How to Bankrupt yourself

A road to Bankruptcy-"Lansing Michigan"

My previous post talked about our 25K(36K total unsecured debt) in credit card debt along with secured personal loans and how two people could be so stupid to get themselves in so much credit card debt. In this post I am going to do my best to describe how easy it is to all of a suddenly find your self and family consumed by debt especially if you live in Michigan and are filing Bankruptcy in Michigan.

First, I want to acknowledge the most responsible individual under the right circumstances can find themselves in debt to their eyeballs( medical, being sued, loss of job. Bankruptcy can extend from bad to unlucky investments, negligence, job loss, divorce. When my fathers second wife filed for divorce in Lansing Michigan it cost him 30K, that in its self would send most people into bankruptcy. However, since he’s lived in Michigan and has been alive he has never claimed bankruptcy. A stigma has been attached because of prior abuses. So, people consider people "filing for bankruptcy stems from irresponsible spending.

My story is mixed with negligence, responsibility and minor irresponsibility. Additionally, the savviest entrepreneurs have found themselves in the position where they had to claim bankruptcy. As an individual and a person not running a multi billion dollar company it only makes since we can find ourselves in the same position filing for bankruptcy. I just read in the paper another company in Lansing, Michigan filing Chapter 7 bankruptcy because things are so difficult.


Young Families

If you are married and are just starting out trying to build a family and you have a kid(s) then you know what the New Year brings and you look forward to it every year.

This assumes you are not bringing in over 100k year. Some of the best documents to receive at the start of the new year is your W2’s. If you’re laughing at this statement; you are one of my target audiences.

Most people whom are well off have their taxes done and they go through great pains to make sure they don’t have to pay taxes at the end of the year. If you’re married and have kids and are scrapping by you try to file your taxes as quickly as possible. Why? Most of people in the U.S. making low wages will likely receive a sizable tax return from government. Lansing Michigan is no exception. Granted this is if you’re like me and only have selected 1 or 2 for withholding on your W4 forms. I withhold 0. The money typically returned from our government can range from $2,000.00- anywhere up to $5,000.00. This is the money the government took from you. This is why financial gurus tell you to claim all your exemptions on your W2. If you follow their advice You will receive more in your paycheck and have less returned to you on April 15th.

I am not the best saver (right now) so; I chose the option of getting the big check at the end of the year. So, the government acts as your mandatory savings account. Another downside, is the government doesn’t pay interest for your tax money that it holds for you. So, you potentially loose out on $40.00 or $50.00 a month (assuming you saved 5k and invested and receive a 10% return on your investment). When you are young, just starting out or restarting your life you are just trying to survive much less worry about where and how you plan to invest. Although you don't get the interest made on the money I highly doubt it will throw you into bankruptcy.

Preemptive to bankruptcy in Lansing Michigan.

My wife had no credit to speak of prior to us actually meeting and dating. She paid everything with cash. I had shaky credit, mostly due to late payments while in the Service. During my enlistment the Army was changing over payrolls from the Army to the Air forces pay system (AAFES). This was a problem because I went crazy being young and getting all kinds of disposable income. However, the change in the military payroll system would prevent me from receiving regular direct deposits. I would go without a paycheck for two months and then take a "draw" to get back all my money the service owed me. This went on for about a year and pissed creditors off because I would be late. I finally got it fixed after calling the III Corp commander and FT Hood CSM ( command sergeant major) and telling them I was putting together all my issues and sending them to Senator Levin in Michigan ( in other words I was going to start a congressional investigation). Interesting enough, after almost a year of issues I had a full bird Colonel from finance kissing a privates (soldier) butt and assuring me the next pay cycle all my problems would be taken care of. Needless to say this is what started my first credit issue.

I eventually paid everything off and had a FICA Score of 750 (credit worthiness number). Prior to me and my wife getting married she bought a SUV co-signed by her mother. She had now built up decent credit. I then purchased a house and ring to propose to my wife. We got a really good deal on the house and the purchase had equity in it. However, one of the problems is the house did not have a stove, fridge, washer and dryer. However, I have good credit and my wife is building up her credit. I suppose we could get some credit cards and “PAY THEM off with our TAX return” I was making only 13-14/hr I couldn’t see any other way to get these products we desired or expected to have during these modern times.

The first Lesson and the beginning of a decline of financial stability My prelude to Chapter 7 and Bankruptcy in Lansing.

The following takes place over the span of about 5-6 years.

I applied for a Lowes Card. - approved bought A washer, Dryer and Stove on credit. You would think that is where the problem started. No—the following year we used our Tax return and paid the credit card off. Unfortunately we had a junk fridge we bought for $50.00. The fridge was on the fritz and was leaking water everywhere. No problem I have a Lowes credit card recently paid off free and clear. I put it on the card.

Oh yeah, I did forget to mention earlier I bought a sectional (couch) with no payments for 18 months and no finance charges if you paid it off before the 18 months. It now looks like my money from our tax return was not going to be enough to pay both off. Yikes, I have credit card debt. No it did not put me into bankruptcy..However, it's the start of the snowball effect

The moral or lesson here, all my credit card debt stems from something of a similar circumstance. Here’s the best, a couple years ago while struggling financially I purchase fuel oil ($800-$900). Would you know it, the furnace broke and the part that broke was supposed to have a lifetime warranty (heat exchange) except they don’t make the part for that particular furnace anymore. Here’s another problem. We of course bought the fuel oil on credit (you have to keep your family warm). We are now faced with about $900 of fuel oil with no furnace.

Fuel oils stinks, my intention was to always replace it with a propane furnace. I did, after borrowing money from my father. A humbling experience since I have rarely ever asked my father for money. Being 33 years old and asking daddy for money to fix my problem (Pride issue).Of course, we replaced the furnace. I went to pay dad back ( tax money) and he told us to keep the money. Great.... I can pay thousand dollar medical bill I have from being the hospital. Additionally, with changing furnaces from fuel oil to propane, I have to pay to fill the new propane tank with fuel. Cha Ching $1,200 Of course, I had to put it on credit (remember keep your family warm). No problem I’ll pay it off with our tax money.

Oh yeah, the transmission decides to go in my 2000 SUV the only working vehicle we have. Most credit card debt was earned like this. Of course, I didn’t include buying new vehicles (beaters such as $500 & $1,000 cars) which would break down after awhile another great way to piss money away. My next post will detail every thing I think of that has to do with irresponsible spending and how filing for Chapter 7 in the Lansing courts is going to teach me to save my money.