Bankruptcy!

Fortunately not but a family member has and I dont recommend it obviously! Years without any bank cards etc

 

I have filed, around '96. I made a huge investment error that devastated my business. I took a risk that ended poorly. I can tell you that it was less than a year when the credit card companies started issuing me cards and I go a mortgage shortly thereafter. I think their view was I couldn't file bk again for many years and my cash flow was more than sufficient to carry the new debts.

There was a time, just forty or fifty years ago, the average millionaire had filed for bk at least once before finding permanent financial success.

It's a mechanism made available to us and there is no shame in taking the necessary steps to make course corrections in our lives and business. Just make certain you learn from the experience and let it make you stronger. Come back to your business with revitalized strength and continue to pursue your dreams. We have entire cities and portions of business and governments filing bk today, they will push on and resurrect themselves also.

T J

 

It really didn't have much of a lasting effect as one might think. I was back in financial fitness within a couple of years and with strong credit established. This was around eighteen years ago, I suspect today would be a different story.

 

Great post TJ and as you mention I've heard of many well known millionaires (and even billionaires) that were once BR before finding their success.

 

Question: How do they start again? I mean, they wouldn't have any lines of credit, etc. to make large purchases of ad space, or whatever they're working with, yet they rebound big and fast. I realize they're doing what they know how but how do they finance it after bankruptcy?

Millionaires and billionaires, I mean. Actually, I guess I mean anybody who's made a big comeback.

 

First of all, there are several ways to structure a bk. Most individuals go for a complete forgiveness of debt. However, sometimes the bk is a unilateral reduction of debt by percentage along with a repayment plan for the reduced amount. Then there is the simple restructuring of debt with which the courts and the vendors agree on a payment restructuring that fits the individual or company's current cash flow. There are more examples, but this makes the point.

Then, there is the recovery from bk. This can be done by finding several ways of managing new debt. Sometimes it is done by establishing a savings account that you use for collateral on new debt, I did this. One can also start a new business that creates a sustainable cash flow with positive earnings that are predictable for purposes of forecasting and present that to vendors for establishing 30 day, 45 day, and 60 day net terms. I also did that. After a year of good relations with the vendors and prompt payments, I was able to get a mortgage with a 25% down payment on a house. Within 6 months of getting back into a house, I started getting credit card offers. They were high rate cards, so I chose only one and I worked it by using it as often as possible and loading it up to 75% of limit each month then paying it off every month 5 days before due date. Within another 6 months I was able to acquire two new cards at highly competitive rates and I was off and running anew.

As many of you know, I am a planner and a researcher by nature. I over analyze sometimes, but it serves me. One can do a bk when it is necessary and recover from it with a plan for recovery. If you don't have a plan, and stick to it, then the likelihood of a speedy recovery is slim.

 

@T J Tutor, your organized mind never ceases to amaze me. I very much admire how well it seems you are able to plan start-to-finish steps, regardless of the length of the project/journey.

I think things work differently in the States than they do here. I did a bit of Googling...we do not have such a thing as forgiveness of debt here. It's an interesting concept, one that might actually prevent a lot of bankruptcies.

You really did recover very quickly! I've always heard that it took several years but you're living proof that it can be done faster with a solid plan and some commitment to rebound.

I don't think over analyzing is necessarily bad, especially the way you do it, TJ. As far as I can tell, it helps you scope out a path from beginning to end. If you ever develop a course teaching others how to do that, please let me know.

Thanks for answering my question, and for sharing more of your story.

 

Before you consider BK, you must find out what your state has provisions for shielding some your assets from the court. Second, you need a good BK attorney who knows the laws and and how do the paper work which is a big load. Each state has their own laws on BK, so do some research on your state. After BK, some of the credit card cos will issue you a card with high interest but you will need to show a good track record in paying your bills on time.