Tell All Tuesday on Sunday-Bankrupt Street-How I Got There Part III

Here is the part III of how I became Bankrupt and it's not pretty!  In previous posts, you read about my personal history and my relationship with money.  In this post I'll elaborate a bit what led me to finally filing the Bankruptcy.

I previously posted about the Universal Default clause that oh so many credit card companies have as part of their Consumer agreement.  I can truthfully say, that the Universal Default is the most consumer unfriendly fiscal invention ever created.  

One of my fiscal issues was my slowly depleting savings account.  Part of the joy of home ownership is being responsible for the repairs and maintenance on the home itself.  I knew my house had some issues, but my home inspection did not turn up any major projects that needed doing.  Enter my insurance company.  First they wanted me to get a new roof.  Why? The roof I had was fine, about 12 years old and fine.  The insurance company said their inspection deemed the roof old and past it's shelf life.  Five quotes and four roofing contractors telling me the roof had at least another 5 years left in it,  I had the roof redone.  Two years later, the insurance company wanted me to paint my house.  Yes, I did have some peeling paint, but it was not that bad, in fact, I had put new siding on one part of the house and was slowly planning on working my way around the house, new siding and new windows.  Painting seemed to me to be a waste of someones time and my money, but the same deal, if I did not paint, I would be cancelled. So I got the house painted.  (and got a new insurance company after the fact too). All that came out of my small savings account and I did not replenish that savings account. 

Being underemployed played a big part in my fiscal downfall. I had a reduced salary and reduced benefits. I had to pick up part of the cost of my medical insurance, which later came back to bite me.  I also agreed to a new salary structure (and did not get it in writing-BIG MISTAKE) which eventually did not pan out.

As I stated earlier, I stopped using my credit cards.  I had 5 credit cards. Yup 5.  I was close to being maxed out on two, had plenty of credit on 2 of them and one was an AmEx. I would use the Am Ex because I had to pay it off each month.  I could not give up the plastic entirely, but I was managing. I still spent money, I just used my debit card. I was paying my bills and still "having a life". 

In 2005 I hit a streak of really bad luck and as I say, even with good research and carefully sought out advice, I started having huge money issues and the Universal Default started to rear it's ugly head. In no particular order the following things happened. My job, job description and pay scale changed, I tried to start a new part time business with someone, I made some bad investments with part of my retirement account, I started going through some relationship issues, and I just made some bad, bad decisions with my money. This is where I really wish I had found the world of Personal Finance and PF bloggers.  At this point, I may have been able to salvage myself.  May have been.

The Universal Default started to kick in a couple months after one of my car payments went missing in the mail. I got a late notice from the loan company, checked my bank account, saw the check never cleared and sent off a new check. No ding yet. A few months later I just totally forgot to pay my car loan. Nobodies fault but my own.  Paid the current and past due and had the 30 day late charge.  A few months later I open my credit credit card and was stunned to see the minimum amount due was like double what it had been the month before.  My first thought was 'Damm the payment did not make it", but I looked on the statement and yes, the payment had made it with room to spare, but my interest rate had been increased.  Up until this point I never had a late payment to my credit cards. I paid on line so that the payment hit the day before the due date or mailed it so that it arrived before the due date. I was not using my credit cards-How could this happen to me?  I called the company and the slightly apologetic lady told me that one reason my interest rate went up was because of my late payments.  To which I replied-"What late payments?" I'm looking at the past 18 months of statements and not one late payment.  

This is when she told me that the company could and did, exercise it's option to raise my interest rate because of my payment history with another lender.  Universal Default.  Guess what, I had no recourse to this Universal Default clause either.

To say that things snowballed is to put it mildly.  If you are reading this, then you have lived my story.  One credit card after another started increasing not only the interest rate, but one bank also upped the minimum due.  It was a double whammy.  Where I was making slow and steady progress in paying down the debt , I now could barely keep up with the payments.  Instead of seeing my amount owed decrease each month, it stayed pretty constant, only dropping literally a few dollars like 2 or 3.  Calls to have the percentage rate dropped fell on deaf ears, and one card holder also then decreased the credit limit as well.  They did this since I was not using the card (duh-I'm paying it off!) and my repayment history with other lenders was not good. I was denied even the chance of playing the balance transfer game. 

