Filing For Bankruptcy

Homeowners!

2009-10-05T18:10:00.001-04:00

We just finished our closing, and we are officially homeowners!

I feel relief, freedom, and pride.

More details later.

Close to the Close

2009-09-30T22:55:00.000-04:00

Just a very quick, very brief update:

Today we received clearance to close on our home loan, and the closing has been scheduled for MONDAY. Just five days away from becoming homeowners, and in less than one month after first contacting Quicken Loans. They worked so much faster than Union Savings Bank, whom I have become convinced was just trying to stall us.

More info on the closing and our new home-ownership soon.

Nearing the Finish Line

2009-09-17T21:49:00.001-04:00

Just a quick update on the home mortgage.

After returning home from vacation and contacting several new lenders, starting over with the home mortgage process completely, things are progressing quite nicely. Our appraisal came in today perfectly in line with the purchase price of our home -- that was one of our biggest concerns. We've been approved and have an anticipated closing date of October 5.

It's a good feeling to be this close to finally owning our own home.

The experience with Quicken Loans has been rather pleasant so far. They work fast, seem to be quite thorough, and everything has gone amazingly smoothly (knock on wood).

Stay tuned for future updates.

Back to Square One

2009-09-12T21:10:00.001-04:00

In June, I contacted the same banker that I spoke with initially last December. It was two months before our Bankruptcy was due to mature to two years, but he had indicated that we might be able to be prepared for a closing date that would coincide with the maturity date if we started in June.

It has become obvious over the past three months that he was stalling, as he continually sprung upon me hurdler after hurdle that dragged the process out. It was just before our recent family vacation that I decided to drop the process and resume after our vacation with a different lender.

Since returning from vacation, I contacted three lenders, including Chase, Fifth Third, the Lending Tree, and Quicken Loans.

The Lending Tree was no help. The representative from Chase Bank that contacted me was rude and pushy, insisting that I tell him what other lenders were trying to do for me so that he could show me how he could serve me better. He refused to present me with a Good Faith Estimate so that I could make the comparison on my own.

Fifth Third Bank, where we bank (though they didn't know that) contacted me only by email.

Quicken Loans was the fastest to respond, the most eager to serve me, and the most professional I have dealt with of the four. I am happy to say that our loan is currently being reviewed by an Underwriter, and we hope to have a closing date the first week of October.

That bank that I was working with originally? Union Savings Bank. We're back at square one now, but things look more promising than ever.

Two Years Debt Free

2009-08-04T22:46:00.000-04:00

It has been two years today since our bankruptcy was discharged. With this momentous event comes many more opportunities for the financing of our home. More details in the week to come.

Being debt free is a wonderful feeling....

Foreclosure, Bankruptcy, and Unemployment

2009-07-31T21:47:00.000-04:00

Question: "How can I trust God when I am facing unemployment, foreclosure, or bankruptcy?"

Answer: The loss of employment and/or income is one of the most distressing events in life, especially for those supporting a family. Foreclosure on the family home or having to declare bankruptcy due to unemployment adds additional fear, uncertainty, and emotional turmoil. For the Christian man or woman facing unemployment, foreclosure or bankruptcy, there can be additional doubts about God’s goodness and His promises to provide for His children. How is the Christian to react to these catastrophic life events? What biblical principles can we apply to the loss of a home or a job and benefits (health/life insurance, retirement)?

First, it’s important to understand that God has ordained work for mankind. Work is described in the Bible as beneficial in that it provides for our needs (Proverbs 14:23; Ecclesiastes 2:24, 3:13, 5:18-19) and gives us the resources to share with others in need (Ephesians 4:28). Paul reminded the believers in Thessalonica that anyone who was not willing to work should not eat (2 Thessalonians 3:10) and that he himself worked at tent making so as not to be a burden on anyone (Acts 18:3; 2 Corinthians 11:9). So loss of employment should not be an excuse for laziness, and all due diligence should be exercised to find other employment as quickly as possible (Proverbs 6:9-11).

