This afternoon, after several years of dealing with credit card games, gimmicks, and greed, my wife and I finally filed for Bankruptcy. In a different era, this would have been a reason for shame; but in today’s world, my Bankruptcy is a source of pride.
I’ve been watching and feeling the Occupy protests nationwide. Despite media attempts to characterize the movement as unfocused, I know exactly what the focus is. For the past several years, I have lived the complaints you see on placards from Zucotti Park to Portland. The banking industry has broken their moral contract with the People via several different avenues. Today I acknowledged that breach of contract by making it clear that I no longer have a moral obligation to them.
The Banks’ games to keep me in debt have failed. I filed for Bankruptcy today with a clean conscience and sound mind. My wife and I have called this “Filing for Freedom”, using the option our forefathers created to help keep the People suffering from Banks’ usury rule out of debtors’ prison. In 17th century England, the Banks’ tactics would have worked. I am thankful that I live in a country that realized the oppressive power of money and debt, at least it did when the original Bankruptcy laws were written.
The full story?
I will be the first to admit that my wife and I were not exactly sin-free in accruing debt. Between moving across state and building our household in our new location in 2006, revolving debt was easily available and seemed like a great vehicle to set ourselves up in our new house. Banks advertised very low interest rates; many of which were advertised as “locked in”.
Despite being admittedly a little irresponsible in accruing debt, we were very diligent about calculating our monthly obligations and knowing what we could handle. Our mistake was one assumption: That the Banks would be honest and keep the terms we agreed to when we acquired the debt.
As the economy began to turn downhill, we started to receive letters from Banks, one by one, with taglines like “We are changing the terms of our agreement”. Anyone who has credit cards is familiar with these notices. The Banks were changing the terms by increasing our interest rate, monthly payments, or both. Points programs and other incentives advertised when we first opened our accounts were being abolished. Our credit limits were being decreased to amounts close to our balance. As a result, our credit score decreased and justified further increases in our interest rates and monthly payments.
We still did a great job managing our debt. Our average interest rate increased from 4.5% to 13% from 2007 to 2009. Nonetheless, we managed to make our minimum payments although they were significantly higher than they were when we decided to incur the debt. This was not easy, as we are a middle class family and were living paycheck to paycheck. In two years, we paid down $20,000 of our debt, but then things started to change.
In 2009, my wife got laid off from her position at a school. Thankfully we live in Oregon, which has a fairly generous unemployment system, but the unemployment payments were significantly less than her salary. The breathing room between our monthly income and our monthly obligations was being chipped away. Although we made a decision in early 2009 to live on a cash-based system, our monthly credit card payments continued to rise due to higher interest rates and higher monthly payment calculations.
Then something great happened last November. We found out we were pregnant with our first son. We knew we would be taking on a greater financial burden, but being in our mid-30s we were eager to start a family. We continued to pay off our debt, but we knew my wife would not be returning to work anytime soon. Between her difficulty finding a new job in the first place, and our desire to have a stay at home mom for our child, we made the family decision to give up on my wife’s job search.
Early this year, as my wife’s pregnancy progressed well, our credit did not. We continued to make all of our monthly payments on time, but Banks continued to attempt raising our interest rates and monthly payments. We were doing everything right that we possibly could. Yet our credit score continued to fall, which contributed to more adverse actions from Banks such as interest rate hikes and lower credit limits, which further lowered our credit score.
Then, in March, the last straw came. We were proud of paying off a $1,000 chunk of debt from one of our credit cards. The Bank thanked us for this by lowering our credit limit by $1,000. Our credit score fell, despite the fact we paid off $1,000. This was the moment we realized just how high the cards were stacked against us. We were tired of being taken advantage of, no matter how much good faith we had in paying down our debt.
Our best friends had been hinting that their experience with their own Bankruptcy was liberating and carried no shame. With the last straw broken, we decided to look at this option. This was the best decision we had made in a long time. We found an amazing Bankruptcy lawyer who felt the pain of his clients and took pride in helping them get out of the situations they and their banks had gotten them into. In April, we finally said enough was enough and stopped paying our credit card bills. In 6 years of living together, this the best decision my wife and I have ever made.
Our lawyer guided us through the process, and I will be honest and say it was a lot of work. But the work was nothing compared to the stress we had been carrying for years as debtors. After months of consultation, we finally “Filed for Freedom” this afternoon. Months of collection calls, deceiving letters, and sketchy collection practices will end within the next couple weeks. We are liberated and can now focus on what really matters…our family.
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As for the political side of all of this, I strongly feel the only way the Banks are going to listen to the people if we hit them where it hurts. Only one thing motivates these beasts, and I think we all know what it is: profit. The problem is not necessarily capitalism, though…it’s the people who play in the system. Sadly the human race has a tendency to crave and accumulate power through whatever means. In a socialist system, this is done through consolidating power in a small and threatening group. In a capitalist system, it is done through accumulating money and using the money to create power. Corruption is the problem. How to fix it is beyond me, but I see some great experiments happening down on Wall Street and at Occupy protests around the world. Keep up the good fight, folks…the human race needs you.
Sat Oct 22, 2011 at 12:30 PM PT: Wow...I woke up today to find this on the rec list!! Thank you everyone for your well wishes and your advice. My biggest hope with this diary is that my experience can inspire someone else in our situation to find the same freedom we did yesterday. Thanks again!!