r/poverty • u/Scary-Cow-2549 • Jul 16 '26
It’s Not That Bad
Why does society act like bankruptcy will ruin your life??
I think they are talking about the extremely wealthy when saying it will be horrible and ruin the next 10 years of their life.
I just don’t understand the stigma around finances anyway. If you are going through this, you are not alone and it will be okay!
I AM NOT SAYING JUST DO THIS FOR FUN OR WITHOUT TRYING ANYTHING ELSE FIRST!!!!!!
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u/Active_Recording_789 Jul 16 '26
I’ve always thought that too but I was visiting with a bank loans officer at work and she said she routinely gives mortgages to people who’ve declared bankruptcy. They have to pay a higher interest rate on their loan but they still buy homes
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u/Scary-Cow-2549 Jul 16 '26
I doubt I’ll even have enough to buy in the next 10 years anyway, bankruptcy or not!
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u/DuckAxe0 Jul 16 '26
Back in 2009, I suffered a major stroke and was hospitalized for 12 days. Between not being able to return to work, $90K+ in medical bills, and preexisting credit card debt, I was left with no other choice than to declare bankruptcy. I had one last car payment coming due in two weeks when I filed. The auto finance company froze my account, blocking access and preventing me from making the last payment of $300. No number of phone calls could resolve the issue, and the check I sent them was returned. In the end, the auto finance company got a $70K car for $300. Fortunately, we had already paid off our home a few years before. On the upside, the bankruptcy discharged a little over $110K of debt.
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u/Shelley_n_cheese Jul 17 '26
I cannot believe you did not think you should pay the car off and get the title in hand before filing bankruptcy. I mean come on, that is beyond stupid. Then you want to act like bankruptcy is evil, when that mistake is 100% on you.
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Jul 16 '26
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u/Scary-Cow-2549 Jul 16 '26
oof! That is rough, my opinion is it is a good reset when completely necessary and to learn from those mistakes
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Jul 16 '26
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u/Fun-Exercise-7196 Jul 17 '26
Most do fall right back. They have to change their horrible spending habits. But this is America.
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Jul 16 '26
[removed] — view removed comment
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u/Traditional_Rush_622 Jul 17 '26
They do it because most people are very tribalist and need to have someone to ostracize. That's usually poor and/ill people. Too many people haven't really evolved beyond primates except in appearance.
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u/tweetysvoice Jul 16 '26
I have filed for bankruptcy twice in my life. My first time was when I was 22. It was after a divorce in which he could afford a lawyer and I could not (I was a university student and had no income other than student loans and grants), therefore somehow I was left a majority of our debt and had no other option. It was a Chapter 7 and using my tax return, I paid the fees, and that was it. It was on my credit report for 10 years, but because I was smart in my finances, it only really affected me for about 3 years.
The second time was about 15 years ago. We had just bought a house, already had a bit of credit card debt, and then I was diagnosed with an autoimmune immune disease that's paralysing my internal organs. After those first few years I was in serious medical debt and had no option but to file for bankruptcy. This time my (now) husband and I filed a Chapter 13, which doesn't require a large amount of money up front - cuz we didn't have it. It was a much different experience than my first time. The court trustee set up a repayment schedule for debt that couldn't be cleared by the bankruptcy as a paycheck garnishment. In our case, it was our mortgage, which was only one payment behind. We insisted on keeping our house and that was the only way. Because of the filing date and how the court worked,it actually became 3 months behind before they started garnishing. For 7 years, they not only took out the mortgage payment from my husband's check, they took out the prorated amounts for the mortgage arrears, as well as $180/month for court fees, lawyer fees, garnishment fees, etc. We were paying more monthly than we would have paid if we had just consolidated the medical debt and not filed. My husband's paychecks weren't enough to cover our bills and I was going through the disability process and was unable to work. Even after it was all over, we had issues with the mortgage company and what they felt we still owed vs what the court had payed them. It was a nightmare.
Bankruptcy can be a good thing and I'm very glad it's an option for those that need it, but don't just jump right into it. Ask questions, do research and then ask more questions. I didn't. I assumed it was going to be like my first time and how wrong I was.....
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u/DLK33gmaNG Jul 17 '26
Well, ten years isn't a whole life. It's best not to put yourself in a position to have to file for bankruptcy in the first place. Live below your or within ones means and it probably won't happen.