At the same time, it may not be possible to find a position equal in pay and status to the one that was lost. In these cases, Christians should not allow pride to keep them from taking jobs in other fields, even if it means lowered status or less pay, at least temporarily. We should also be willing to accept help from other believers and our churches, perhaps in exchange for work that needs to be done in homes, yards, and church facilities. Extending and accepting a ‘helping hand’ in these times is a blessing to those who give and to those who receive and exhibits the ‘law of Christ’ which is love for one another (Galatians 6:2; John 13:34).

Similarly, loss of the family home through foreclosure or bankruptcy can even be a time of blessing for the family, a time when parents and children “close ranks” and become more keenly aware of their love for one another and the important things in life—faith, family and community—and less focused on material things that have no eternal value and can disappear in a moment. God can also use these circumstances to remind us of the truth spoken by Jesus in Matthew 6:19-20, and refocus our hearts on heavenly treasure.

Above all, renewing our faith and trust in God’s promises is of utmost importance during times of financial stress. Revisiting passages that speak of God’s faithfulness to His children will strengthen and encourage us when the future looks bleak. First Corinthians 10:13 reminds us that God is faithful and will not test us beyond our ability to bear it and will provide a way out of the trial. This ‘way out’ may mean a new and better job that comes up right away. It may also mean a lengthy period of unemployment during which God’s faithfulness in providing our daily bread is shown to us. It may mean a new home or it may mean living in reduced circumstances with relatives for a period of time. In each case, the way out is really the ‘way through’ the trial, in which we learn of God’s faithful provision as He walks by our side through the entire ordeal. When the time of testing is over, our faith will be strengthened and we will be able to strengthen others by bearing strong testimony to the faithfulness of our God.

Recommended Resource: When God Doesn't Make Sense by James Dobson.

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Appraisal, and Other Hurdles

2009-07-19T19:24:00.000-04:00

In my last post, I mentioned that we would be considering our home mortgage through a different lender because the first lender we spoke to had sprung additional costs and restrictions on us nearly 45 days into the process. Well, there is news.

First, after speaking with the second lender on the phone, explaining the situation (including the fact that our bankruptcy would mature to two years on August 4), and providing the necessary information for the credit reports to be run, I heard nothing back from the lender. I made several attempts to call this lender (and because my goal here is to help others going through bankruptcy, I'll share with you here that this secondary lender was Fifth Third Bank), with no response. Finally, I called a toll free home mortgage hotline they list on their website and learned that 5/3 Bank uses only an automated underwriting system, which would automatically reject our application if we apply before the bankruptcy is two years old. Which put that idea on the back burner for another few weeks.

Second, the lender we've been working with contacted me about having an appraiser come out to the house to assess it's value, and he was willing to do so without having yet received the application fee, so I agreed. The appraiser came out on Friday morning and was here for less than half an hour. He took some pictures -- inside and out -- and asked some questions, then left. There were two things he was asked to determine, and I got the news early Friday afternoon.

The value of the home was appraised at $6000 less than the agreed upon sale price in our purchase contract.
The fair market rent of the house was assessed at $100 per month less than we have been paying for the past nineteen months.

An FHA loan, which is what we applied for, limits the loan amount to 96.5% of the lower of the appraisal value or the purchase price. This means we would have to come up with a significantly larger down payment than initially planned.

Because the underwriter will only accept that portion of the rent paid that is over the fair market rent to be applied toward the down payment, the high fair market rent effectively eliminates $3000 of our rent credit from being allowed toward the down payment -- further increasing the actual amount of money we would have to raise for the down payment.

I have contacted the seller to discuss adjusting the purchase price and other methods that the rent credit can be used toward down payment -- such as rebating the rent credit to us in cash so that we can apply it as a cash down payment rather than a rent credit. I will also be speaking with the lender this week about using my VA loan eligibility instead of FHA, which has fewer restrictions than the FHA loan.

