Slipping Over the Edge

Our family has been tiptoeing along the razor's edge of personal financial failure for quite a while now. We've tried many different methods for getting our financial situation in order, including a debt management plan through the Consumer Credit Counseling Service, increasing our income with a second job for me, and severely paring back any variable expenses.

A search of the blog shows that I've written many a post about our personal financial situation, especially how it relates to the larger economy. I don't think we are so different from many American families when it comes to the mess we've gotten ourselves into. We've been living for many years now on expected income. When I changed jobs earlier last spring, I ended up with a $12,000 annual pay cut. Boneheaded? Well, of course, but I needed a job in this faltering economy and that was the job I could find. It promises a higher salary in the long run, but for now, I must live with the dollars I earn.

We were already on a path to disaster. The pay cut was just the final straw.

In a three-part series, I wrote about the reasons why we can no longer pay all the bills we owe (Part 1, Part 2, Part 3). In the process of writing those pieces, I was able to take a step back and consider, realistically, our options.

As with any journey along the razor's edge, one slips and recovers. We've done this many times and with each recovery, we've breathed a sigh of relief. Finally. This would be the answer. We would pull out of this and move away from the edge. Each time, we were wrong.

Last week, we finally slipped over the edge. We faced the reality that no fix is going to pull us off the edge and so we let ourselves go over. We'll have the next few months to figure out how badly we've been sliced up, but for now, we have some very immediate concerns.

By signing Chapter 13 bankruptcy papers last week, we entered into a legal agreement to do the following:

(1) Pay our unsecured debt in full (100%)
(2) Surrender my little white car
(3) Surrender our house

Notice, however, that we have not asked for a bailout. Why bother? Hell, we couldn't even qualify for a Chapter 7 which would have wiped out our credit card debt and allowed us to stay in our house. The county where we live has a very low median income used for the bankruptcy means test and funny as it sounds, we make too much money to qualify. We're the classic case of once you fall behind, you can't get caught up.

To be honest with you, signing those legal papers was a bit freeing. The big, scary decision is made and now we deal with the fall out of that. Though we're still tied to the past (credit destroyed, five years of payments to cover the debt and lawyer's fees), we can now make better choices and move on. The hemorrhaging of piled on debt in the form of fees and interest is stopped. We'll be out from under an upside down mortgage and car payment.

I asked MathMan if he felt ashamed to be in this situation.

"No. We didn't have any choices left," came his clear response after much consideration.

He's right. The choices were made before. Through our own mismanagement and a couple of bad breaks, we got ourselves into this mire. Now we learn from those mistakes and start over.