July 19, 2008 06:36 pm
—
Editor’s note: Barbara Smith is a pseudonym used to protect the privacy of the individual quoted in this article under that name.
By Cristin Ross
cross@jacksonvilleprogress.com
“If I had gone with my gut instinct, I wouldn’t have gotten into the situation I did,” Jacksonville senior citizen Barbara Smith said.
Smith, whose only income is Social Security and a small pension payment, spent most of her adult life using one credit card and paying it off completely each month.
“But as other expenses and medicine started to rise, I found I couldn’t always pay it off completely at the end of the month,” she said. “Then I started getting letters in the mail telling me I could transfer the balance of my card to another and get zero interest for a year.
“Like a fool, I fell for that and before I knew it, I had two cards, then three, then four.”
She made her minimum payments diligently, she said, but when her home needed extra maintenance recently, she got a bank loan.
“I had to rebudget my food allowance, but we worked it out so I could make that payment, too,” she said. “Then, six months later, I found out they made a mistake on the ESCROW and my payments went sky-high.”
After much debate and research, Smith finally decided to file for Chapter 7 bankruptcy.
“It’s terribly embarrassing,” she admitted. “That’s just not how I was raised. I am perfectly capable of managing my budget and to have to take this step, at my age... I haven’t even told my children about it. I’m just too embarrassed.”
Smith isn’t the only one her age who has, or is considering, filing for bankruptcy in Cherokee County, according to local bankruptcy lawyer Mike Wallace.
“Smith is pretty typical of who’s filing these days,” Wallace said. “We’re seeing more and more of people like her having the same kind of problems.”
Wallace reported the number of bankruptcy cases filed in the Eastern District of Texas, which includes Cherokee County, is up from this time last year.
“At the end of June, 589 cases had been filed in this district,” Wallace said. “Last year we didn’t have that many filed until July.
“Though we’re up slightly, I don’t know that we’re seeing as much as other parts of the country.”
And the number of potential cases has risen.
I’m also seeing a significant jump in the number of inquiries on filing bankruptcy,” Wallace said. “I can’t say that all of them will develop into actual filings, but there are a lot of questions getting asked.”
Wallace handles both business and consumer cases, but he’s predominantly involved with consumer cases filed by individuals.
He explained the differences between Chapter 7 and Chapter 13 bankruptcy cases.
“When a person files a Chapter 7, their large unsecured debts, generally credit card debt, is discharged usually within 90 days of filing,” he said. “With a Chapter 13 case, which usually includes foreclosures of homes, a person pays a certain payment for 36 to 60 months to the creditors, but there is no discharge of debt.”
Most people file Chapter 13 bankruptcy now, Wallace said, thanks to the Bankruptcy and Abuse Prevention and Consumer Protection Act of 2005, which made it more difficult to file Chapter 7.
“There’s now an income determination made on cases,” Wallace said. “If a person’s income falls above the national median income, they’re required to file Chapter 13.”
Wallace said most people who file for bankruptcy do so because they’ve been living beyond their means, but in some cases, like Smith’s, it’s just inescapable.
“There are a lot of good, decent, hardworking people who wind up filing for bankruptcy,” he said. “Some circumstances, like an extended period of unemployment or a major medical problem, are simply unavoidable.
“Filing for bankruptcy is a way to give those people a fresh start.”
And peace of mind, Smith added.
“(Filing for bankruptcy) has been very helpful,” she said. “It was almost too easy, but I do have a blotch on my record now. Despite that, it’s given me a world of relief and taken away a lot of worries.
“My advice to anyone with troubles like I had or worse is find a good attorney if you decide to file for bankruptcy, and remember you’re not the only ones swimming in those waters.”
Copyright © 1999-2008 cnhi, inc.