Of course, the process just cannot be simple. It seems that we've done everything over the past twelve months to prove that we can afford the home (including paying a monthly rent ON TIME every month that is greater than our monthly mortgage payment would be), and new hurdles keep popping up in our path.

I hope to get something figured out in the coming week and get this process behind me and start our life as Homeowners. Stay tuned...

The Mortgage Application Process Resumes

2009-07-08T12:49:00.000-04:00

Nearly six months ago, I mentioned the possibility of getting a VA Loan. The VA has a provision where they can waiver the two-year post-bankruptcy waiting period under certain circumstances, and that's what I was hoping for. Unfortunately, that didn't happen.

Our bankruptcy will reach it's two year maturity date on August 4, less than one month away. I contacted the same lender I spoke with in January and we met on June 10 to start the process in preparation of the maturity date. Having completed the entire loan application, the Loan Officer said he wouldn't collect the $325 application fee until the underwriter had indicated an approval.

I must say, I have been less than satisfied with this particular Loan Officer. It took nearly a month for me to receive any word through him from the underwriter, and at that time, the response wasn't exactly what I had been hoping for. The underwriter had a couple of concerns.

The $5000 rent credit we're receiving from the seller of the home cannot exceed the difference between what we paid and what the fair market rent value for the home is. In other words, the home has to be appraised in order to determine the fair market rent value before we can proceed. By my calculations, the fair market rent value cannot exceed $920 per month for the underwriter to accept our $5000 rent credit toward the down payment. Of course, the requirement to appraise the home has changed the Loan Officer's flexibility about the application fee. He said he would need to collect the application fee in order to send out the Appraiser.
The underwriter was concerned that we have not established several new lines of credit since the bankruptcy. The one credit card account I have opened is apparently not enough for him to be satisfied that we are now credit-worthy. The Loan Officer asked me to email him an explanation for why we haven't opened additional lines of credit. As if going through the bankruptcy in the first place isn't enough reason not to open several new lines of credit.
In addition to the above, the last time I spoke with the Loan Officer to lock in our mortgage rate at 5.25%, he mentioned (for the first time) that there would be an additional fee of $325 required to get the rate because of our current credit score. No mention of that fee before.

My concern is that this lender had shown now sense of urgency about our loan, has sprung undisclosed fees upon us, and that the underwriter isn't happy with our existing open lines of credit and isn't certain he can accept the rent credit as a down payment.

What makes this funny is that I have not yet emailed the Loan Officer with the explanation he requested, and I have not given him the application fee, yet I have heard from the Appraiser twice trying to schedule a time when he can come to the house to do the appraisal. I am putting him off until I decide how to proceed.

Needless to say, I have contacted a new lender and begun the process anew, assured (so far) that we should be able to close in approximately thirty days. We'll see how that goes, and how the entire situation pans out.

The lesson learned in this is that it isn't always best to go with your first lender choice. It really does pay to shop around to different lenders, as they all set their own mortgage rates, their own fees, their own guidelines for things like rent credit, and some are more aggressive in obtaining approval than others.

Stay tuned for updates soon.

FHA Loan = NO. VA Loan? Just Maybe...

2009-01-18T09:53:00.001-05:00

The latest word from our mortgage lender is that the underwriter will not approve our FHA loan under two years post-bankruptcy. Apparently, the rule requiring the borrower to be two years past bankruptcy to qualify for an FHA loan is insurmountable.

Having served eight years in the Army, I also qualify for a VA loan. I did a little research into the requirements for a VA loan, and found the following:

	Inquiry
	If I filed for bankruptcy, do I qualify for a VA home loan?

