Sunday, September 25, 2005

$139k In Debt, Yours To Keep

If you're in the mood to read a 16-page PDF bankruptcy court opinion ... well, you're just odd. But what if I told you that this one was written by a judge with some common sense (and a pair o' stones)?

Moreland Bankruptcy - Memorandum Opinion (2005-08-03)

Here's the CNN Headline News version: North Carolina couple (the Morelands) earned over $100k per year from 2001 thru 2003. Year 2004 saw their household gross drop to $72k, thanks to an extended bout of unemployment followed by rehire at a job which paid about $30k per year less than the previous. The couple had purchased a home for $178k in 1997; by 2005, they still lived in that same home (2700 sq. feet on 3.7 acres), but owed $243k on it. (The couple had no children or dependents.) In addition, they had racked up $139,639 in unsecured debts, most of which resided on seventeen credit cards.

The couple filed for Chapter 7 bankruptcy in February 2005. At that time, they had a net monthly income of $4977, and monthly expenses of $4793. Housing expenses alone absorbed 52 percent of their monthly take-home pay.

The Bankruptcy Administrator in the case suggested that the couple's Chapter 7 petition amounted to an abuse of the bankruptcy system, thanks to their history of "wanton spending" and "excessive housing expense." The judge agreed, directed the couple to sell their home and rent an apartment in order to save money to repay creditors, and dismissed the case.

All in all, the PDF is a really interesting read. It's also more succinctly-worded than most court documents, without a ton of legal jargon. It's a great look at what can happen when overspending and fairly presumptuous debtors run headlong into a judge with some court integrity to uphold.


— Posted by Michael @ 12:06 AM


It is a common situation with ever one.With income delining and growing expenditure or expenditure at the same level will deifnitely push one to bankruptcy,slowly and gradully and one is helpless.It is common with higher middle class through out the world wide.


scary. I wonder how anyone lets it get that bad (an overwhelming faith that it will one day be wiped out in bankruptcy court?)


I haven't read the pdf yet, but I plan to. I have a coworker who graduated from college when I did. She didn't work the last two years of school, drove a Lexus, bought new furniture, big-screen TV, took vacations... the works. About a year out of school she declared bankruptcy. The school loans stayed with her ($40,000), but the credit card debt and car debt was dismissed ($30,000). She could have dug herself out, and I still think she should have had to. It just would have required her living a more austere life than she was used to.


Of course, there are probably many like them that are allowed to file for Bankruptcy. In Florida, the laws are very lax and even protect your home from being taken away. See OJ Simpson.


I haven't read the PDF yet, either. I, too, also plan to.

I think the Judge's assessment of the situation is sound. Those people still have a healthy income - what they have is too much house. Their debt could be restructed.

I applaud the Judge's decision to make them sell their house, move into an apt., and deal with financial mess they've made. Because now, I, another consumer (though I prefer citizen), won't have to pick up their tab through higher prices, premiums, etc.

Given people's debt loads out there, this type of action could be the tip of the iceberg. And it's about time our fellow citizens got some tough love about money.


Thank goodness for judges with common sense.


Bankrupcy should never be allowed.
But then again, I am kind of draconian.
Money ANd Investing


Bankruptcy should never be allowed huh ? Hmm, let's see here - I got ripped off for 18000.00 all total in a time frame of 3 weeks and the credit card place NEVER even attempting to ask themselves why were there charges being made in PA, NY, CA - when I live in Illinois and I was using the card in Illinois at the same time frames. Gee, I must have a super fast jet to get from one state to the other in the same day. Did I like taking bankruptcy ? Hell no I didnt, but did I have to ? Yeah - if I wanted to eat, pay my mortgage and keep my power on - yes I had to. The CC places werent "allowing" me to claim fraud - their words not mine - so they were going after my wages - I would have had about 20 bucks a month to pay all of my monthly bills and to live on once the creditors took what they wanted. So I went to se a lawyer a day after I received a few summons' and he filed that same afternoon - done deal.

But it still sucks that some scummy assed theives are out there laughing their butts off at the expense of totally trashing a 47 year old womans PERFECT credit


Sue, I think the "bankruptcy should never be allowed" comment excluded criminal fraud victimes from its scope.

At least I would hope.

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Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


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