Bankruptcy and Divorce

•February 28, 2015 • Leave a Comment

In 2009, my parents separated, filed for bankruptcy and divorce.  These events have greatly shaped my adult life and years later, still cause a lot of anger and pain.  The path to these events were a long time coming, but they really took root in 2005.

At the time, Pete and I were in college in Boston.  My parents were still together and living at my childhood home.  We moved to this home in 1994 – for those of you counting at home, we had lived there for more than 10 years.  In the years leading up to 2005, mom has consistently voiced her displeasure with the house.

What was my mother displeased about?  Well – you have to understand mom.  She is a woman who constantly seeks change for the sake of change.  In some ways, I admire her.  She knows or appears to know what she wants and goes after it.  If she is dissatisfied, then she will seek a change.  However, sometimes, I think her need for change was borderline pathological.

For example, when I was a kid, on occasion, I would come home to find that mom re-arranged my room.  She explained that it was better this way even when I protested that I liked my room the way it was.  I know this sounds like small potatoes.  There are mothers and fathers that beat, neglect and generally abuse their children.  But as a kid, it still felt like a violation of my autonomy.

Eventually, she wore dad down and they decided to put the house up for sale.  It was on the market for a few months when a family with two adorable girls fell in love with our house and made an offer on the house.  My parents accepted the offer and continued their hunt for a house.  The buyers for our house also need to sell their home.   In a strange twist, the realtor suggested that my parents go to see the buyers’ house.  We looked at their house and my parents decided to make an offer.  We essentially exchanged houses!

Flash forward to the end of 2007.  As most of you know, the economy completely tanked.  I graduated college from college in December of 2007 without a job and horribly depressed.  I did what many of my generation had to do.  I moved back in with my parents.

In January of 2008, mom and dad confessed that they were exploring the possibility of filing for bankruptcy.  I knew that money was an issue, but I did not know that it was bankruptcy bad.

The point is – the purchase of the new house was a horrible financial mistake and was the point where my parents finances unraveled. Home prices were sky high as the houses sold near the height of the housing bubble.  I did some research.  My parents sold their home for $343,000.00.  They bought the new house for $353,000.00!  What were they thinking!?  In hindsight, I can’t wrap my head around this.  One of the reasons my parents wanted to move was because they wanted to DOWNSIZE!  Pete and I were in college, and at the time, neither of us were expecting that we would move back home. I also researched the bankruptcy records.  Their consumer debt (unsecured debt like credit cards) were over $100,000.00.

As the winter months came and went, the situation went from bad to worse.  Mom was in denial.  Despite their intention to file bankruptcy, she bought 3 iPods and a 32 inch LCD TV on credit.  The bankruptcy attorney also advised dad to buy a new car – because once they file, he might not be able to buy one for quite a few years.

In May of 2008, Pete graduated and moved home.  He was able to find a job, but he needed a car.  Mom and dad bullied him into taking a fairly bad car loan for a used car.  To this day, I’m still angry about that – but I selfishly already had a car and Pete needed one.  In another bad financial move, dad purchased a car for me in 2003 and I co-signed the loan.  I went along with it – what did I know?  I was 18 and excited to get a new car!  But then I went away to college and dad kept paying for it.  When 2008 rolled around, I had use of a car that we owned free and clear.  Pete was not so lucky.

It was around this time that my student loan deferments had run out and my parents were no longer going to assist me in paying my loans.  I was so angry.  My parents gave me vague promises in college that they would help out with my student loans.  I was in despair – I had a part time job, but I wasn’t making much money.  How would I ever afford payments of $400 to $500 a month?  How would I ever pay off $80,000?  My anger was explosive.  I threw my parents mistakes back in their faces and we constantly fought.

I also discovered more disturbing news.  Dad had taken out various credit cards in my name.  To my recollection, they were mostly gas credit cards.  Most of them only had limits of $1,000 or less.  However – the worst was the Macy’s card.  I had a store card with Macy’s.  I signed up to get a discount on a purchase and I paid it off.  No big deal.  In addition to the store credit card, there was a separate line of credit for purchases made outside of Macy’s.  Dad somehow applied for this outside credit or just started using the card without my permission.  He racked up $10,000 of debt.  To this day, I’ve never received an answer as to what he used this for. He also maxed out one of my personal credit cards with Capital One to $1,000.  I hadn’t used the card in years and again, I didn’t know he had access to it.  I felt my life spinning out of control.  I called up many of these credit card companies and cancelled the cards.  Dad was super pissed and angry with me, but I yelled right back.

