Catch 22

David Freed · January 17, 2009, 04:51:14 AM

I am 48 years old. I have always paid my bills, doing whatever it took to get the money to do it. Three months ago I hit a brick wall financially. I had borrowed a lot of money to get my wood business started. Over the past year, my income has been getting smaller every month and we are now getting 50 to 75 calls a day from creditors that we don't have money to pay. It has been hard having to deal with this, knowing that if I hadn't started my wood business, we would be debt free, and could have made it through this.
Last week my wife and I went to see a lawyer, and he said it would cost close to $2000 to file bankruptcy, and you have to have pay that before you can file. If I had money laying around, or some way to get some, I would be paying my bills, not talking to a lawyer >:(.

WildDog · January 17, 2009, 05:42:09 AM

Hi David

Not a good situation to be in, focus on the positives you have your wife and there are 2 of you to share the load and give each other strength, I see on your website your not taking any orders and 48yrs is still an employable age so hopefully between the both of you there is the opportunity for outside income, prioritise the debts and try to arrange part payments to keep the wolves at bay, don't lose touch with your friends you never know where support can come from......Try anything to avoid bankruptsy.

Just my opinions David and not meant as advice.

Rob

blaze83 · January 17, 2009, 05:58:19 AM

Hi David,

I feel for you, I have been thru what you are experiencing. Hang on and try to keep focused.. If you are a man of faith pray, get your friends to pray. I was to the point of not knowing what to do. I needed 1500$ to file my bankruptcy, long story short after considerable pray and crying out to the Lord for mercy a man called me that i had did work for and was supposed to work for again but he hired some one else. He new a little of my situation and felt to help me so he wrote me a check for 1500$, pretty much a casual aquantance..was the money i needed to file and get the stress level down. I'm not proud of the fact that I had to file....was mostly due to poor decisions on my part and some business partners that i trusted unwisely. be encouraged, and keep fighting. I will add you to my prayer list...I understand the stress and other emotions. I went through mine alone, so be thankful of the support of your wife.

bless you,

Steve

David Freed · January 17, 2009, 07:14:17 AM

I have been borrowing money from everyplace I can for the last few months to keep paying my bills, hoping things would turn around. We owe more on our house than it is probably worth, owe $7000 on a $4000 semi truck (it was worth $7000 before the truck market tanked), borrowed everything I can on my life insurance, etc. To cover all the bills for the household and both businesses we need about $4500 per month, and are only bringing in about $2500. Our vehicles are 15 to 30 years old, with 200-270 k miles. I am trying to sell some of the equipment for what I owe on it, but it will probably be repossesed before I can. I have never been in the position of not paying my bills before, but I don't see any choice other than bankruptcy, and now I found out I can't even do that unless some money magically shows up. The lawyer said that even with the new bankruptcy laws that force most people to file chapter 13, you could be in better financial shape than we are and still be able to file chapter 7.

flip · January 17, 2009, 07:20:24 AM

David, sorry to hear of your troubles. How are others faring in your area (cabinet shops)??

ellmoe · January 17, 2009, 07:23:27 AM

A late relative was in the oil business in West Texas. He was a millionaire three times, broke four. The last time the oil downturn caught him, he should have filed for bankrupcy, but didn't. By filing he would have been able to reorganize and had the capital to maintain his wells. He would have caught the rise in oil prices and been wealthy again. As it was the banks would not let him keep enough money to get "ahead of the curve", so equipment was always broken and he never could get production up. He passed away still struggling. He was an honest, hard working man and deserved better. My point is that bankrupcy is there for a reason. Consider taking it before your financial problems bury you or your marriage. When you get healthy again you can always repay your creditors as a man should. Good luck. During these times there will be a line at the courthouse, I'm sure. Safety in numbers! ;D

Mark

isawlogs · January 17, 2009, 08:26:01 AM

Well I think one should take a look at all possible options before filling for bankrupcy , I have been in the receiving end twice from those that drop all responsability and not one came to see me prior to filling or after .
It is easy to file , it is as easy to meet with the creditors one at a time a sit and work it out . I am sure that they would rather wait some then get nothing or close to nothing .
My advise would be to call them and set up a few meetings and see where you can ride . If there is no way of getting an understanding of positions ... Wich I doubt then find 2000$ ... But at least try to work things out before and call the ones that where kind enough to either loan or wait for payment .

tcsmpsi · January 17, 2009, 08:26:34 AM

David, I do not know your particular situation in detail. However, generally, it is a similar situation hitting large and small business worldwide. Circuit City just pulled the plug, after bankruptcy filing. Bankruptcy is not the 'solve all' for all that it might seem to be. In fact, for most businesses who have utilized bankruptcy, it has been a temporary 'fix'. The newer bankruptcy regulations make it even more difficult to 'restructure'.

