We declared bankruptcy. Phew - scary thing to say, and scary thing to go through. I'm sure that you can all appreciate that this was not an easy decision to make, so let me enlighten you as to the reasons we ultimately decided it was necessary.
Back in mid-December I lost my job. It was a surprise, but not really. I had spoken with my boss back in November about the future of my position, knowing that our current project would be wrapping up and my job would become obsolete. She assured me that they had a plan in place and wanted to keep me on. Unfortunately, the plan did not come to fruition and the work dried up. I have still been told that they want to find a position for me, but when and if that will happen remains to be seen. Being that I am a mother of three small children, finding a position that earns $1500-$3000 per month after expenses is not particularly easy. So now we're down to one income.
Then we had the issue of our 2010 taxes which we still had not filed. We knew that we would owe money, but as to the amount I was scared to even hazard a guess. We finally quit procrastinating, and when the number came in, I just about fell over. We owed $1600 in corporate taxes, Nick owed $5500, and I owed $2000. I stayed up until the next day crunching numbers trying to figure out how we could even afford a monthly payment plan for the taxes, and I just couldn't. We had reached the tipping point where we could no longer sustain our monthly payments, let alone make any headway on paying down our debt.
Nick and I both just looked at each other with heavy sighs, threw up our hands, and said, "Something's gotta give!" We called the bankruptcy trustee the next day. At this point we hadn't solidified in our minds this was the route we were going to take, but we wanted to know our options.
As it turned out there was another factor we hadn't considered: Our House. Our home has been an ongoing saga and a constant reminder of the bad decision we made when we bought it. We are upside down on our mortgage with no hope of selling, and the thought of trying to wait out the market was a constant black cloud over our heads. Our trustee told us we could let the house go with the bankruptcy. We hadn't even considered that before, but as soon as he said that, we knew what we had to do.
Now I know that not everyone agrees with bankruptcy, and I know that not everyone agrees with foreclosure. I will admit to being one of those people that perhaps judged these options too harshly. I want to remind you though that these options exist for a reason. This is giving us the opportunity to have a future... without the bankruptcy, I don't know how long we would be treading water, trying desperately to get ahead but not really getting anywhere.
I want to make it clear that this does not mean we get to just "walk away" from our debt. We will be making payments for the next 21-24 months. We are "allowed" to make $4059 per month, after that amount everything else we make we will owe 50% towards the bankruptcy (our current monthly payment is $645). This also does not absolve the debt we owe to my mother in law, to the tune of $45,000, it also does not absolve our corporate taxes, or my own personal taxes (Nick is declaring bankruptcy, I am not). So we are far from out of the woods. But there is hope, and there is a light at the end of the tunnel, and for that I am thankful.
I am thankful for finally having some breathing room. I am thankful for the opportunity to show that our past mistakes do not reflect who we are TODAY. There are drastic changes ahead for us... I hope that you'll stick with me along our path to financial redemption.
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