I was in grad school in the humanities for 8 years (2 for a Master's degree and 6 for a PhD program) with the eventual plan of being a university professor. During this time I was very stupid and lived outside my means and racked up about 20k in credit card debt under the working assumption that I would soon get a nice job and I'd be able to pay it off really fast.
Needless to say I became disillusioned with academia and dropped out of my PhD program because I was absolutely miserable with my job market prospects and my career.
On the plus side I ended up with a Master's degree in philosophy with no student loans whatsoever.
But suddenly I found myself working at Starbucks with 20k in credit card debt. That was more than I was making annually at Starbucks. It's a great company but they don't pay much (benefits are AWESOME though - 401k w/ 5% match, stock grants, awesome health insurance, free food/coffee, discounts).
So I went and saw a bankruptcy attorney and he told me that I was a good candidate for a chapter 7.
I own very little property. My car is paid off and 12 years old, prob not even worth 2k. Other than that I don't really own anything of high value. Like I said, no student loans. So my lawyer assured me that with the means test I should likely be able to keep everything and get the entire 20k wiped clean for a fresh start.
The downside? It will be harder to go into debt. But he said after two years the average credit score is pretty solid and financial institutions typically have no problem giving lines of credit to chap 7. First of all, it's because I won't be able to file bankruptcy for another ten years. Second, it's because with zero debt my debt-to-income ratio is very good.
A couple months later I filed for bankruptcy. Just this week I had the "meeting of creditors". Now, everything should be discharged in February. My lawyer assures me that there is a basically zero chance of the creditors objecting and that the discharge should go through no problems.
After I filed, I actually did three things: got a second part-time job delivering pizzas, got YNAB, and discovered Dave Ramsey. I'm averaging about $15-20/hr delivering pizza and this has essentially doubled my income.
With extremely low cost of living in St Louis, and zero debt, I am making about 35-38k a year gross. Obviously this is not a long-term career plan. My current goal is to save up the cash to pay for a 2-year associates at the local community college in nursing and become a RN which starts at 50-60k.
Right now I am in the process of building up my 3-6 month emergency fund. But being debt free and actually watching my net worth grow is an amazing feeling. I finally feel in control of my financial future.
Through the bankruptcy I had to basically stop using credit cards and live on debit alone. This has taught me to be extremely frugal and live well below my means. Right now I am debating whether I even want to get a credit card after bankruptcy or go the Dave Ramsey method of Cash is King. Given my past history of using credit irresponsibly I am worried it would be too tempting. But I might just get a secured card and use it to buy groceries or something and pay it off every month.
But anyway, that's my story with Chapter 7. Was it my only solution out? No. But as far as I can tell it had great upsides for me with very little downside. It's not for everyone obviously. But there is SO much stigma and myths surrounding bankrupcy that I wanted to share what I considered my "success story" with chapter 7.
Submitted December 15, 2017 at 05:16AM by rachelsmantra http://ift.tt/2AvxQUR