So here I am, with a non existent savings account, credit card payments that were manageable now through the roof, a change in my job pay scale (which in hindsight was STUPID, STUPID, STUPID), a several bad fiscal decisions, topped off by me having personal issues that just totally crapped out my year. I felt like someone had put a hex on me for 2005,  I really did.  

2006 did not start of much better, in fact, it got worse.  I was relying on promised bonuses to help with the credit card crunch I was in.  Because of the new job description and a change in the company (ie my boss did not want to pay out the new bonuses when he realized how much was going to employees and not him), our bonus structure got changed and guess what? I did not get the bonus I had been anticipating.  Talk about being screwed.... but let's face it, I did not plan well and relied far to much on that supposed bonus. 

In mid 2006 I switched jobs to a new company (the one I work for now), better pay, closer to home, but my credit situation was not improving. In fact, it was still spiraling out of control. I started missing payments on my credit cards, I spent money  I should have put towards my credit cards, I honored some personal obligations that cost me more money, I just made bad decisions.  To stop the hemorrhaging I took money out of my 401K, early withdrawal penalty be dammed.  It helped somewhat but did not stop the problem.  I still could not get out of my own way to improve my situation. No matter what I did, things just got worse. 

At this point, I had paid off my car loan, had put my student loan in deferment (again), and was trying to see if I could reverse the damage done.  Quite simply, I could not. I was paying more in debt repayments that I was taking in income.  My part time business partnership went no where and cost me money, I was having health issues that I had to cover payments out of pocket because of my high deductible plan (about $3,500 worth of bills, my deductible was $5,000). I had some minor car repairs to my old car, but it all added up.  

I started to do even more stupid things. I was ignoring the phone calls and letters from the credit card companies that may have been able to put me on a more reasonable repayment plan.  I did not seek out help. I just got totally overwhelmed.  One credit card company did "catch up" with me and I did set up a repayment plan, reduced interest rate, I got to pick the payment date, etc.  

What stuck out in my mind was the comment from the representative setting up the repayment schedule.  "Ms. B, you have been a customer of this bank for 10 years and never a late payment. In fact, up until this past year, you have been a great customer"  what happened?  All I could respond was that Life took a bad turn and I just never got back on the right street."    

After this conversation, I got up the belated courage to try and contact the other companies to see if I could work out a similar repayment plan.  No such luck.  I was a "day late and more than a dollar short". 

What eventually drove me to the Bankruptcy was being slapped with a judgement by one of the credit card companies. I was being taken to court for my credit card debt.  I was already napping on my couch when the Marshall came to my door to hand me the summons, but that put me to bed at 6:30 PM not to get out of bed until 8:00 AM the next day. I felt totally shattered that day, just shattered, run over and out of ideas as to what to do. 

I called my attorney to ask about what they hell I was supposed to do with this summons. He referred me to his partner who specialized in debt collection and bankruptcies and strongly suggested I make an appointment to see his Partner.   With great reluctance I made the appointment and brought all my documents as requested by his paralegal.  He reviewed my documents and said I was a candidate for Chapter 7 Bankruptcy. I asked why not Chapter 13?  In my mind, I had collected these debts and I should repay them. If my creditors did not accept my plan for repayment, they would accept the courts and I could repay my debts. 

My attorney said the success rate of C13's was far less than C7's. In fact, C13's were harder to get than C7's, or so said he. We talked about me and my situation.  He gave me a bunch of paperwork to read and told me to think about it over the weekend and to call back on Monday.

I took the paperwork home and did not look at it for two days.  I was in denial about the whole surreal process, I really was.  Bankruptcy was a dirty word.  Only slimy people filed bankruptcy, the negative connotations were all swirling around in my head. People are going to read about me in the paper!  Me Bankrupt? I could just not fathom it all.   I spent a lot of time that weekend feeling  terrible and detached from myself.   I reread all the papers given to me and I did some internet research.  I went to bed one night still unsure of what to do.

I woke up the next morning and my decision was made, I would start the Bankruptcy process.  I was feeling beat up and I was tired. I called the law office and made a follow up appointment to start the paperwork. As they say, the rest is history, I became Bankrupt Betty that day.

Part IV- I'm Bankrupt Now What and how I'm getting off of Bankruptcy Street.