I have a pretty good notion where you're at, judging by what you've stated. Whether the creditors calling you have let on to you, or not, all lending companies KNOW there is a major, unprecedented crisis. They will work with you, if you have anything at all to work with.

They KNOW their ultimate alternative. If it is secured property, they don't want to take posession of it. What are they going to do with it? They know the lack of probability of turning it for reasonable compensation.

I know a couple folks in your situation that are working viable, acceptable terms with themselves and all parties involved.

Ultimately, it is a matter of doing the very best you can with what you have to do with. Realistically.

snowman · January 17, 2009, 08:42:04 AM

"Neither a borrower nor a lender be". One reason our economy is in this mess is because people were literaly betting the farm. Borrowings like gambeling, dont bet more than you can afford to lose. Heres another one, "If you can't do the time, dont do the crime". In this case the crime is putting youself deep into hock. I may sound like a hardass but you did this to yourself, suck it up.

WH_Conley · January 17, 2009, 08:59:29 AM

I feel your pain. I have been there before. Wish I could give some expert advice. Blind luck and bullheadness maybe is all that got me by. Not much help, just letting you know that you are not the only one that has ever been in bad financial shape but survived.

tcsmpsi · January 17, 2009, 09:07:59 AM

Quote from: snowman on January 17, 2009, 08:42:04 AM
"Neither a borrower nor a lender be". One reason our economy is in this mess is because people were literaly betting the farm. Borrowings like gambeling, dont bet more than you can afford to lose. Heres another one, "If you can't do the time, dont do the crime". In this case the crime is putting youself deep into hock. I may sound like a hardass but you did this to yourself, suck it up.

What the sam hill does that mean, "suck it up"? What do you think he should do? Pull turnips out of the air? No matter all that speculative mumbo jumbo, reality is reality.

What should he do by, "suck it up"? No one can forsee the future. Speculations are how business grows. Some do, some don't.

I'm certain he went in with a reasonable belief he could 'afford' what he went into.

snowman · January 17, 2009, 09:15:05 AM

"Suck it up" means don't whine. I was raised that the world owes you nothing, you make decisions you live with results of those decisions. Dave rolled the dice, if things went well he'd prosper, if they went bad hed lose it all.Things went bad, suck it up.

tcsmpsi · January 17, 2009, 09:22:38 AM

I didn't see any "whining". I saw a man, a fellow human being, up against the wall with a seemingly insurmountable problem, looking for a viable solution.

In effect, 'sucking it up' in a most realistic and honorable manner.

Jeff · January 17, 2009, 09:36:05 AM

I agree tcsmpsi.

Snowman, while some people like David show integrity in the face of adversity, others simply show ignorance and insensitivity when given a key board.

timber tramp · January 17, 2009, 09:39:59 AM

David- In business, as in most cases, communication is the key. Have you tried contacting the A/R departments of the outfits you owe money to? You might find that they're more willing to work with you than you think. After all recieving anything is better than recieving nothing.

TT

Fla._Deadheader · January 17, 2009, 09:48:02 AM

First thing I would do is, Contact those that you owe, and have them "Call off the dogs", those scum suckers that hound you, and make your life miserable. Their business may be booming from the ones that are sweating and trying to pay SOMETHING. >:(

Offer to meet with the ones you owe, AFTER they call off the hounders. Make an honest effort and you might/should make headway.