	Answer
	The fact you have been adjudicated bankrupt does not in itself disqualify you for a VA home loan. The following rules apply: * If the bankruptcy was discharged more than 2 years ago, it may be disregarded * If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that you are a satisfactory credit risk unless both of the following requirements are met: 1. you have reestablished satisfactory credit, and 2. the bankruptcy was caused by circumstances beyond your control (such as unemployment, medical bills, etc.) * If the bankruptcy was discharged within the past 12 months, it will not generally be possible to determine that you are a satisfactory credit risk.

It appears that the VA loan requirements have a specific provision that allows borrowers who are over one year but under two years post-bankruptcy to still qualify for a loan under certain circumstances. In my case, our credit score is actually back over 700, which should qualify for "satisfactory," and the two biggest contributing factors to the financial difficulties that led to our bankruptcy were unemployment and medical bills caused by the birth of my son (and, subsequently, my daughter as we were still trying to dig our way out).

I have applied for my VA certificate of eligibility and hope to pursue some other lenders on the possibility of obtaining a VA loan.

Check back for details...

The Home Loan Process Continues

2009-01-08T21:57:00.000-05:00

I just got word today from our loan officer that the FHA loan is a no-go right now. The underwriter was unwilling to approve the loan less than two years outside of bankruptcy. We still have the VA loan option to pursue. I've emailed my loan officer to get his opinion about whether it's worth pursuing.

Stay tuned for updates....

Mortgage Application Process

2008-12-18T22:53:00.002-05:00

I spent two hours yesterday with the Vice President of Sales at a local bank branch, putting together a loan application to finalize the purchase option on our home. Doing so on an FHA loan will require obtaining a waiver for the two year waiting period after bankruptcy. Not impossible, but not a simple task, either. Should we fail to obtain the waiver, we still have the VA loan option to fall back on.

The loan application process seemed quite tedious, but I found that the only document I needed was a copy of last years W2 form, which was easily obtained from my employer. You should be prepared to provide the following forms when you attempt to obtain a mortgage for your first home after bankruptcy:

Thirty days worth of pay stubs
Two years worth of tax returns
Two years worth of W2 forms
Current lease information
Prior lease information (if less than two years in current home)
Two months worth of statements for all bank accounts
Your entire bankruptcy packet, including discharge order
Actual copies of canceled checks to verify timely rent payment

In our case, I also had to prepare a letter explaining the contributing factors to the financial situation that led to bankruptcy that I feel justify a waiver of the two year waiting period. That letter follows:

In July 2003, just prior to my one year anniversary of employment with [name and occupation omitted], I was released from my position. The company had been fervently pursuing other companies to acquire them, and [company name omitted] was in talks with the [company name omitted] Board of Directors about a deal.

As the newest [occupation omitted] in the District, I was downsized in order to make room for a more senior [occupation omitted] whose location would be closed shortly after the merger. After my discharge from the company, day-to-day operations of my location were taken over by a [occupation omitted] with the assistance of the Assistant Managers.

Shortly after my release from the company, when the merger was finalized, [name of company omitted] sold off their [type of business omitted] business and renamed the company to [name of company omitted]. They then began to close several locations across the country that they felt were underperforming. While my location was not closed, another location in the area was closed and the tenured [name of occupation omitted] of that location was assigned to my location.

While there is no supporting documentation, it is clear that as the junior Manager I was released to allow for the retention of a tenured Manager whose location was targeted for closure.

At the time of my discharge from [name of company omitted], my wife was seven months pregnant with our first child. Though I diligently pursued other employment, even accepting an hourly position for a short while during my search, the decrease in income combined with the medical expenses of the pregnancy and child birth created a situation that proved to be insurmountable.

We attempted for the next three years to make ends meet and tried to work with creditors to resolve our outstanding debts. Many of our creditors demanded no less than payments of more than one month's salary in order to make arrangements on the remaining balance – payments that we were unable to make in lump sums.

