paS2K

Nope....not us....but I got your attention

In about an hour Kathy and I are taking our ancient Odyssey and a borrowed full size van to a friend's house....helping to take years of accumulated JUNK and excess furniture to the township DUMP. Unfortunately, the clean out b/c Bruce is an unemployed architect and was underwater with 2 mortgages and a HELOC. They are declaring bankruptcy and moving to a small rented twin house.

These are folks in their 50s....not someone who over-bought a McMansion with a balloon mortgage that should never have been approved for them. They're very "giving" people (Sunday School teacher, etc) who just took on too much debt

I'll bet that a lot of folks...even in well-to-do neighborhoods....know someone who's in difficult financial straits.

gomarlins3

My mom has once and a couple of friends have over the past year or so. We thought about it years ago, but decided to move four states away instead. We made the better choice for MANY more reasons than avoiding bankruptcy.

valentine

Very sad for your friend. We do not incur big debt and try to keep spending low. I've noticed more and more folks are seeking bankruptcy protection and it saddens me. One never knows the twists and turns that could lead to such a thing and I cannot say it will never happen. Most of the people that I know who've filed had to do it because of a divorce.

Lainey

I know of two folks. Neither recent. One was young and in credit card hell.....common problem. The other was a couple who owned a small home improvement business. He bit off more than he could chew, and they lived slightly larger than the income. He was not well (life long diabetic) and when a heart attack at 35 required by pass surgery, that was the beginning of a big financial mess.

Folks in our age group often have difficulty finding employment in this recession. Even if you have saved, and have little debt, forced retirement due to a job loss, or an illness can really takes it's toll on the financial picture.

Kyras

My brother did but it was in about 2000. Mental health issues.

paS2K

Interesting...13 votes but only 3 "stories". Maybe more will come "out of the woodwork"

ralper

Over the years I've seen more than my share of bankrupcy, but mostly from small business. Oftentimes the worst thing that can happen to a small business is to have an unusually good season. Somehow hubris sets in, the company loses control over spending and forgets that things might not always be so good and over expands. In no time the cash flow can't keep up with the bills, and bankrupcy protection is necessary. Of course, there are many more reasons such as changing demand, competition and recession. Mismanagement is also a big cause.

From a personal bankrupcy point of view, the backrupcies that I've seen mostly came from divorces, unemployment and illness. I've seen some result from borrowing and too much debt, but for the most part, with the people that I work with, the debt was the result of borrowing caused by unemployment and illness.

DiamondDave2005

A friend on another forum has a son who is a bankruptcy lawyer, and he said at least a third of his clients are building contractors going out of business.

zdave87

Been there, done that, and had the t-shirt repo'd.

Lakersfan

I was actually at a reception this afternoon and my wife's friend's ex-husband was there. He came over to where I was sitting and proceeded to tell me his tale of woes over the past few years. He went BK personally and had +- $100K of unsecured CC debt erased. Also, he owed $350K on his 1st TD (mortgage) and asked for a loan modification on the interest rate only (not the principle). He claims $300K is now deferred and due and payable in 40 years (NO interest accrues for 40 years - balloon or refi the $300K at that time). The remaining $50K is now fully amortized over 40 yrs with a starting rate of 2% going up in increments to 5% max in 10 years with the $50K paid off in 40 years. So, his current P&I is +- $170 per MONTH. If he were to pay off the $50K early or sell the house, this would trigger the $300K being due and payable at that time. Therefore, there is NO incentive to pay off the $50K early. He would be better off renting the home for +- $2K per month!

Your tax $$ hard at work courtesy of the bailouts.

Also, with his credit totally shot, he was able to buy a slightly used car and finance 80% of it at 7.00%.

So, he gets to keep his house, has no CC debt, and is driving a virtually new car for almost nothing. It doesn't appear that his lifestyle has changed other than the fact that he now has substantial additional cash flow to pay cash for the kind of things that he went BK for.