Pete was not spared either.  He had one credit card.  I’m unsure if Dad maxed this out or not, but I do remember that Dad would often raid Pete’s bank account for money.  Again, I’m unsure how much money he stole from him.  It could be anywhere from a couple of thousand to 5 figures.

Near the end of the summer, my parents told Pete and I that they were planning to move out of the house because they could not afford it.  They started to look for apartments.  Pete was planning to move out and I was planning to stay with them because I did not believe I had the money to afford an apartment.  But, it became clear that that living with them would not be an option.  My parents found a house to rent and Pete and I moved in with a friend to his apartment in October of 2008.  The house went into foreclosure.

Times were rough.  I was making some money, but not nearly enough.  I was working two jobs that just barely covered my living expenses and the minimum payments on my credit cards.

A few days before Christmas in 2008, Pete dropped a bomb on me.  Mom told him that she was leaving dad on the first week of January.  I was disgusted that she told Pete and she asked him to tell me the same.  Pete and I had to go through Christmas and the next week like nothing was wrong because mom would not tell dad.  It was awful and it was the worst secret I’ve ever had to keep.  I’m unsure if Pete or I should have told him – I can see the argument going both ways.

Mom followed through on her plan.  She already secured a place of her own.  On D-Day, she drained some portion of the bank account, packed a suitcase and left.  Dad called me and was furious.  He demanded if I knew anything about this.  I lied.  Pete lied too.  A week or so after she left, she asked Pete and I to help her move stuff from their rented house to her new apartment.  The confrontation at their house is one of the worst hours of my life.  Dad could barely control himself.  He was yelling and swearing.  He broke some things.  He declared that mom was entitled to nothing.  In the end, mom took the items that she wanted anyway.

After the separation, the bankruptcy rolled along – very slowly.  Now that their finances were separate, they were able to convert their Chapter 13 bankruptcy (a formal repayment plan to creditors) to a Chapter 7 bankruptcy (complete liquidation – all debt is wiped clean.  They made these terrible financial mistakes and their slate was wiped clean.

Pete and I – not so lucky.  As much as I complain about my student loan debt, Pete’s was worse.  Mine reach a high of approximately $80,000.  Pete’s student loan debt was around $120,000!

In the years that followed, I was able to make a little more money.  I knocked out some of my own personal credit card debt, forced my parents to pay off that Macy’s card as penance and start attacking my student loans.

It’s now 2015.  Somedays, I feel like I’m over this, but other days, it still makes me so angry and depressed.  Pete and I have delayed starting a family.  We’re unable to buy homes. I don’t have the resources to go back to school to start a new career.  Pete works 60 hours a week and more to make his payments. Basically, we’re indentured servants until these loans are off our backs.

My relationship with both mom and dad have improved.  Mom chipped in to help out with some expenses from time to time.  Dad, not so much.  He’ll occasionally go overboard at Christmas and Birthdays to make up for the guilt he feels.

It’s hard not to blame them.  Ultimately, I’m responsible for my own life.

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Time Wasters

•September 12, 2012 • Leave a Comment

Why is that we feel need to waste time?

I keep pondering this question.  I catch myself many Saturdays sitting around my computer playing stupid Facebook games.  If I’m not wasting time on Facebook, I’m playing stupid games on my phone.  Most of the time, the games are not fun and they are simple point and click games. Don’t get me wrong, there are plenty of games that test knowledge or entertain similarly to a movie or book.  I’m talking about real “time wasters”.

I guess that I sometimes play these games to avoid other tasks.  The apartment needs to be cleaned.  The refrigerator is empty.  Day 56 of 90 of my half marathon training will not run itself.

What makes any of these activities more worthwhile than Facebook games?  I think I know why.  Almost every other activity is an act of self preservation or improvement.

I clean to keep the apartment sanitary.  Act of self preservation.

I go to the grocery store to ensure that there is food to eat in the house.  Act of self preservation.

I run.  Act of self improvement.

As I write this, I think have this figured out.  I think I feel guilty because I know there is so much more I want to accomplish.  I moved to Chicago 2 years ago, and it was the culmination of years of hard work.  It was the first time that I felt like I “made it”.  This accomplishment was enough to satisfy for me for a while, but I know that I have to keep building and growing.  It’s time to start thinking about what I want to achieve next.

I think I want to do the following in the next 5 years:

Run a triathlon

Earn promotion/change positions at current job or change jobs.

Marry girlfriend

Travel to Europe

Make more friends

 

I think these are the 5 things I want to check off of my to do list before the big one – start a family.