As we continued to struggle with resolving our debts, my wife became pregnant with our second child – a daughter born in 2006 – and the added medical expenses further complicated the situation for us. When it became apparent to us that the only way we would ever be able to provide adequately for our family was to get a fresh start, we made the difficult decision of bankruptcy. Since the discharge of our bankruptcy, we have remained debt-free with two exceptions: my wife's student loan which has been paid on time for the past eighteen months and a small credit card account we opened on the advice of a lender who said it would help us to rebuild our credit and to better qualify for a home loan when the time arrived.

Over the past twelve months, we have been paying $1200 per month in rent on a lease to purchase option for the home that we are now attempting to obtain a mortgage for. Our rent payments have been made on time or early every month, we have insured the home with a renter's policy through State Farm Insurance, and have maintained on-time payment history on all of our bills and utilities.

We are now in the wait period while an underwriter reviews our loan application to make a determination on whether to approve our loan. The process, of course, required obtaining a new credit report, and I'm happy to report that in the sixteen months since our bankruptcy was discharged, my credit score has jumped 170 points to over 700. Not quite perfect yet, but much better than it was two years ago when we were deeply in debt with seemingly no way out.

Stay tuned for more updates on the latest in our saga toward home ownership.

FHA Loan Waiver Provision

2008-12-16T22:25:00.002-05:00

It has been one year (almost) since we moved into our new home -- and almost eighteen months since our bankruptcy was discharged. We moved into our new home on a lease to buy option, which would allow us to build up rent credit toward our down payment while waiting for the FHA mandated two year waiting period to execute and FHA loan.

I have now learned that there is a provision in FHA guidelines that might allow us to take advantage of the FHA loan before we reach the two year post-discharge point. FHA guidelines allow for certain hardships that contributed to the financial situation that resulted in bankruptcy to be given a waiver and receive an FHA loan after just one year post-discharge.

I will be meeting with a lender tomorrow to see how this will work out. Stay tuned...

Home Purchase Agreement Matures

2008-12-05T23:45:00.002-05:00

Almost exactly one year ago, I spoke about our home purchase agreement. That agreement is now in the maturation stage, and we'll begin the process of transacting the actual purchase of our home.

Stay tuned for updates on the entire process, which should be quite interesting with in the current economic state of our country.

Subscribe for updates.

One Year and Counting

2008-08-06T09:27:00.005-04:00

Where have I been over the past six months? Wow, has it really been that long since my last post? Yes, I guess it has. It has blown by quite quickly.

Life on the post-bankruptcy front has been going along well. We are still essentially debt-free. We have just one credit card, which we use occasionally and pay off every month (which, of course, is the only way that a credit card should be used). Our cars are both paid for (we have resisted the wishes to have new cars because our desire to have no car payment is stronger), and our only real debt is our home loan. Life is good.

Since filing for bankruptcy, we have moved into our new home and even begun tithing to our church. Our new house payment is more than twice what we were paying for rent before we moved. But getting our debt relieved and moving closer to work has so greatly reduced my commuting expenses (the price of gasoline being so high) that we have been able to add tithing to our monthly budget and barely notice the impact (financially, that is). Of course, I believe that tithing has also brought God's blessings upon us and made us better stewards of the money we have left.

We have had money in our savings account for the past six months, and haven't been living from paycheck to paycheck as we did so frequently pre-bankruptcy. Having opted out of pre-screened credit card offers, we have eliminated the potential credit trap that so many newly debt-free people find themselves in. We simply don't receive the offers, so we don't have to resist the temptation to respond to them.

We just hit the one-year anniversary of our discharge date two days ago, and it is a wonderful feeling to still be so fully in control of our finances. It is truly a liberating feeling.

That is not to say that there won't still be an occasional challenge to your debt-free status so long after discharge. Just two weeks ago we received a mailing from a creditor demanding payment of a debt that was discharged as part of our filing. The nicest part of it is, a simple phone call to notify them that the debt was discharged was all it took to end the notices.

