Starting fresh by filing Chapter 13 bankruptcy

Ending up in a credit mess is something no one plans for. Many New Yorkers face the everyday stress of trying to get by but end up with debts that could take years to eliminate. Relying on credit cards to pay for everything, for instance, is one sure way to end up crushed by debt.

A 43-year-old woman from New York is a good example. She is not that different from millions of others who teeter on the edge of insolvency. Fortunately, through determination and one particularly smart move, she bounced back.

In 2000, she chose to resign from her job, got a part-time job as a receptionist and focused on her songwriting career. She did not anticipate that work would disappear after 9/11. She relied on her credit cards and assumed that she could turn things around. After 5 years, she was $80,000 in debt. She had never planned to live on her credit cards but did, and she was too proud to ask her parents for help.

In 2005, she got a full-time job, working as a secretary and legal assistant for two entertainment lawyers and putting her songwriting dreams on hold. She filed for bankruptcy and worked hard to become solvent again. Her case is proof that insolvency can be resolved, although it requires a lot of work.

Asking for help from friends and family is one way out of debt, but this is not always possible. Perhaps a better way to end the agony is by filing for Chapter 13 bankruptcy, or reorganization. This debt-relief option lays out a plan in which regular and substantial payments are made to creditors but with protection from creditor abuses. A qualified legal expert can help clarify the eligibility requirements that must be met before personal bankruptcy can be declared.

Source: Forbes, “Financial Comebacks: How I Bounced Back From A Money Disaster,” Marisa Torrieri, Dec. 5, 2013