Post-bankruptcy experience – did habits change?

[Anonymous]

Looking for insight from anyone who has had a close friend or family member go through bankruptcy. My in-laws are in the process of filing Chapter 7 after years of poor decision making and living beyond their means. DH has tried to talk with them on various occasions to encourage them to change their ways but every time we visit, we are shocked by the new car, tv, tablet, etc that they’ve bought despite having tens of thousands of credit card debt and a 1st and 2nd mortgage for a house that’s underwater. Example of their thinking: “We wanted to get the new tv and wii for the basement so the grandkids would have something to do while they’re here.” Our visit was for 3 days and I doubt the IL’s will venture down to the basement the other 362 days of the year.

Anyway, my question about post-bankruptcy experience came up because when DH found out about the filing, he was so happy and had an attitude that this would solve all their problems and life would be hunky dory. While I agree it’s a necessary step to take and will help tremendously, I know that old habits die hard. I realize they’ll have limited (or no?) access to credit for several years and will have to take a financial education course, but I worry that the same problems will present themselves in other ways, or in a few years when they can get a credit card, they’ll immediately max it out, only make minimum payments and here we go again. MIL has already said that they’ll need to find at least a 2-3br rental (house will go back to the bank) because they have too much furniture for one.

So if you’ve been through bankruptcy or know someone who has, did that person really step it up and learn to live within their means? Maybe they were forced to since they had to pay cash for everything? Did they find other ways to get back into financial trouble - maybe payday loans or some similar way to get credit not through an official bank? IL’s both work and while they don’t make a ton of money, they should be able to pay rent on a modest apartment, afford groceries, gas, the basics. But they’ve never been the type to settle for just the basics.

[Anonymous]

My MIL went through bankruptcy/foreclosure last year. The only thing that's changed is that she doesn't have access to a credit card to run up new debt. She's still making poor financial choices and spending every penny she can get, so when she hits a financial bump (like her car needing to be repaired) she has no resources to cover it and ends up "borrowing" money from us. From our perspective, things have gotten worse rather than better.

[Anonymous]

They will be flooded with credit offers once the bankruptcy clears.

http://www.creditcards.com/credit-card-news/credit-card-offers-after-bankruptcy.php

[Anonymous]

No, unfortunately, habits did not change. After about a year, got a bunch of credit card offers. Slowly trying to pay off cards, and close the ones that have annual fees and keep 2 with largest limits. At the time, bk was the only way I could see myself recovvering, but 12 years later, bad financial management is still an issue. To make matters worse, I have more than tripled my income from those days, but still over my head in debt. I'm really pathetic!

[Anonymous]

We did we'll after ours until my husband got laid off and was out of work or working for way less than before.

We are rebuilding once again. We weren't wreck less before-we both had companies downsize and we were laid off at the same time. I also lost my dad that year and was very depressed.

[Anonymous]

Anonymous wrote:No, unfortunately, habits did not change. After about a year, got a bunch of credit card offers. Slowly trying to pay off cards, and close the ones that have annual fees and keep 2 with largest limits. At the time, bk was the only way I could see myself recovvering, but 12 years later, bad financial management is still an issue. To make matters worse, I have more than tripled my income from those days, but still over my head in debt. I'm really pathetic!

PP! bad financial management is often a sign of low self esteem or sometimes a result of trauma. In the former case, you are not valuing yourself enough to manage your finances in a healthy way, In the latter case, if you grew up with chaos and crisis in the family, you're used to feeling under siege. if the external circumstances of your life have changed, you may unconsciously create circumstances that recreate the feelings you experienced as a child,

Please consider seeking help. You are not pathetic. I suspect that you have some emotional scars that arE keeping you stuck in unhealthy patterns.

[Anonymous]

OP here. Thanks for sharing your experiences, and to those of you still working through it, keep pressing forward and I hope things improve for you. I'm sure there are some positive stories out there, but I suspected I'd see some responses similar to what was posted here. I think the underlying issue for DH is that we'll eventually have to step in and support his parents so he's looking for any hope that their situation will improve. I have more of a "let's manage expectations" personality and was concerned that his excitement might be unfounded. Only time will tell.

[Anonymous]

Anonymous wrote:OP here. Thanks for sharing your experiences, and to those of you still working through it, keep pressing forward and I hope things improve for you. I'm sure there are some positive stories out there, but I suspected I'd see some responses similar to what was posted here. I think the underlying issue for DH is that we'll eventually have to step in and support his parents so he's looking for any hope that their situation will improve. I have more of a "let's manage expectations" personality and was concerned that his excitement might be unfounded. Only time will tell.

As long as his parents know DH will bail them out, they'll continue with their reckless spending. Past behavior predicts future behavior. They need more than a financial management class, they need counseling. Lots of it.

[Anonymous]

I am not sure, but I thought with the Bush admin., a new law went into effect that required people who filed Chapter 7 to also attend a money managing course or something like that.

Anyway, I don't know if this is hype or what, but in my area on the radio...Whenever I hear a bankruptcy commercial, they all make it sound like as soon as you erase your debt away (like some dirty oil stain), you will be able to get loans again since people know you won't be able to file bankruptcy for a certain amount of years again.

Go figure.

[Anonymous]

Anonymous wrote:I am not sure, but I thought with the Bush admin., a new law went into effect that required people who filed Chapter 7 to also attend a money managing course or something like that.

Anyway, I don't know if this is hype or what, but in my area on the radio...Whenever I hear a bankruptcy commercial, they all make it sound like as soon as you erase your debt away (like some dirty oil stain), you will be able to get loans again since people know you won't be able to file bankruptcy for a certain amount of years again.

Go figure.

That is correct, you have to do that type of course which is done online.

[Anonymous]

OP - You need to be having an on-going conversation with your husband about finances and about what the two of you together will be saying to his parents. Unless you have a lot of extra income, it would not be surprising for the ILs to expect DH to help them out in future years financially. You also need to keep up the antenna if DH starts to exhibit any signs of acting like his parents. It is important that you and DH together handle financial affairs and decisions for the family.

[Anonymous]

Anonymous wrote:I am not sure, but I thought with the Bush admin., a new law went into effect that required people who filed Chapter 7 to also attend a money managing course or something like that.

Anyway, I don't know if this is hype or what, but in my area on the radio...Whenever I hear a bankruptcy commercial, they all make it sound like as soon as you erase your debt away (like some dirty oil stain), you will be able to get loans again since people know you won't be able to file bankruptcy for a certain amount of years again.

Go figure.

With Ch13 that is like a repayment plan and you have to attend a debt management class.
Ch7 is much harder to file now and this is for people who are unemployed or have debts that are so enormous there is no way they can get out (think enormous medical bills).

Once the debt is discharged, the credit offers do start to roll in.