My Bankruptcy Experience

In 1996 I declared bankruptcy.  That was the culmination of a series of bad financial moves.  I was only about $20,000 in debt which doesn’t seem like that much to me now but at the time seemed like an insurmountable amount.  My credit card companies kept hitting me with late fees,over the limit fees and punitive interest rates so even though I was making monthly payments my debt just kept getting larger.  I don’t blame the credit card companies for my getting into debt but they did help push me into bankruptcy.  I tried to work with them but they wouldn’t cut me any slack.  With the credit card companies offering no flexibility on the repayment terms the situation seemed hopeless. I gave up and declared bankruptcy.

The bankruptcy law has changed since I declared bankruptcy so someone filing today would probably have a different experience.  The lawyer fees and court fees together were about $500.  I’m sure it would cost more now but it was a lot to me at the time and it was a struggle to come up with the amount.  The bankruptcy hearing itself was pretty simple.  None of my creditors showed up.  The judge asked me if I had any assets. I replied that I did not and that was pretty much the extent of it.

The aftermath wasn’t too bad either.  I’m sure my credit was very poor after that but I wasn’t applying for any loans so it didn’t really matter.  I was able to rent an apartment while the bankruptcy was pending.  The apartment management didn’t really care about the bankruptcy.  I was told as long as my rental history was ok then there wouldn’t be a problem.  My rental history was fine because I always considered my rent payments more important than credit card payments.

My credit today is great.  My credit score is 731 and has been in the high 600s/low 700s for several years.  I receive credit offers all the time but right now I have all the credit cards I need. Even before the bankruptcy came off my credit record my credit was better than average.  I didn’t do anything specifically to try to improve my credit but just paying my bills on time seemed to do the trick.

After the bankruptcy I got a secured credit card which I was eventually able to convert to an unsecured card.  I received a lot of offers for secured credit cards after I went bankrupt and most of them offered terrible terms.  If you’re going to get a secured credit card make sure you look carefully at all of the potential fees.  I’m not sure if having the secured card helped rebuild my credit sooner or not.  Not having a credit card at all is also a reasonable strategy to consider if you’ve just declared bankruptcy.

All in all my bankruptcy experience wasn’t that bad. I wouldn’t do it again in the same circumstances though. Hopefully I’ve learned enough since then I won’t be faced with that situation ever again.

September Credit Score

My credit score for this month went up to 731 from 725 last month.  My credit score has been going up steadily the past few months after it went down earlier this year when I used a balance transfer from a credit card to pay down one of my student loans.  I don’t plan on using my credit any time soon but having a high credit score can also affect how much you pay for insurance and other things  and if I do decide to apply for more credit having a high credit score should make it cheaper .  I get my credit score for free with my credit card from WaMu.

August Credit Score

My credit score for August is 725 up from 716 the month before. It finally seems to be heading the right direction after declining this spring and early summer. It is still a long way from the high of 787 earlier this year but it is good enough for my present needs. I get my credit scores for free from my Wamu credit card which is all I use the card for any more.

July Credit Score

A quick note to those who have just discovered my blog this week.  I normally post daily M-F but I’m on a trip this week so I’m not on my normal posting schedule.

My credit score for July went up to 716 from 710 last month.  It is a long way from the high of 781 I hit earlier this year but at least it has stopped declining.  I’m not acquiring any new debt other than my student loans so my credit score should remain stable or go up next month.

June Credit Score

My credit score for June is 710 down from 719 the month before.  This is still a decent credit score but way down from the high of 781 earlier this year. I’m assuming this drop is due to the balance transfer I used to pay down one of my student loans. Since that was a couple of months ago my score should start stabilizing.

I get my credit score for free from my WaMu credit card which is about all that card is good for.  I’m not particularly worried about my score since I don’t plan on borrowing any money other than student loans.  Your credit score can affect other things though, such as your insurance rates, so it is good to maintain a high credit score even if you don’t plan to borrow money.

More Love for the Hoopty

If you’re a regular reader of this blog than you know that I have a hoopty(beat up old car) and think it is one of the better forms of frugal transportation. Trent at The Simple Dollar recently linked to a couple of posts that show why a hoopty is a great,frugal transportation choice.

Do Cars Stop Depreciating After 200K Miles? from Pro Bargain Hunter. My car has over 200,000 miles and I’m not at all worried about it depreciating. I plan to get just salvage value from it when I’m done with it, anything more will just be gravy. I bought my car for $1750 so even a 100% depreciation wouldn’t be that much.

Hybrid vs. Gasoline Vehicle Comparison – Are Hybrids Worth it? from Million Dollar Journey. After reading this post Trent came to the conclusion that the most efficient car in terms of carbon emission and fuel efficiency isn’t a hybrid. It’s driving an old Toyota or Honda into the ground. If you’re concerned about being green consider that by buying an older car you’re keeping it out of the junkyard and helping delay the carbon emissions that would result from manufacturing a new vehicle.

If going without a vehicle isn’t a viable option for you than I would suggest that buying a hoopty is your next best option.