At Times Like This I Love My E-Fund

The reduction in hours for my full time job means a reduction in my paycheck. Somewhere in the past couple weeks, I've had a mis communication with our payroll processor. Let me tell you I was UNHAPPY to open my pay stub this AM and see I got less than half of my usual pay. I was only paid for one week of work instead of two. SURPRISE SURPRISE-of the unhappy sort. I was expecting to get paid for the last two weeks in November on the check that was deposited to my account yesterday. I only got paid for one week. I was expecting almost twice as much money as I got. I was not expecting to be a week behind on pay. Not only did my hours get cut, but I got moved from salary to hourly (same rate, but I think that may have something to do with the mix up).

I'm not sure where the mix up is, or how it happened, but it did. I have money in my checking account, I have money in my E-fund that can be used in case of an emergency, I have money coming in next week for the yet another part time job, but boy, was I glad that I did not have any large bills to pay today. I have the checks written out, the bills stamped, but they are staying on my desk until I get this sorted. I would have been SOL as they say, if I posted them today. I wrote bills for exactly the missing amount I was expecting in my check.

I have a call and an e-mail into the person who processes our payroll. I need to figure out where and how we mis communicated. I know they won't cut me a check if it was an error, I'll have to wait until the next paydate, which is the 15th. This just adds to my work frustrations, it really does. Grr.

Just to Make Myself More Insane

I pulled the bill from the accountant for this years company taxes, the CPA charge $70/hr to input all the information from the "unbalanced" account into Quicken and to the Excel spreadsheet, total time spent doing this BEFORE they could work on the Income Taxes, 8.5 hours, or $637.50 of company dollars spent to do work that should have been done by someone else.

Why does this piss me off? Well, it's because someone did not do their job and complained about all the extra work this new to them task was taking. We are not talking rocket science or complex financial dealings, we are talking recording deposits, writing checks out, inputting some data into a spreadsheet and filing papers. There were no complex fiscal calculations that require great financial decisions, on the simplest terms, money in, same amount of money out, less a few expenses. Something that should take a couple hours a week if that. I know this former employee got decent compensation, she was good at most of her job, but the fact she complained how much time this additional task took when in fact it's not that much time at all irks me. I'm also irked because my boss never followed up with her, he trusted her to do her job, all facets of her job. To be honest, he does not follow up with me either on most projects, so I'm not complaining about unfair treatment. Had I been aware that the information was not being inputted into the databases, I may have found a way to correct that. But I did not and the past is the past, no use crying over spilled milk as they say.

The upside is my boss has realized that our next employee needs to be someone who can handle both the customers and the spreadsheets. I did tell him that I thought it was a waste of the accountants time and company dollars to input the data when we can do it in house. As long as we had the paper copy back ups for them to see (or the IRS), we should be ok. He agreed.

All right, I'll get off my soapbox. I just had to vent.

It's Been a Heck of A Couple Days

At my real, full time job, I wear many hats. I answer phones, work on projects, go shopping for office snacks, deal with clients, etc. It is the nature of my job. We have a couple bank accounts, I take care of the petty cash one. Quicken and I are best friends forever. My petty cash account has not been "off" or "wrong" or whatever since I arrived. In fact, our company accountant is very happy with the Quicken files. My boss is happy the accountant is happy.

I was given the task of doing almost 18 months of account reconciling on one of our other bank account, 18 months. It had been in the custody of my now long departed boss, one of her best work buddies took over her some of responsibilities and the account, she then left in February. My boss asked me to assume the duties of keeper of that checkbook a couple weeks ago, so I did.

Imagine my horror when I went to her files only to discover, opened, but unbalanced statements going back to December 2006. She kept a check register but never balanced the account. I think she did it all in her head. She never even wrote down a running balance in the check register. She had Quicken on her computer, she never inputted any information into it (and neither did my former immediate boss a supposed computer savvy person). She also did not enter any of the financials in the Excel spreadsheets that are set up either. I have no idea what information went to the accountant, probably all of it in a paper format. I remember we specifically bought Quicken to streamline our banking work and the transfer of information to our accountant. it was time for our small company to go beyond paper. I was hired because I can navigate around a spreadsheet (don't ask me to make a complicated one, but I can work with them.) My boss went through the roof when I told him that nothing was in the computer, nothing.