The birthday season for our family is now fully in swing, with Christmas following closely behind it. This can be a very tempting time to resort to credit cards and other offers to purchase gifts now and pay for them later. I have just one word of advice that has become my mantra in the world of credit:

DON'T!

For those who you still struggling with the decision to file for bankruptcy, it has not been a bad experience at all. You have to first understand that the option of bankruptcy is there because creditors tend to take advantage of consumers, and we need to have an alternative to being buried in debt. The reason for making the bankruptcy laws so much more prohibitive was to prevent abuse by repeat filers, not to prevent legitimate first time filings. It is not really a difficult process at all, and the past year has been nothing but a positive experience.

I am no financial expert. I am just one man who has been there, but I am more than willing to share my experience with you and to answer any questions that you might have. Just leave your questions in the comments, and I will answer them in the comments.

Credit Offer Opt Out

2008-02-13T22:49:00.003-05:00

One quick note worth mentioning. You may notice after your bankruptcy has been discharged that you will once again start receiving "pre-approved" credit offers, and similar solicitations. You receive these because the big three credit bureaus actually sell your information to companies looking to mail out credit offers. And each and every one of these companies can cause an inquiry to appear on your credit report, which does not look good to actual credit providers that you might be trying to business with.

There is a solution. Simply go to www.OptOutPrescreen.com and you can ask to be removed from such offers. While it may take several months for the offers to trickle away, you can up out online for up to five years, and you can opt out permanently by mail. I highly recommend that you put a stop to these credit solicitations before your bankruptcy has been discharged. Check it out today!

By the way, there is no cost involved, and I receive nothing for recommending them here, other than the satisfaction of knowing that I might be helping someone else who has been in a similar financial situation to the one I'm emerging from.

Thoughts From The New Home

2008-02-08T17:24:00.002-05:00

It has been two months since my last update. Things in the bankruptcy arena tend to slow down a bit aftrer discharge. We're in our new home now, and have been for about a month and a half. Details are much as I explained them in December. We're currently renting the home, with a purchase agreement that will go into effect within the first twelve months. The rental arrangement is much as if we already are the home owners.

Getting out of the lease for our old home was only a minor issue. We had lived there for approximately five years, and were on a month-to-month lease at the time, so our only obligation was a thirty day notice (with rent) before vacating the home. We did that, and the landlord actually complained that we weren't getting out a few days earlier so she could re-rent the home at the beginning of the month (our original projected vacate date was January 4).

What was most surprising of all was her reaction to the fact that we were moving out in the winter. Her comment was something to the effect of, "I always treated you guys right, except for that one time when I tried to sell the house. I can't believe you would do this to me, moving out in winter. You try to do somebody right and this is the thanks you get." Talk about being furious!

It turned out that we were able to get into the new home on December 28, so I took twelve days of vacation and we began moving. It felt like a much longer process than it actually was, but we finally got everything moved and dropped off the keys to the old place on New Years Day.

HAPPY NEW YEAR!!!

And so it has been. We have loved the time in our new home, and my wife is already making color choices for paint in every room. She has gone nuts trying to pick out her window treatments and wanting to change out light fixtures here and there. And she wants to buy a new black refrigerator to match the appliances in our new home.

So what has happened on the credit front? Well, I have been attacking the credit repair process. I have looked into the possibility of credit repair companies, but have rejected those. They seem to be nothing but a costly way for a lazy person to have someone else do what he can do easily enough himself.

By simply logging on to view your credit report online, you can submit errors on your report for investigation, and you can do so with all three major credit bureaus from one site. THIS IS THE ONLY SITE AUTHORIZED UNDER THE LAW THAT ALLOWS YOU TO VIEW YOUR CREDIT REPORT ANNUALLY FOR FREE. ACCEPT NO IMITATIONS. Others will look like this site, but will trick you into signing up for some kind of credit protection scheme that you don't need in the first place. It's just another way for services like these to tack more debt onto you. Don't do it.

