Plain Vanilla Bankruptcy? Ours Was Rocky Road
My husband and I have always lived as if we were in a recession. Early in 2010 I lost my job, and by the end of the year it became clear we would lose our house to foreclosure.
My husband’s parents invited us to move into the second story of their farmhouse. It’s no South Fork or Tara, just a run-of-the-mill house on 15 acres of property. No one had used the second story of the house for over 30 years. In order to pay for moving expenses, renovate the upstairs into modest living quarters, and have living expenses until we found work, we reluctantly liquidated my pension.
Before moving I contacted several bankruptcy attorneys. The retainers ranged from $1,750 to $2,200. I eliminated the ones who I felt were condescending or hard sell, choosing the one who had the best customer demeanor and who communicated the nuances of bankruptcy. A “plain vanilla bankruptcy,” he said, would require an estimated $2,000 retainer.
“Ours is more like French vanilla,” I said.
A Rocky Road Bankruptcy
Our case was fairly straightforward. There were no investments or antiques or vacation property to complicate matters. But a financial decision from 2003 came back to bite us.
In 2003 my in-laws placed my husband’s name on the deed to their house, which they owned free and clear. Adding a child’s name is a common way for middle-class families to keep real estate from being seized should the homeowner enter a nursing home.
We considered filing bankruptcy as early as 2008, but realized my husband’s parents’ home would be at risk for seizure. By 2010, when my job was eliminated, we realized foreclosure on our house was imminent. I tried not to dwell on the fact my pension would be gone, instead trying to feel grateful that we had it in the first place, and had somewhere to go. And since the farmhouse was now our primary residence, we could file bankruptcy without jeopardizing my husband’s parents’ security.
After meeting with the attorney and paying the retainer, we completed mandatory credit counseling (a requirement of the 2005 bankruptcy reform) and filled out a 37-page bankruptcy questionnaire. It was a document dump that took weeks to complete, and we felt nothing but relief when we submitted the finished package.
Within a week, a paraprofessional told us the next step was to get a real estate appraisal on the farmhouse. This would determine whether the house would be protected from creditors, she said.
Maybe getting an appraisal is a standard procedure and there was no chance the farmhouse would be seized. But we didn’t want to take the chance. My husband’s parents knew we were struggling but didn’t realize the stake they held. We preferred to keep it that way.
To File or Not to File
Deciding whether or not to file meant choosing between a bad option and a really bad option. Not filing meant we would get back the rest of the $2,000 retainer, cash that would tide us over until my husband’s new job began. (I’ve been working, at a job that pays one-third of what I earned at my previous job.) On the downside, not filing meant we would have to deal with creditors on our own.
Filing bankruptcy meant we would pay the entire retainer, and possibly more if creditors contested our case. Not only that, filing bankruptcy would mean involving my husband’s parents and disrupting their sense of security.
We decided not to file.
I know people will say this predicament is no one’s fault but our own. That we’re leeches for being fifty-plus years old and living with parents. And that the decision to put my husband’s name on his parents’ farmhouse was wrong. But our crystal ball wasn’t working very well in 2003. And I’m sure that many other families are in the same situation, but are unwilling to talk about it because of shame.
I, however, am shameless. I’m willing to write about it in order to let people in the same situation know they’re not alone. But out of consideration for others involved in my particular situation, I’m keeping it anonymous.
The Case for a People’s Bailout
Nobody wants to finance someone else’s diamond jewelry or Disney World vacation. But for the time and money it would take to parse luxury debt from necessity debt, a people’s bailout would wipe the slate clean for everyone.
What would a People’s Bailout look like? And how can we get it to happen? That’s the subject of my next post.
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