Since the accountant never raised a red flag, I can only guess they inputted all the information and did a reconciliation at tax time (costing the company $55/hour) when all they needed to do was download some files and see any back up they asked for. That account does not get used that often, so maybe it takes two hours a month to maintain, maybe? I know she got paid a lot less than $55/hour. I did find her lazy at times and would always complain that she had "so much work" (no more and at times a lot less than the rest of us). My company has used the same accounting firm for a number of years, sends it's financials out every few years to an independant auditor to make sure all is good (and our accountant encourages that, it's a double check thing) has been slow to computerize it's finances, but is slowly getting there as my boss realizes the savings by becoming automated. I know our accounting firm probably regrets the loss of income, but probably is not happy having to do all the company's accounting the old fashioned way, on paper.

It took me four days to input all the information, reconcile the accounts, find my errors (I would get tired and input numbers wrong) as I was doing my other work. I'm happy to say we are "off" by $15 and I found out where that error is. I'm really glad it was not $15,000. And I'm really glad I won't have to be on the computer as much. My eyes hurt. I've just sent the accountant an e-mail to expect our 1st and 2nd quarter bank reports no later than July 15th (earlier if I get all my bank information) and I've already told him I will have as much as I can on Quicken and in Excel for him. I'm going to pull the statement from the accountant on Monday and see just how much work we paid his office to do at $55/hr that could of, and should of been done in house.

Second Job Blues and First Job Worries~Sort Of

I've blogged before about my hunt for a second job (the good and the bad of it and my laziness with it). I do have an occasional part time position as a 'road groom" for a horse trainer. My first weekend out went well in early May, I did one day of home barn coverage and made enough money to cover my car payment in full for May. Which was my goal, cover the car payment. Real Estate has been dead dead dead.

I did get a message and an e-mail yesterday. I'm not going to be scheduled for any road groom work until the end of June. Grrrr I had hoped to work NEXT weekend-fairly local show, can sleep in my own bed, minimal travel since I'd drive my own car, etc. But for the reason it is a fairly local show, they don't need two road grooms, one will do it and as of now, there is no home barn coverage either. The person I was to originally replace has changed her mind and is staying on at the barn. She is very good at what she does, which is great for the facility and clients, not good for me. This means the chance for working part time at this barn on a regular basis has gone out the door. Ah well.

Plus my full time job is a little hectic at the moment. In the winter we lost a couple people to retirement and one person moved to another company. We have not replaced them. My boss originally wanted to wait for a good candidate, but has now decided NOT to replace them until the economy bounces back. My position is a mixed one, I do everything from answer the phone to work with clients, BUT I am worried. For the first time in months, I am worried. I think I'm OK for now, our business is slowly picking up, but there is always that nagging fear that the company may have to economize and my job could be something that is economized. My boss has approved some time off in July and is letting me take a day to go to an industry conference, so I take that as a good sign for now. I just wish I had more of an emergency fund (damn the wind ripping my door off it's hinges and damn me for trowing a post through the neighbors car window), but I actually feel better equipped to handle what may be thrown at me.

Like I said, I think I'm OK, I don't to dwell on the maybes but I'd rather be cautious than caught unawares....

Some Really Good News!

I've been a bit absent from blogging as I deal with a family issue and some "things" at work. Work has been interesting the past few weeks, we lost one employee to early retirement and one fairly new employee "jumped ship" to another company. My boss decided in this current economy NOT to replace them right away and really do a job search to find a suitable candidate. Since we rely on these employees to bring in revenue, I was a little nervous, could my job be on the line. My E-fund is sorely lacking and I'm just getting my act back together.

I work as a cross between a project manager, office manager and a bit of a personal assistant for a small company in New England. Pretty much we all wear many hats and do what has to be done to get the work done. My boss takes out the trash, I shop for office snacks, we both do filing, answering of the phones, computer work and lots of customer care and contacts.

The good news is my job is OK and the even better news is I got a small raise! My boss is not a man of many words and I was surprised and pleased about the raise. He said it was in recognition of the additional work I've been doing and the way I've redefined my position at the company making things run smoothly and enabling him to do what he does best.

Wow, it's probably the best news I've had in the past few weeks. Now to focus on the second job