I have filed for investigations on nearly every item on my credit report with all three agencies. Those investigations take approximately 30 days to complete. At that time, they provide you with an updated copy of your report and give you the opportunity to file for additional investigations, if needed. You can pay more to actually receive your credit score if you like -- that part isn't free -- but if you simply address the issues that need correction, the score will improve itself.

Also, I opened a secured credit card. This is a credit card that is guaranteed to the lender by a savings account that you open with them or a partner bank for an amount equal to the credit limit on the card they issue. Many banks offer secured cards. You may want to check out one or more of the following:

I cannot specifically endorse one bank over another, and naturally you must research which choice is right for you. The above banks are all reputable banks that offer secured credit cards. You can expect to pay some sort of fee, whether they call it an application fee, or an annual fee, or some other name of their choosing, but if you shop around you can find a very reasonable fee to open the account (mine was less than $40). They will make you feel like they are "approving" your credit, but for most of these institutions, all the approval needed is an associated savings account that guarantees they aren't taking any risk.

The above mentioned banks will report your payment performance to all three of the major credit bureaus. This is the most critical part of any secured credit card. The only way to rebuild your credit is to use it. Do not waste your time with someone who will not report your payment performance -- good or bad -- to the three bureaus.

Another important note! It is not necessary to carry a balance on a card to improve your credit. When you receive your secured card, you should do four things:

Sign the back of the card immediately
Call to activate the card
Use the card to make one small purchase or utility payment that you can immediately pay off
Put the card away where using it will be very inconvenient

My wife and I use our secured card to make one payment every month, whether it be for a utility or for gasoline or some similar expense. We then immediately log onto the issuing bank's website and make full payment in the form of electronic check from our checking account. Don't ever wait to receive a statement before paying your bill. By the time you've received your statement, you have already incurred finance charges and interest. The only way to avoid such charges is to keep your card balance at zero every month when the bill is cut.

Rebuilding your credit is easy, if you have the drive to do so and take a little time to do the research.

And remember, you must always be wary of those past creditors from your pre-discharge days. Some of the less reputable ones will still pursue and try to scare you into making payment. If you enter into any agreement to repay any debts you incurred before your bankruptcy was discharged, those agreements are legally binding and those debts are once again valid. After paying so much money to get your debts discharged in the first place, don't let anyone trick you into agreeing to accept those debts as valid again.

We received in the mail today a statement from someone claiming to have purchased a debt we owed to Capitol One prior to filing for bankruptcy. That debt was discharged in bankruptcy in August of last year. This will happen. When it does, don't worry. You have the full power and authority of the United States Court System standing behind you. If you included the debt in your bankruptcy filing and your bankruptcy has been discharged properly, you no longer have any obligation to repay this debt.

I placed a simple phone call to the company that sent the letter. I was very polite to them, and when they asked if I would like to take advantage of their settlement offer, I replied, "No, I'm calling to inform you that this account was discharged in bankruptcy six months ago." You should be prepared with the case number, which district the bankruptcy was discharged in, whether it was an individual or joint filing, when it was discharged, and the name and phone number of the attorney who represented you. After providing this information, if the creditor contacts you again, they are breaking the law and can be held responsible for paying punitive damages.

I guess that's about all for this month's update. I'll try to do these on at least a monthly basis. If you have any questions, please feel free to post them in the comments section (please, no personal information about yourself), and check back for more information.

Our Home Purchase Arrangement

2007-12-08T22:56:00.001-05:00

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

2007-12-01T22:05:00.001-05:00

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

2007-11-27T14:18:00.001-05:00

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!

2007-09-07T14:13:00.001-04:00

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

2007-08-15T14:54:00.001-04:00

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

2007-08-07T21:12:00.001-04:00

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

2007-08-06T22:51:00.001-04:00

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

2007-08-02T21:29:00.001-04:00

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

2007-06-29T08:04:00.001-04:00

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.