My Student Loan Story

•September 9, 2012 • Leave a Comment

All my life, my parents drilled into me that I had to do well in elementary school, so I could do well in high school, so I could do well in college, so I could get a good job. Naturally, going to college was the only option I saw ever saw for myself less I become a disappointment in my parents eyes. I took my parents advice.  I finished in the upper third of my high school class and scored high enough on my SATs to make me a great candidate for just about any non Ivy league school.

After touring many colleges, I fell in love with Northeastern University in Boston. I applied and I was accepted. They offered me a fairly sizable scholarship, and my parents told me that they would certainly help me pay back some of my student loans.

In that magical September of 2003, I went off to college.

Let’s flash forward to graduation.  It was the fall of 2007. I was ready to graduate and I had no idea what I wanted to do. My original plan was to go on to law school, but after bombing on the LSAT, I basically lost confidence in myself and decided not to apply for law school right away.  Instead I halfheartedly applied to various jobs that I never considered prior to my job search.  I could not get an interview any where. Without any prospects, I had to move home at the end of December in 2007.  I remember thinking, “moving home is only temporary.  I’m going to find a job and everything is going to be ok.”

I cannot remember exactly when I learned how much I had borrowed for school, but if I did not know at some point before the January of 2008, I certainly knew about it then.  All in all, it was $80,000.00+.   I experienced what many of you know as “sticker shock”.  I thought I borrowed a lot of money, but I had no idea it was that high!

Payments were soon scheduled to start at $300 to $400 a month. For someone who was making zero dollars, that was an unfathomable amount to be paying every month. I had also thought that my parents were in good shape financially and that they would be able to help me out. That expectation turned out to be wrong. They told me that they were planning to file for bankruptcy.

My job search continued. As we now know, the winter of 2008 was when the US economy took a massive nosedive. I went on a few interviews every now and then, but I could not get a job. My mom suggested that I enroll in a paralegal certificate program at Boston University. The class was not that great, but I guess it helped, because between the certificate program and with a little help from a friend of my dad’s, I was able to get my first paralegal job. It started out at a whopping $10 an hour, and only 15 hours a week. I guess I had to start somewhere.

In the meantime, I started dealing with my student loans. I deferred most of my loans for as long as I could.  As I learned more about student loans, I made a couple of discoveries:

Realization 1: Deferring your loans does not stop interest from accruing on most loans. In fact, interest had been accruing on my loans all along! I thought that didn’t happen until after I graduated.

Realization 2: Any interest that accrues is then added to the principal balance. Then the loan starts growing off of this new amount. This is called interest capitalization, and I had no idea that was happening.

It was a struggle to make ends meet, even living at home. I still kept my eye out for other jobs, but I could not find a better opportunity.  Eventually, I started doing contract work with another lawyer friend of my dad’s, but that did not work out very well.  The pay and work were horrible.  After 6 months or so, I quit.  I was going to be fired anyway.

2008 marched on. My parents were still trying to file bankruptcy, but they could not meet the requirements to finalize it. Near the end of the year, my parents told my brother and I that they were walking away from the house and that we would have to find another place to live. I was working more hours at my job, but I was still barely making enough money to meet my current expenses.  My brother and I moved out of my parent’s house.

At one point in January of 2009, money was so tight that I was sure that I would not have enough money to buy food for the week.  With a little help from my family, I did not go hungry, but it’s so scary to live so close to the edge.  I know there are numerous people who deal with this kind of situation every day.

It was not until March of 2009 that my life took a turn for the better.  After I quit/was fired from the contract job, I started delivering pizza.  This turned out to be the best thing I ever did.  I made enough money to meet my bills.  I gained more experience at my paralegal job.  I soon moved on from that job and moved on to work at accounts payable job at the end of 2009.  This new accounts payable job was a temporary job, and I decided that it was time to make a big change.  When the job ended in April of 2010, my girlfriend and I decided to move to another city.

We visited our new city, and with a little help from my girlfriend’s dad, I lined up a job interview.

I got the job.  I moved away.

This was no magic bullet.  After 2 years since the move, I am finally making full payments on my student loans.  I feel very fortunate that with hard word, help from family and friends, that I was able to start digging myself out of this hole.  I’m on track to pay my loans off in approximately 10 years.

It is useless to ask if I regret my decision.  The past is the past, and I would not be who I was today if I did not make these choices.  There is a small part of me that wonders, “there has to be a better way.   Students need to understand the risk they are taking.”  I also think that the whole loan business needs a complete overhaul, but that is another post for another day.