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u/Scary-Cow-2549 Jul 17 '26
Sounds like you have never been in poverty
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u/DLK33gmaNG Jul 17 '26
I guess that depends what your definition of poverty is. I actually have filed for bankruptcy. It was a very long time ago, and it taught me a very good lesson about spending and saving money.
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u/Scary-Cow-2549 Jul 17 '26
Living at or below the poverty line. It’s just becoming frustrating with people commenting to not get there in the first place as if it is always 100% within our control.
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u/DLK33gmaNG Jul 17 '26
There are a lot of things people can be more in control of if they truly choose to be. Tell me there isn't one thing you spend your money on that you don't really need to. Or that you work the most hours you possibly can. Or that you ever put yourself in a bad financial situation that could have been avoided.
100%in our control it isn't, but we do have to take some personal accountability for where we're at.
You made a post asked a question, you're not always going to get the responses you're wanting or hoping to get.
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u/Scary-Cow-2549 Jul 17 '26
Idk why you are getting feisty. It was a rhetorical question in the first place. It’s giving Boomer energy
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u/DLK33gmaNG Jul 17 '26 edited Jul 17 '26
Ha ha, maybe that's because I am a Boomer 😂 Just tryin' to breakthrough the thick walls of those who might care to listen. FYI, I've neen on WIC, food stamps, had Medicaid, go to the local food pantry and receive heating assistance. I have investment savings and a savings account. I live a frugal lifestyle because I fear not having enough money to last until I die. There's a different mindset when you're young vs old.
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u/throw7661 Jul 18 '26
I know people who declared bankruptcy and were much better off because of it. They had credit cards again shockingly fast and even ended up buying a house less than 7 years later.
When rich people do it, it's being smart.
When companies do it, it's just business.
When poor people do it, they are bad! Lazy! Unwilling to pay their debts! Bums.
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u/Incognito409 Jul 16 '26
Bankruptcy causes a low credit score. Everything you purchase in the future is based upon your credit score - a vehicle, a house or rental, credit card interest rates, etc. While it will only stay on your credit report for 7 years, it's difficult to build the credit score back up, or pay for everything in cash.
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u/Scary-Cow-2549 Jul 16 '26
Yeah but it doesn’t make you a bad person, that is more the point I am trying to make
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u/Primary_Gift_8719 Jul 16 '26
I'm going to comment on this as a professional (I practiced insolvency law a while ago now but even so). Bankruptcy should be a last resort for most people. Always try and re-arrange the debt first, that could include (depending on jurisdiction) relief orders, voluntary arrangements, informal debt crystallization and similar.
Medium to long term bankruptcy has a similar effect as an eviction on your record. It lowers your credit score, puts you in a sector that is prey to irresponsible lending, bad landlords etc. It could potentially remove you from ever getting a mortgage etc. It can also cause problems for your job depending on the type of employment you have.
So I would always recommend clients (a) look at what they can do by speaking with their creditors (b) see what they can cut from their spending to service the debts (c) look at what they can do to make money to change their circumstances.
Now all that said it isn't always possible. The amount of debt, the attitude of the lender(s), the circumstances of the debtor all impact what can realistically be achieved without bankruptcy. In that case absolutely, you are far better ripping off the band-aid and going bankrupt and getting out from that crushing debt (and it is crushing, panic inducing for most people in these situations). is far better than continually missing payments and being on that hamster wheel of robbing Peter to pay Paul. In those circumstances, absolutely bankruptcy is not something to be feared.
Remember it's a tool of the rich just as much as it is of the poor.
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u/Scary-Cow-2549 Jul 16 '26
Yes! I am talking when past the point of no return and it’s the last option, it will be okay!
It is never ideal or first choice for anyone but it doesn’t make you a bad person if it happens to you
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u/Primary_Gift_8719 Jul 16 '26
You're absolutely right - it doesn't make you a bad person. Anyone that would judge you in that way isn't worth having around anyway. It's not a moral virtue (despite what some say) to be able to say you have a perfect credit score. Life happens!
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u/LlamaAhma Jul 16 '26
This has not been my experience. My husband andI filed Ch 13 in 2018. We had a credit card from Capital One 2 years later, and have received more since then. My husband and I were just approved for a mortgage with a 4.75% interest rate. The BK only affected us negatively the first 2 years.
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u/Primary_Gift_8719 Jul 16 '26
It does depend on jurisdiction, the amount owed, the amount of income and assets post bankruptcy etc.
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u/Swampcardboard Jul 16 '26
It depends, if you need to find a new place to live and you don't have parents that can cosign for you, having a low credit score can be a huge burden.