New retiree story and recommendation for a good brokerage/bank

[swampwiz]

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Originally Posted by growing_older I believe that intentionally hiding assets or piling up debt with the intention to file bankruptcy and default are both crimes. What makes you think doing either of these would be a good idea?

There will be no hiding of assets. I am going to state that I have the home, and that it was bought at a certain time. And the money that I am using to buy the home has a direct link to the state grant for me to buy it, so it's not like I went out and got a bunch of cash advances just to buy this home.

Up until I realized that I had hit the "point of no return", I had no intention to file bankruptcy. Indeed, all I needed to do was to get a gig earning only $40/hr (i.e., the gig could be a conventional W2 employee gig, or a 1099 independent contractor gig), and I could have rolled up all the debt into a super low interest, 30 year loan. I tried for 18 months to get this gig. Just a few years in the past, before I went into "sabbatical" / semi-ER mode that turned into post-disaster depression for a while, I was regularly earning $60/hr. Indeed, legally I could not spend down any more of that $63K grant as it was meant for me to buy a home - hence the "point of no return". There were virtually no luxury or "high living" purchases done during this time (although there was about a $4K/mo bleed due to my living expenses and the gigantic debt payments.)

I suppose the question could be posed as to whether or not I should have given up my search earlier than the 18 months. I don't think that there is any reasonable guidance to this question.

[kyounge1956]

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Originally Posted by swampwiz (snip)I suppose the question could be posed as to whether or not I should have given up my search earlier than the 18 months. I don't think that there is any reasonable guidance to this question.

Yes, that question could and should be posed. I think some reasonable guidance is this: keep looking until you find a job, and keep working until the debt is paid. I have been in the situation of looking and looking and finding nothing, so I know it can be extremely discouraging, but IMO, unless actually unable to work, a person who owes money should not consider retirement, and especially not early retirement, until the debt is paid back.

If I understand your situation correctly, you have a grant that can only be used for housing expenses. That gives you a way to cut your expenses while working, and pay down your debts faster than you would be able to if you had to pay rent or a mortgage payment at the same time. Even if it takes you ten years to repay the $120K, you'll still be retiring earlier than the majority of people are able to, and if your portfolio grows at 7% it will be nearly twice the size it is now, even if you don't add to it in the interim.

[Milton]

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Originally Posted by swampwiz Well, the state gave me, coincidentally, $63K to purchase a home, so you could say that money is contractually obligated for me to purchase the home.

You might say that; but by the sounds of it there is no legal restriction and you are free to use it as you see fit. If that is not the case, I don't see why you are planning to use a $10K portion to purchase appliances and furniture.

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Originally Posted by swampwiz And in any case, if the creditors should get that money, then the laws should have been written which would disallow me buying an exempt asset before bankruptcy. This is analogous to a tax loophole - if such loopholes should not be done, then the law should be written to disallow it.

You may well be correct ... very likely there is nothing illegal in your plan to evade your creditors.

That said, I don't personally approve of any able-bodied person refusing to work and sticking it to their creditors; so I for one respectfully decline to provide any advice on how best to do so.

[swampwiz]

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Originally Posted by kyounge1956 Yes, that question could and should be posed. I think some reasonable guidance is this: keep looking until you find a job, and keep working until the debt is paid. I have been in the situation of looking and looking and finding nothing, so I know it can be extremely discouraging, but IMO, unless actually unable to work, a person who owes money should not consider retirement, and especially not early retirement, until the debt is paid back. If I understand your situation correctly, you have a grant that can only be used for housing expenses. That gives you a way to cut your expenses while working, and pay down your debts faster than you would be able to if you had to pay rent or a mortgage payment at the same time. Even if it takes you ten years to repay the $120K, you'll still be retiring earlier than the majority of people are able to, and if your portfolio grows at 7% it will be nearly twice the size it is now, even if you don't add to it in the interim.