Wadda I know :

??? ??? ;D

Gotta agree with tcsmpsi. No need to stomp on a man when he is asking for ADVICE, EH ???

underdog · January 17, 2009, 10:07:30 AM

Quote from: Fla._Deadheader on January 17, 2009, 09:48:02 AM

First thing I would do is, Contact those that you owe, and have them "Call off the dogs", those scum suckers that hound you, and make your life miserable. Their business may be booming from the ones that are sweating and trying to pay SOMETHING. >:(

Offer to meet with the ones you owe, AFTER they call off the hounders. Make an honest effort and you might/should make headway.

Wadda I know : ??? ??? ;D

Gotta agree with tcsmpsi. No need to stomp on a man when he is asking for ADVICE, EH ???

Many good replies here.

Be very carefull with your next steps as this sort of thing can eat assets you did not realize where at stake.
Friends - Family - Marriages - Etc.

This reply is exactly what i have been reading.
Do not try to hide or pretend things are not as they are.
Get in touch with your creditors and work out a deal.
Get a handle on the problem then move forward............... Good luck and my your God walk with you.

snowman · January 17, 2009, 10:45:43 AM

Quote from: Jeff on January 17, 2009, 09:36:05 AM
I agree tcsmpsi.

Snowman, while some people like David show integrity in the face of adversity, others simply show ignorance and insensitivity when given a key board.

Insensitivity Ill cop too, like I said, I'm kind of a hardass. :D Ignorance though? Ignorance is not being aware of the fact that if you borrow money to finance a business you may lose it. 70% of small businesses fail within 1st year. I lost it all once and know how it feels. A falling accident left me on crurtches for 6 months and walking with a cane another 3 months, All I had was workmens comp. Lost my new pickup,snowmobile etc. I knew the risk of falling timber for a living and didn't whine about my plight. I sucked it up.

Also I made no personel attacks on David, didn't call him a whinner,just said don't whine. My advice may seem harsh but it's in reality meant constructively.

Tom · January 17, 2009, 10:52:32 AM

Well, your constructiveness is insensitive and non-constructive in the end. Your attitude is the same as the man who shouts "jump" to the depressed woman on the ledge of the building.

You would have been better not saying anything at all than make comments like "suck it up". Your bravado is not impressive and I find an attitude like you exhibit atrocious.

If you see yourself as being constructive, you aren't the type of person I wish to associate myself with.

You want to hear a course opinion, you got one.

This isn't meant as an opening for anyone to start a flaming war, so let's get back to showing Mr. Freed that we are capable of empathy and sympathy and possibly something good will come of it.

David Freed · January 17, 2009, 11:24:42 AM

Quote from: flip on January 17, 2009, 07:20:24 AM
David, sorry to hear of your troubles. How are others faring in your area (cabinet shops)??

I was making cabinet parts for local shops until about a year and a half ago. I went from busy to almost a dead stop in about a months time. That is why tried to switch to flooring, but I only got three orders. There is one cabinet shop that I hear from occasionally, and he has been staying busy, but most have really slowed down.

I used to have really good credit. Because of that we were able to get several credit cards at a very low interest rate, and I used them to help get the business running. We now owe $70,000 to credit cards. Before we started missing payments over $50,000 was locked in at under 5%, with a fair amount of it locked in at 3%. I have had people try to tell me that was just a teaser rate, but as far as I am concerned you have to be pretty dumb to fall for that. When I say locked in,
it was locked until the entire amount was paid no matter how much other rates changed (unless you miss a payment).

My wife or I have talked to everyone involved. We even had a third party that deals with these situations try to negotiate for us, but our income has dropped so much that we have nothing to negotiate with. Our local bank where the truck and house are financed has rearranged our loans so that our payments are a third of what they were. The company where I have some of the equipment financed is also being very patient, but there is no money to give them.

My wife has always done a good job handling our money and paying our bills. She had to take care of things when I would be gone for weeks at a time in the truck. We have been through rough times before. She has always bought our food at cut-rate grocery stores buying whatever is cheapest. She only buys clothes when something is worn out, and then buys things on sale. I just got us into too much of a mess for anyone to get us out as far as I can see so far.

