Progressive today and renewed our policy at the increased rate, which was still lower than the competition.

Another Judgement

We received a default judgement in the mail yesterday for $435 plus $95 in court costs. At first I didn't remember even receiving the summons, but it came just before Christmas, when things are so hectic both at home and at work that they it was easily forgotten.

I don't know if the next step will be for them to issue a wage garnishment,or what. The notice we received yesterday said thing about it.

What gripes me most about this judgement is that it was for a bill that we don't even owe. At least, in my opinion. Part of it is for a food system my wife joined that she can no longer even access because they closed up shop and moved out of town. The rest is for dental work that I already paid for in full.

At least this judgement can be added to our bankruptcy filing.

Rate Hike

You know, it's no wonder that people with financial problems have such trouble pulling themselves out. I just had a car picked up last night to be returned to the lender. A car that was totaled several months back in a rollover accident that wasn't paid for because we couldn't afford to insure it. After the accident, we found a way to afford insurance.

That was six months ago. Now the policy is up for renewal, and I just got a notice that the rate will be going up $17 a month! And not because of the accident, either (I reported the accident when I applied for the insurance). No, the insurance went up because of our "insurance score," which is just Progressive's fancy way of saying that our credit score stinks, so they're raising our rates.

After making on time payments for six months, they have decided that our difficulty paying our bills has made us a higher accident risk. I think we'll be shopping rather hard for a new insurance company before the policy renews in February.

Sure, their ads say they have the best rates, but what they don't tell you is that they'll stick it to you six months later if they can!

Voluntary Surrender

My crunched up car has just been taken away to be returned to the dealer where I bought it. I must say that everyone involved in the process of recovering it was quite professional. You normally wouldn't expect such professionalism from a lender repossessing a car and the recovery company they hired.

It's good to have that eyesore gone and to have my garage back. It's one less item I have to report on the assets section of my bankruptcy petition. And one less secured loan that I have to worry about. The debt will now be easily discharged.

I took my son outside to watch the men hooking the car up to the truck. He asked, "They fix it, then it works?" I explained to him that it was being taken back where Daddy bought it. Talking with one of the men in the truck, I told him my son would have been more excited if they had brought a large tow truck. He told my son that the type of truck they brought is called a "sneaker." Which, of course, means they can pull up in it in the middle of the night, hook up a car, and sneak off with it. It literally took less than ten minutes for them to hook up and be gone, and I can see how it could have been much faster if they needed to be stealth.

More On The Totaled Car

After some additional consultation with my Attorney, he has advised the following:

If you do not want to keep the car, I will advise you to contact the lender
to make arrangements to surrender it to them. Once your bankruptcy is on
file, then they can make no claim against you. The debt to them will be
considered unsecured at that point and you will be able to discharge that
debt in bankruptcy.

My concern was mostly that if I surrendered the car to them, they would be able to add the charges for the recovery to my debt. The point is, if they take the car back, then I no longer have in my possession the item I purchased from them on loan. Even if they added their costs to my debt, that debt would be discharged, effectively eliminating the costs altogether. In addition, surrendering the car to them would mean no more calls from them, no more totaled car taking up all the space in my garage, and no more concern for how I'm going to get rid of the thing after the bankruptcy is final, which is the soonest I would have the title to be able to sell it as salvage.

I'll be contacting the lender tomorrow to make arrangements for them to come pick up the car.

A Quick Response

I would not have expected to receive a response until tomorrow from my Attorney, but he has already replied via email.

His suggestion is that I NOT take any action with the car dealer, but rather wait until my bankruptcy has actually been filed -- when I'll have more options. Now I have to figure out how to stall the repo man.

Request for Repossession

I spoke today with a representative of the car lot where we purchased the car that was totaled. After speaking with my Attorney, they assumed that the car wouldn't be listed in the bankruptcy proceeding because the car is worth more than the loan balance. They weren't aware that it was totaled without insurance.

I spoke with the representative and explained the situation to her. She was actually quite nice and professional, which is very unusual from a creditor speaking to someone in the process of filing bankruptcy.

She asked me to send her a picture of the damaged car -- probably to satisfy themselves that the car is totaled.

Moments later I received another phone call that displayed BLOCKED CALL on the caller ID. I let the answering machine screen the call and called back at the number given in the message.

The caller had been from a towing company that represented the car dealer. He wanted to make arrangements to have someone pick up the car this evening. Again, it's unusual to have a "repo man" call you to schedule a repossession -- and he, too, was quite polite and professional.

I told him that I didn't have access to where the car was stored so late in the evening, especially on such short notice (the car is actually stored in my own garage). I told him I might be able to make arrangements for tomorrow after speaking with my Attorney.

When I asked him what the dealer's interest is in the car now that it's totaled, he said that it would be sold at a salvage auction and the proceeds would be applied to the balance of my loan.

I emailed my Attorney for advice with the concern that the recovery fees for the repossession would be ADDED to my loan balance, actually INCREASING rather than decreasing my debt.

It's refreshing to deal with people who act so professionally in a situation when most creditors can be so rude and disrespectful. Of course, I'm just a little wary of their actual intentions.

I should have an update with the Attorney's response tomorrow.

Year End Update

Things have been a little quiet on the bankruptcy front. The holidays can kind of do that, I suppose. There are just a couple of updates.

1. The calls from collection agencies have mostly ended. I'm starting to realize that sending letters to creditors might not have been the best method to end some of the phone calls. The two I mentioned writing to have both contacted me since then. The first, which is a car dealership that I still owe payments to for the car I wrecked several months ago, called my attorney, who apparently has forgotten that the car has been totaled. They contacted me again after speaking with him to ask me to contact them because the car is worth more than I owe on it. Of course, they don't know that it has been totaled, either. If they knew, they would also know that the car is worth much less than I owe on it, even though it is only a few months from being paid off.
2. The second creditor I wrote to is a law office that is collecting on an agreed judgment. These guys just can't seem to get the clue. They called me on both Christmas Eve and New Years Eve, both of which were Sundays. I imaging this one will take a little work to take care of.
3. We're making slow progress on paying the costs of filing bankruptcy. As I've said before, if we had the money it takes to file bankruptcy easily, it would be easy to pay our bills and we wouldn't need to file. We're about 18 percent paid so far.

Coming soon: recording our assets for filing purposes.