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Getting Out of Debt

Declaring Bankruptcy, Reluctantly

After dealing with her husband's out-of-control debt, Amy Smith went to bankruptcy court. <b>As told to Joan Goldwasser</b>

When did you first discover that your husband had credit problems? We were married in 2002 and filed our income-tax return jointly that year. I was expecting a refund, but I found out my husband had student loans he'd "forgotten about." The government took the refund as a partial payment of his debt. That was a wake-up call, but not enough of one. When you are married to someone, you want to believe in him.

What prompted you to declare bankruptcy? After he started his own business, my husband maxed out the credit cards in my name and ran up a balance of nearly $80,000. By October 2007, it had gotten to the point that I couldn't cover his debts. The realization that it would take 200 years to pay off the credit cards at the monthly minimum payment persuaded me to do it. I canceled his right to use my credit cards and started researching how to file for bankruptcy. It was not an easy decision. I was raised to pay as you go.

So you're off the hook for the bills? Yes. I qualified for Chapter 7, which means I'm not liable for any of the bills. I was not held responsible for any of my husband's debts, including a loan I had co-signed for him.


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But you had to sell your house? I had to surrender our house and my husband's motorcycle, which was in my name. I kept my car. I thought that when you declared bankruptcy you had to live in a tent and drive a Yugo. It wasn't as bad as that.


What is your current situation? I pay as I go. I have my employer take money out of my paycheck for my 401(k), and my only payments are for a car loan and a Capital One credit card with a $750 limit, which I pay off every two weeks when I get paid. My credit score went up 120 points in five months. And my divorce is almost final.

Do you think you did the right thing? You feel you are the scum of the earth if you can't pay your bills. But when I went to court, there were a lot of people there, so I realized this is happening to others, too. Afterward, it was as though a big weight had been lifted off my shoulders. Now I can move forward instead of being stuck.