I guess the whole point of my original post was to see if there was any other ideas or possibillities that I didn't know about. I have failed at lots of things before, but nothing near as big as this. This is just another adventure where I have to learn everything I can and then jump in. 24 years ago, I sat down with a drafting book and made my own blueprints for a house. The bank gave me the money to build it, so I sat down with a book on construction and built my house. I am heating 2500 sq ft with a 40,000 btu gas furnace (even in the subzero weather we just had) so I must have done something right. That is how I have done most of the things I have done up till now. Now that we have the internet, I can find information much faster than I used to. I am going into this not knowing how to not pay your bills. I have already made mistakes (Is paying your bills instead of saving money back for bankruptcy a mistake?) and now I just want to know everything I can to try to make this a controlled crash.

I agree with snowman about borrowing to a point. We don't borrow money for pleasure items, but on the other hand I have said for a long time that it takes money to make money. I borrowed a lot to try to start a new business. I just picked a lowsy time to do it. I still believe borrowing money to invest in a business is a good thing to do. If farmers were afraid to borrow money to plant their crops, we would all be pretty skinny right now. Even while this mess is going on, I am still trying to figure out how to get back in business someday. I also agree with snowman in that I got myself into this mess. I have always been a risktaker, financially and otherwise. This is the first time I ever lost big. I will probably borrow money again, and I will still take risks, but I may be a little more cautious financially.

I have been doing other things while typing this response, adding to it as I see others responding. Sorry it is so long. I have to go work outside now.

Gary_C · January 17, 2009, 11:33:10 AM

Amen to that Tom.

David after surviving in farming with all the ups and downs, I can say that this will pass. Just keep taking small steps ahead and do what you can and you will be surprised at how far you can get. I can't tell you exactly how to do it as every situation is different, but the first place to start is good communication directly with the creditor and see what you can work out to stop the harassment. In my opinion, it does little good to try to work with those professional bill collectors. If you still have some income, try to apportion some payments equally to each debt for some time till you can get back on your feet. You need to be calm and firm rather than threatening. That is really about all a court ordered reorganization will do.

As they say, a journey of a thousand miles starts with just one step.

edit: I see you posted while I was writing this. All I can add is you may have no choice but to come up with the $2000 to get rid of that credit card debt. Right or wrong, I have little sympathy for those credit card companies right now, especially Chase after what they did to my wife when she was one day late on one payment. And all at the same time Chase was getting money from the taxpayers and buying JP Morgan.

Tom · January 17, 2009, 11:52:54 AM

$70,000 is a lot of money. More than the cost of a new pickup. But, not as much as two pickups might be.

There has to be some way out. The sale of tools is one way, but that leaves you with no means to make money. Working for someone else is another and one that probably should be considered. Long hours, on top of another job(s) might be a way out and get the business going again too

If you aren't expecting too much from the business, perhaps getting it going is the fastest way out. Perhaps the trucks and tools will serve more than one business.

I'm certainly interested in your plan and watching as you climb out of the hole.

Things will be fine. I just know they will. They might not be the same as you expected when you started, but it sounds like you have a good attitude, a willingness to make the best of what you have and a good partner. It's the good partner part that is the most valuable, I think. Women, like a good dog, just don't seem to know when they are licked. When things are the darkest, they stand the closest.

snowman · January 17, 2009, 11:59:42 AM

David your 2nd post is inspiring, you took responsability for your plight and learned from your mistake, You "sucked it up" Tom sorry I offended you, we come from different worlds,as I recall your retired from IBM. Corporate America, probly even had sensetivety training, :D nice retirement I imagine too. I come from a logging family, do or die, sink or swim. Spent my life on the edge financially and physically, fist fights in the landing even :D.I won't say harsh things about you though, we are just from different worlds,universes even!

Tom · January 17, 2009, 12:16:39 PM

You're wrong about my world, my occupations, my retirement and my life in general. Don't think you are the only one in this world that has seen it as a real place, or has brought himself up by his bootstraps. I still have no respect for your insensitive attitude, but pride Freed in acknowledging you. Your responses require no explanation, they stand on their own merit. It's time to get back to Freed's thread.

farmerdoug · January 17, 2009, 12:19:45 PM

David, I will say one thing, The credit cards are unsecured debt. They will call and say nasty things but they cannot bankrupt you. They will kill your credit rating but so will bankrupcy. Make sure your house is covered first. The truck second as I assume you use it for business.