I cannot use the grant to spend on rentals, only on a house. And once I have bought the house and properly furnished it, I will have virtually nothing left.

I guess what you are saying is that I should go through Chapter 7 and then voluntarily agree to continue to pay off the debt. Since I have the opportunity to completely erase my debt in Chapter 7, what logical reason would there be for me to pay off the debt, aside from somewhat salvaging my credit score? Is a good credit score worth $100K?

Now from an ethical and moral POV , I suppose that it is good karma to pay off all creditors properly - but does that extend to such institutions that have tried to trip me up and screw me over at every turn, and that have made reckless decisions with their own capital (to enhance shareholder value and to pay obscene executive bonuses) such that the government that I help support with my taxes had to bail them out so that financial infrastructure would not completely explode? Should I feel guilty that these institutions made cold hard investment decisions on me that happened to turn out poorly at this time? I'm just a number to them. I think that it would be much better karma to take the money that I would save from paying back my creditors and put it to good use helping destitute folks in Africa or India out of their squalor, etc.

But it doesn't matter. I have learned that this is a dog eat dog world, and I need to take care of #1, since no one knows how to care of him like I do. With this debt out the way, I can start the last leg of my working life with no burden, to work and save enough to give me a decent retirement.

[kyounge1956]

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Originally Posted by swampwiz (snip)I guess what you are saying is that I should go through Chapter 7 and then voluntarily agree to continue to pay off the debt. Since I have the opportunity to completely erase my debt in Chapter 7, what logical reason would there be for me to pay off the debt, aside from somewhat salvaging my credit score? Is a good credit score worth $100K?

What I am saying is that you should repay what you borrowed, whether or not you declare bankruptcy. I've never been as deep in debt as you are, so I don't know the best way to get out again, but I bet there are people on this forum who can make extremely practical suggetions on how it could be done. If your library has a copy of a book called The Richest Man in Babylon, you might find the stories "The Camel Trader" and "The Clay Tablets" of interest. There are probably reputable credit counseling services that could assist too.

The logical reason to do this is that when you borrowed the money, you promised to pay it back. If repaying improves your credit score, that's frosting on the cake.

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Now from an ethical and moral POV , I suppose that it is good karma to pay off all creditors properly - but does that extend to such institutions that have tried to trip me up and screw me over at every turn, and that have made reckless decisions with their own capital (to enhance shareholder value and to pay obscene executive bonuses) such that the government that I help support with my taxes had to bail them out so that financial infrastructure would not completely explode?

YES. Nobody forced you to borrow the money. The fact that you disagree with the use your creditors plan to make of the profits isn't a valid reason not to repay them.

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Should I feel guilty that these institutions made cold hard investment decisions on me that happened to turn out poorly at this time? I'm just a number to them. I think that it would be much better karma to take the money that I would save from paying back my creditors and put it to good use helping destitute folks in Africa or India out of their squalor, etc. But it doesn't matter. I have learned that this is a dog eat dog world, and I need to take care of #1, since no one knows how to care of him like I do. With this debt out the way, I can start the last leg of my working life with no burden, to work and save enough to give me a decent retirement.

I'm not a Hindu, so I don't know whether it's better karma or not, and it may be a moot point anyway. If I understand what you've written earlier in the thread, you will be living at near poverty level so as to be eligible for state medical coverage. At that income, you won't be in a position to help anyone out of their squalor.

