Has she spoken with a credit counsellor yet? It would be much better for her if she could negotiate her debts and pay them off rather than go the bankruptcy route.

Is she having trouble making her payments?

I’ve seen my mom go through it. Pretty much after wards she’s never had a social life, just holding down two jobs now. Never went to the mall anymore either, never went shopping afterwards. It was tough. Just get her ready mentally for the “rebirth”. As in, remind her its not the end of the world, but realistically she can’t be going and eating out lavishly, having the “best” quality tv’s or tv services stuff like that. I grew up poor after my mother went bankrupt, if she has any kids, just please try and help by providing essentials… like Printers (so they don’t have to stress out about homework), internet access, a steady ride to school stuff like that…

My sister and her husband did back in 2000. They lost the house (they weren’t even living in it at the time) and the cars. Those were the only possessions that were seized. They had already financed a new car before handing in the old one. Back then it was pretty easy to get a loan with a bankruptcy. A year after the bankruptcy they bought a new house.

But the main reason for the bankruptcy was the weather turned nasty and there wasn’t a lot of work for commercial electricians. And they had twins.

We were going to file for Chapter 7 to save our house but decided to file Chapter 13 and walk away from the house instead. It wasn’t worth saving because it needed too much work (fixer upper). We are on the 3 year plan and have about $70 taken out of our paycheck each week to pay our debts (credit card bills, loans and medical bills).

Our car was used and paid for so that wasn’t a problem for us. We had to move an hour away from where we were living to find affordable housing. We got very lucky with the house we found. It’s nicer and is on more land than the house we walked away from. We have about 18 more months until we’re done with the bankruptcy. It will be a good feeling to have all of this behind us and not have any debt.

My parents just finished a 7 year bankruptcy and they were able to keep their house and car. They also have a credit card for emergencies.

Bankruptcy isn’t the end of the world. It’s a struggle for several years, but it’s also a chance to start over and do things right.

It is on your record and affects your purchases for seven years. Has she tried a consumer credit counseling service? It’s a much less drastic option, and she may be able to reduce the debt she owes.

If she does go through bankruptcy, her house and personal possessions should be safe (if she has kept up house payments). Her car and any other secured credit loans she has are subject to repossession.