This is a scary time in my life. I am self-employed. I am 57 years old, single, and live alone in an apartment in San Francisco. Following my divorce three years ago, after 18 years of marriage, I found myself in the position of not being able to pay monthly expenses on my income alone.
My apartment is rent-controlled but even so, it is still very expensive to live alone in San Francisco. I cannot get a roommate because the apartment is one bedroom and designed for a single person or a couple. Bottom line is that I have incurred over $100,000 in credit card debt, due mostly to cash advances used to pay monthly expenses and medical bills.
During 2008, I really struggled financially, but 2009 was the best year ever for me for earned income. I grossed over $90,000. This year all was continuing to go well until July. Since then I have lost more than half my monthly income due to the economic downturn. For example, one of my clients is a nonprofit and they have lost about half of their average contributed income this year, so my hours were slashed. I have earned less than $4,000 per month since July so I am considering talking to a bankruptcy attorney in December for a possible January filing.
My biggest fear is that the bankruptcy court might subpoena my income records from my clients. I am embarrassed to say that I am an accountant and financial manager and, though I excel in managing others’ funds, I apparently cannot manage my own. I know for certain that if the nonprofit were to find out that I was filing for bankruptcy they would dismiss me as the contracted financial manager. I might be able to hold on to my two smaller accounts but my income from those sources is not enough to cover my monthly rent.
What are the chances that the bankruptcy court would subpoena income records from my clients?
While anything is possible, it is extremely doubtful and a situation I have never seen since 1994 when I first started helping people.
I understand how scary and frightening these times can be. I lived through them myself. They were not fun then. They are not fun for you now.
However, if you take a step back and look at the situation through the eyes of another, the issue here is one that is understandable and explainable. And that is the most important part if you were ever asked to explain. Even your clients have had to deal with economic changes. It is not as if these are wonderful financial times and you are struggling. No, these are horrible financial times and you and millions of others have found themselves in uncertain and difficult financial moments.
My advice is to own the situation, face it, and deal with it. If you do this then your life will improve quickly. The issue here is not if you’ve had financial problems, but how you’ve dealt with them. Taking action and filing bankruptcy is often the most responsible thing to do.
Don’t let your past distract you. You’ve picked a path to follow, do it and use the fresh start to do better moving forward. If you are going to file in January, click here to find a local bankruptcy attorney and develop a game plan now. The bankruptcy attorney may tell you to stop paying your unsecured credit now in preparation of filing.
Once you do file be sure to exercise those habits you would advise others to take, open a savings account and build an emergency fund.
If you would like a second opinion about your situation you could contact Damon Day. He’s a fellow debt coach.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.