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Find out why Bankruptcy is a 5 ½ inch game 

Five and one-half inches is the distance between the ears.  In other words, bankruptcy is an attitude.  A good bankruptcy attitude goes something like this:  “I made a mistake accepting all of the quick and easy credit offers which put me at the mercy of the aggressive creditors.  I let myself fall victim to their high interest rates, late charges, and over limit fees. I need a fresh start so I can start over without debt and be the wiser for it.”  The wrong and unhelpful attitude is feeling guilty about not affording to pay the debt and how bankruptcy would “affect” me in the future. The credit industry wants the public to worry about credit and credit scores.  It’s an important part of their marketing plan.  The more the public’s mind is on these topics, the more likely they are to borrow and increase profits. Don’t buy into it!

If you are like everyone else, you probably fought tooth and nail to pay off your credit cards and personal loans.  You struggled to make your monthly payments even though you knew that most of the payments are applied to interest and other charges with very little being applied towards the principal debt itself.  Believe it or not, it takes almost 20 years to pay off a credit card with minimum payments.  And, it is never paid off should the card be used during that time which it surely will be.  If you had a pension or a house with equity, you probably borrowed from one or both to “consolidate” the debt, which as you know, doesn’t work.  You might even have gone to a “credit counselor” which you also now know doesn’t work (after paying $600 per month for 9 months for example).  You tried everything.  But why?

I personally think the reason for avoiding a helpful bankruptcy and going into a “consolidation” idea is fear of losing “good credit” and “credit score.  In the back of the public’s mind is the burning question of “how am I going to get a car or mortgage loan in the future. Wouldn’t a bankruptcy be a problem?”  The fact is, bankruptcy is not a problem but a help.  Someone who started over with a bankruptcy has no debt, same income, and cannot file Chapter 7 again for 8 years and can afford a car or mortgage loan.  But do you really want a car loan, or a credit card?  The answer is no!  Keep the car you have and avoid credit card and debt in the future.  Believe me, you can get all the debt, credit cards and car loans after bankruptcy – if you are foolish enough to go for it and get back into interest slavery.  Car loan companies will lend anyone a car loan, even a ham sandwich, usually at ridiculously high interest rates.  If you need a car, be creative and find a used reliable one from a neighbor, co-worker, friend, family member or the like.  Car dealers are really in the financing business so stay away!

As for getting a mortgage in the future, our clients have no problem getting one within two years after filing bankruptcy.  Of course the usual qualifications must be met such as a steady job and the like.  Keep good records of timely payments for your rent, utilities (phone, cable, electric, gas), insurances and other living expenses.  Also, critically important is having a meaningful downpayment, which helps qualify you for the mortgage and at the same time lowers the payment because less is borrowed.  And, a downpayment avoids the fatal interest only second mortgage, which is commonly known as the “80-20.”  Unhelpful creative mortgage financing was invented to satisfy the instant gratification needs of homebuyers who did not have the patience to put together a meaningful downpayment.  Unfortunately sub-prime lenders along with aggressive mortgage brokers were just too happy to process these mortgages.  Also, unfortunately, they are just not affordable when interest adjusts in two years, and the second mortgage payments skyrocket up when principal starts to be paid.  The bottom line is for you to break off your love affair with credit and start enjoying life again.

© Thomas J. Subranni, 2007

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Contact the experienced and caring New Jersey Bankruptcy lawyers at Subranni Ostrove & Zauber for free, confidential information. See if you qualify and if bankruptcy is right for you!