Many of us carry the battle scars of a troubled financial past. I know I do. When I was 21 and in college, I was living in my own apartment and using student loans to pay my rent. Thus, I was living beyond my means, and, quite honestly, I wasn't living in the real world. During this time, I ran up a number of credit cards. I lacked the knowledge necessary to use credit responsibly.
I'm not sure how I, as a 21 year old with no job, thought I was going to make the payments on these cards. It's possible that I literally thought I would just default on the cards.
And default on the cards I did. Many nights during this troubled time were spent eating credit-card subsidized pizza in my apartment paid for with student loan refund money. I don't think I ever stopped to consider the impact that these decisions would make on my life later on.
When I was 22, I lost a close and valued friendship. I sank into a depression that lasted a few years. I mention this because the grief of losing the friendship was compounded by calls from the creditors who wanted their money. That's right. I was well into default. I had complete strangers calling me at home, calling me lazy, implying that I was a deadbeat. It was unpleasant. I felt indignant.
At the time, I didn't understand that collectors use unethical tactics, like threatening people with lawsuits, sheriffs and jail time, to get the money. Not all adhere to the rules. I think it's important that everyone be aware and informed about the FDCFA (Fair Debt Collection Practices Act). It has a number of rules, among which are that collectors are prohibited from contacting you between 8 p.m. and 8 a.m. They're also not permitted to call any third party to discuss your debt. Did I ever have collectors who violated those. One charming gentleman called my landlord during the day. I found out only when my landlord said, “A man called...” I was horrified.
My strategy at the time was to bury my head in the sand. I didn't want to acknowledge what I'd done to myself, to my finances. Heck, I barely understood what finances were. All I knew was that mean people were calling me and all of my credit cards were maxed out — mostly with fees and penalties.
My head remained firmly in the sand until 2010, when I realized that I would probably have to go bankrupt. Somehow, the actual act of filing bankruptcy was delayed another two years. I think I had tried to convince myself that I could just “wait out” the statute of limitations, and be handed a shiny new credit rating at the end of seven years. I was deluded. Additionally, I had been sued by one of my creditors. I had been going to court repeatedly since September 2009. Later on, I would realize that lawsuits from creditors have become increasingly common, as bankruptcies rise and the economy remains in a funk.
My bankruptcy was definitely the best, and really only, choice I could have made in my situation. I wouldn't recommend it for everyone. It wasn't as awful as experts sometimes say — most of my bad experiences happened because of the defaulted debt, not the bankruptcy — but it wasn't entirely pain free, either. If you haven't experienced a lawsuit, have less than $10,000 in debt, or have other options, I would recommend exhausting all possibilities before filing bankruptcy.
But for some, like me, it's the only solution for a financial fresh start.