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Monday, September 7, 2015

How did it get so bad and how I made the decision to claim Bankruptcy

Well before it was able to get bad it had to get good first. I was in a relationship for 7 years, from the time I was 18 years old. We always had 2 incomes in the home and there was only a small amount of student loans that we were able to pay off fairly early. Neither of us had fantastic paying jobs and we lived in Toronto for the first few years so cost of living was high but we also lived within our means because we had to. We didn’t have tons of credit because we were young so we just lived sort of paycheque to pay cheque. Even when I did go to school it was an apprenticeship and I was able to claim EI and school was free for me.
We eventually decided to move out east. One of the first things I did out there was get my license and a vehicle. I had a credit rating of 580, my ex was just slightly higher. They agreed that with both of us they would allow us the car. We went to a place that approved everyone and was high interest. My car payment was 16% interest. I now know how utterly ridiculous that rate is but I had no clue back then.  I had biweekly car payments of 160 if I remember correctly. It’s funny because although these were ridiculous prices I still paid it on time every single payment, which in turn made both of our credit scores build very quickly. I had a credit card as well that they kept raising the limit on about every 6 months or so. I passed on some of the offers but took others and eventually I got my 700 credit limit up to 3750. Then we decided to buy our house. My credit rating was now 750 and my ex’s was around 680.Anyways, we applied for a mortgage through a mortgage broker that we had heard about that could get anyone into a home. We were able to get preapproved for 200,000. We found the perfect place and that we wanted and started the purchase. The problem was that the broker told us that he could get us approved for zero down. Even after banks decided not to allow zero down anymore. But after 5 long months of bargaining and fighting with banks, switching the mortgage to a new bank, trying every which way to get us approved- He finally did it. We were moving into our new home that had a higher interest rate because it was zero down and we took along with us our high interest car. It was tough, the mortgage was high, the utilities were like ridiculous time 1000 and the whole process took a toll on the relationship. I don’t think that we were even in the house 6 months before I started having doubts about the relationship. She didn’t see it at that point.
I always had thoughts about the greener grass on the other side of the fence but went along with everything anyway. Then one day I finally started to think it might be time to call it quits. We ended up getting some roommates and moving into different rooms. Problem then became that no one paid their rent on time and the two of us were still responsible for the whole thing.  Then she moved on and found a new significant other, as did I. We both decided that it was time to move out. We rented the house to a family. Well guys what… that family didn’t pay the rent either. 
We were still managing until her new partner decided that she didn’t want my exs and my names together on anything. At that point she Claimed bankruptcy. They took the car because it was considered part of the assets that she had to liquify (could have kept it if we wanted to and could prove we made the payments but as it was one of the items we shared, she had to get rid of it- this left me with 6505 in debt for a car that I no longer had. Because of the high interest rate and because we were still in the first 2 years there was way more on the car loan than the car was worth)- Then came the house. I was served papers. I was told that I now owned the house with the trustee but that I would need to either buy them out or they would sell it. I wasn’t able to buy them out at the time.
There were other items that I was still responsible for as well like a loan we had. My Ex opted to get a loan for new couches at one point. Was paid off so then we got a dining room set which I believe was on the loan at that time. Then she upped it a little bit so that she could get a computer. Then we upped it even more and I stupidly added my name because separating is expensive and we both needed money to move on.  This loan was up to 8000 by that point which was solely all mine once she claimed bankruptcy. I literally had ALL the debt and not a single thing to show for any of it.
I was still so scared to claim bankruptcy that I didn’t for a really really long time. It was over a year after her before I claimed. I was really scared that I would be messing up the rest of my life and what would people think, how could I face people after being bankrupt. I was scared that I would get a better job that would give me a raise and I would have to extend my bankrupt time and pay all of the extra earnings to the trustees. So I procrastinated for a full year.
I searched and searched for personal stories. If I was able to find one at the time like mine maybe I wouldn’t have been so scared to go in and claim. I didn’t know if I should go to the same one that she went to or if I should go to a completely different one of my own. I thought my life would have been over. I let the debt pile up and pile up. I had no way to even touch it.
I made 820 at my job take home biweekly at that point and it was salary so there was no option for overtime. My cell phone was paid by work.
1640 – Monthly take home pay
  750- Rent (all inclusive including cable and internet/ no laundry on site)
    50- Laundry (laundry was expensive because I had to cab there and back and it was 5 bucks a load)
  250- Groceries/ pet supplies
  200- Spending money
    20- Bank fees
 I had 370 per month left. This wasn’t much. I did need to have a bit of a life and I needed to pay off close 20,000+ some amount I was scared to find out about for the house. How was I going to be able to pay off my debts? I decided that I would try little by little. I did the math and was going to be able to put a tiny amount on it each month to bring it all down. The problem was that stuff kept coming up and that 370 would get used up for the emergency.
The debt kept building and I couldn’t touch it pay after pay.
One day I checked my bank account to see how much I had in there. Some creditor took out 500 bucks. I called my bank and they couldn’t tell me anything about the with draw except for the bank that took it. I called the bank that took and they were able to release information to me either. Neither side was able to stop the payment.
Knowing how much debt I actually had in my name- that’s when I made the decision that it was time to claim bankruptcy. I couldn’t afford to lose 500 bucks randomly without notice and not know who it went to in the future. I made my appointment and got the ball rolling on that day.