What you've written sounds to me as if you have already decided not to repay. If you will excuse me for saying so, I think that would be cutting off your nose to spite your own face. It sounds as if you are willing to live near the poverty level for the rest of your life, to avoid paying off these debts, when the same or even a lesser degree of deprivation would enable you to pay them off in much less time. That ten years I mentioned in my previous comment wasn't just a number I pulled out of a hat—I did a rough estimate earlier today of what it would take to pay off $120K. I make a bit less than the $40 an hour you mentioned earlier in the thread as a threshold at which you would feel able to repay. Like you, I'm single, so let's assume our basic expenses—food, utilities, transportation, etc—are similar. If I had somewhere to live with neither mortgage nor rent, I could redirect the principal and interest I'm currently paying on my mortgage toward debt reduction. At present, I'm making the maximum contribution (including over-50 catchup) to my tax-deferred retirement plan at work, and I could also use that money. Altogether, that's about $2385 a month that could go toward paying down debt, and at 10% interest, that monthly payment would get rid of a $120,000 debt in under six years. Unless the interest rate is over 21%, the $120K could be paid back in less than ten years. You could also, during that time, be putting $500 a month into a Roth IRA (I do). I tithe to my local church, but if you don't, you could put that money into your retirement account.

In ten years or less, you could be debt free, you'd have a nest egg that's much more likely to support you during a lengthy retirement than the one you have now, you would no longer be facing a future of enforced quasi-poverty, and you'd still only be 54, which is early retirement in anyone's book.

I encourage you as strongly as I can to stop trying to think of reasons not to repay, and instead start thinking of ways that you can.

[swampwiz]

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Originally Posted by kyounge1956 What I am saying is that you should repay what you borrowed, whether or not you declare bankruptcy. I've never been as deep in debt as you are, so I don't know the best way to get out again, but I bet there are people on this forum who can make extremely practical suggetions on how it could be done ... The logical reason to do this is that when you borrowed the money, you promised to pay it back. If repaying improves your credit score, that's frosting on the cake.

But I have the legal ability to not pay it back (and even after bankruptcy, I can choose to pay them back), so I am trying to understand an objective reason for actually paying them back. And since it would not be paying back a debt that I owe, instead it would be making a donation. Sure, there could be ethical and moral reasons for paying the debt back, but that is true in any aspect of life.

When I borrowed the money, I made a promise that subject to the bankruptcy law, that I would pay back the debt. Well, by going bankrupt, I will have kept my promise, since bankruptcy allows a debtor to legally change the promise.

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Originally Posted by kyounge1956 YES. Nobody forced you to borrow the money. The fact that you disagree with the use your creditors plan to make of the profits isn't a valid reason not to repay them.

The creditors made a business decision to offer me an unsecured loan. They calculated that they could make a net profit from me. They looked at my credit score and history and figured that I had perhaps a 2% chance of defaulting, and figured with the myriad schemes of low interest balance transfers, fees, etc., and with super low interest rate money (probably coming from China), that they would come out ahead. Indeed, it was a strange mixture of disaster, recession and anti-American worker laws that lead to my situation. Had any of of those happenings not come to fruition, I would not be in my current financial state. Hey, you win some and you lose some - I am just in a position to offload my loss.

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Originally Posted by kyounge1956 I'm not a Hindu, so I don't know whether it's better karma or not, and it may be a moot point anyway. If I understand what you've written earlier in the thread, you will be living at near poverty level so as to be eligible for state medical coverage. At that income, you won't be in a position to help anyone out of their squalor.

Concerning the helping of others out of their squalor, I was speaking hypothetically as if I were to have a high income again. Of course, my plan is to earn a high income again, but I am beginning to wonder if I will ever have a decent income ever again.

And as for getting state medical coverage, I have figured out a way to game the system - just make sure that I am instantaneously unemployed when I am applying for benefits. During the year time frame that I would be using the benefits, I would increase my income - but since it does not matter if one's income is higher in the middle, but only at the beginning, I would not lose my benefits. I learned how to do this as a response of my COBRA insurance company denying me from continuation (past the mandated 18 months) of health insurance when I had cancer. You see, I tried to do things the right way - actually buying my own insurance rather than becoming a leach on society. But the system is so bad, that the only way I could get what I needed was to be (instantaneously) poor. In hindsight, this was actually a very good thing for me, as I probably have saved about $40-50K in health insurance and deductibles over the last 12 years.

