There is one drawback to reading a lot of personal finance sites. Everywhere I look online, I see stuff like this:
And it really makes me angry.
I’ve talked briefly before about filing Chapter 7 bankruptcy. It’s one of the biggest regrets of my life – not the part where I got rid of the debt that was burying my family, but the fact that I let things get that bad in the first place. I’ve worked hard not to put myself in that position ever again. Unfortunately, five years later, I’m still suffering from the aftermath of my financial transgressions.
My FICO scores are in the low 600s right now. That means:
- I can’t get approved for a credit card. Not that I need one, but I’d considered getting one to increase my available credit.
- I can’t buy my home from my parents. They were kind enough to buy the house when I got divorced, with the expectation that I would take over the mortgage as soon as I was financially stable. I know they aren’t hurting themselves, but I can’t stand knowing I’m not taking care of my responsibilities. They won’t accept rent, saying they’d prefer I get out of debt and build savings. It drives me insane.
- My son will need a car in less than four years. While I’m saving for that now and think it’s dumb to finance a car for a teenager, I keep thinking I might have to finance a small part of it if an emergency eats into his car fund. My bankruptcy will still be on my credit report and I worry that I won’t be in a position to help him get something reliable.
- If I wanted to change phone providers (not right now, but someday), I couldn’t pass the credit check and would likely be required to put down a deposit despite 10 years of paying my phone bill on time.
Bankruptcy is NOT all bad. At the time we filed, we literally did not know how we would buy food or pay the utilities. I’m thankful for the opportunity to say, “Okay, I’ve totally screwed up and would like another chance.” I just wish I would have come to that realization before things got so horrible. Now for another 4 years or so, I have to continue suffering the consequences of my past mistakes. That’s the biggest lesson I can think of for anyone in this situation – you can’t run from your mistakes, ever.
If you’re considering bankruptcy, please consider the impact on your financial present AND future. If there is any alternative, use it first. And don’t file unless you’re sure you are ready to change. One of the most helpful resources I found was a forum for people considering or involved in bankruptcy.
For now, I have to live with my crappy credit and do my best to improve it. I’m using Credit Karma to monitor my credit for free as I pay off debt. This month, I’m down to utilizing 10% of my available credit, which is what finally pushed my score above 600. I would definitely recommend Credit Karma, not because they asked me to say so (I’m not that important!) but because the service is really cool and tells you what the problem areas are on your credit report.
Hopefully someday I’ll be able to write a post called “My Credit Doesn’t Suck Any More.”
Edited to add: My friend at Money Ning just posted about getting out of debt without bankruptcy. Go check it out!