I recently met with clients who are coming out of their third bankruptcy. Yes, third! I did everything humanly possible to be objective, but I was having real trouble. They are both in their early 50’s, so they weren’t wasting any time, as you can’t file a second or third time for 7 years.
The first time was in 1989, as the value of their home dropped below what they paid and what they owed. The bankruptcy laws were different back then. They were making very good incomes and could have made the payment, but decided to file and got out from under a property that dropped in value.
The second time was in 1998. They had moved from Connecticut to Florida, along with their two children a few years earlier. Purchased a rather expensive home, did a mortgage that required no income verification mortgage. They thought they would be getting jobs that were comparable to income that was available to them in CT, but that didn’t happen. They ended up losing the home and filing bankruptcy again.
They moved from Florida to Michigan in 2003. They fortunately did not buy a home with this move, but the job opportunities that they thought were there ended up not being as plentiful as they thought and they moved back to Connecticut. They got employment and you guessed it, bought a home in 2006. They got an FHA mortgage, which was at 7.25%. Unfortunately, they weren’t able to refinance, as their credit scores had dropped, as they has missed some mortgage and credit card payments.
In 2007, they were both out of work during various times and decided it was too difficult to pay their mortgage, so they stopped paying. In 2011, the property was eventually foreclosed and they filed for bankruptcy for the third time.
They happened to read a blog that I wrote about credit and thought I was the right person to help them. Aren’t I lucky? They said they wanted to work on repairing their credit so they could purchase a home of their own, again. They then asked me a great question, what can you do for us? I could no longer resist, I told them that I wouldn’t help them, that there wasn’t any way to fix their problem. They then told me they would find someone else that could help them, got up and walked out of my office.
The sad part of my meeting with these folks was that they had no shame about any of their financial history. They kept talking about how bad things always happen to them or someone was always doing it to them and they took no responsibility for anything. I couldn’t work with them!
What would you have done?