Friday, February 12, 2010

My Mom's Bankruptcy

My personal view of bankruptcy has never been a negative one. I never thought about it too much until my mom had to go through it in 2005. It was a huge relief for her and so my view became it was a good thing when it was needed.

My dad was in upper management at a local church. The visiting minister wanted to bring in his own guy and rather than have a split congregation my father bowed out. It took him a long time to find something. He sold shoes, his usual fallback job, in the meantime. A national charity hired him as their local executive director. Within a year he was laid off again due to internal changes.

He had been out of work for several months when he was diagnosed with cancer. This was late August. His health insurance was taking forever to approve his chemo and he didn't have the money to pay for the first treatment himself. I still wonder if he'd be alive today if he hadn't had to wait so long.

They started the process of bankruptcy together. He died October 9, less than a month from his 60th birthday.

My mom continued the process. We moved in with her in December and later that month I drove her to Tampa.

When we got there we checked in and were directed into one of the connecting rooms. We waited in a large room that had a table with four seats in the front. We waited for awhile. I was surprised how calm everyone was. Nervous, yes, but no one was in tears or hysterical. There were no sounds of begging and pleading coming from the front. Mostly everyone steeled themselves, went up, spent a few minutes chatting, and came back with a slightly stunned yet relieved expression on their face on the way out the door.

She was called up and her lawyer met her at the table. (Her lawyer was Melanie from Jodat.) was surprised that she didn't recognize her or that they hadn't conferenced prior. My mom spent about ten minutes answering questions. The man at the table mostly nodded, looked over her paperwork, and was very polite.

The whole process was a lot faster than I had expected. I was expecting a typical court room (I've done jury duty several times) where everything was extremely public and somewhat hostile. It was nothing like that.

Afterward Melanie talked with us for a few minutes, answered questions that my mom had and, to my surprise, answered my questions as well.

I found out that since my father had reconsolidated the Parent Plus loans he'd taken out for my college, they were forgiven and I wouldn't have to repay them. (The original loan that I cosigned was considered paid off by the new loan.) I also discovered that my mom was not responsible for my father's medical bills and could not claim them in her bankruptcy. She received far too many bills after, but she could throw them out guilt-free.

This was prior to the laws changing, so I have no idea how my court date will go, but I'm expecting something similar.

I felt bad for my mom. She had retired a month before my dad was laid off and her employer had replaced her before she left so she could train her replacement. My father was supposed to receive SS disability that was far more than what she got for her retirement, and then she got nothing from my father's.

It was a huge relief to her to not be saddled with all the debt they had accumulated. She felt stupid for not knowing about it until he was diagnosed. I remember she showed me a spreadsheet with thousands of dollars of debt. I don't recall how much it was now, but I was really impressed and surprised by the amount of debt. I know she worried about how she'd make the payments. Bankruptcy was the right choice for her.

After her discharge her lawyer touched base a few times to make sure no one was harassing her and made sure she knew that if they did to contact her. Most of the contact was thru form letters.

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