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Originally Posted by kyounge1956 What you've written sounds to me as if you have already decided not to repay. If you will excuse me for saying so, I think that would be cutting off your nose to spite your own face. It sounds as if you are willing to live near the poverty level for the rest of your life, to avoid paying off these debts, when the same or even a lesser degree of deprivation would enable you to pay them off in much less time.

I only need to stay poor and unemployed until I file bankruptcy. Of course, as it was the prior 18 months of unemployment that put me in my current position, it is not too much of stretch to presume that I would be unemployed for these extra 3 months as well. Like I said, I am hoping that after I file for bankruptcy, that like GM, I can reemerge with a better after debt income. I do have the fallback of a humbly poor ER if that were not to happen for a while.

[QUOTE=kyounge1956;870548]That ten years I mentioned in my previous comment wasn't just a number I pulled out of a hat—I did a rough estimate earlier today of what it would take to pay off $120K. I make a bit less than the $40 an hour you mentioned earlier in the thread as a threshold at which you would feel able to repay. Like you, I'm single, so let's assume our basic expenses—food, utilities, transportation, etc—are similar. If I had somewhere to live with neither mortgage nor rent, I could redirect the principal and interest I'm currently paying on my mortgage toward debt reduction. At present, I'm making the maximum contribution (including over-50 catchup) to my tax-deferred retirement plan at work, and I could also use that money. Altogether, that's about $2385 a month that could go toward paying down debt, and at 10% interest, that monthly payment would get rid of a $120,000 debt in under six years. Unless the interest rate is over 21%, the $120K could be paid back in less than ten years. You could also, during that time, be putting $500 a month into a Roth IRA (I do). I tithe to my local church, but if you don't, you could put that money into your retirement account.[QUOTE]

Or I could put that $2385/mo towards my retirement instead of to the creditors. Like I said, I see no objective reason to pay back my creditors.

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Originally Posted by kyounge1956 In ten years or less, you could be debt free, you'd have a nest egg that's much more likely to support you during a lengthy retirement than the one you have now, you would no longer be facing a future of enforced quasi-poverty, and you'd still only be 54, which is early retirement in anyone's book.

That presumes I could find work. But by not having to pay the $2385/mo, I could probably move up my retirement by 5-8 years. I guess what I am saying is that I would rather stiff my creditors and have the earlier retirement than donate the money to them (again, since in bankruptcy I will have erased my legal obligation to paying them back, actually paying them back would be a donation.) I never said that my choice was completely ethical or moral, but rather - just like a health insurance company denies a treatment for someone such that the person dies - a cool hard business decision.

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Originally Posted by kyounge1956 I encourage you as strongly as I can to stop trying to think of reasons not to repay, and instead start thinking of ways that you can.

Sorry, your encouragement is falling on deaf ears.

[kyounge1956]

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Originally Posted by swampwiz (snip)That presumes I could find work.

It does presume that you find work. I can remember from my period of un- and underemployment during the recession of the early 80's that nagging doubt that I would ever be able to find another job that paid enough to live on. It took over two years and a career change, but I did find one eventually. I think you will too, if you keep looking.

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(snip) Sure, there could be ethical and moral reasons for paying the debt back, but that is true in any aspect of life.(snip)... But by not having to pay the $2385/mo, I could probably move up my retirement by 5-8 years. I guess what I am saying is that I would rather stiff my creditors and have the earlier retirement than donate the money to them (again, since in bankruptcy I will have erased my legal obligation to paying them back, actually paying them back would be a donation.) I never said that my choice was completely ethical or moral, but rather - just like a health insurance company denies a treatment for someone such that the person dies - a cool hard business decision.(snip)

By stiffing your creditors (your word, not mine) you are refusing to do what you yourself have acknowledged is the ethical thing. By your own description, you are willing to violate your own moral standards by reneging on this debt that you voluntarily took upon yourself. Legally, bankruptcy erases the debt, but morally, it doesn't eliminate the obligation to keep your promises and repay what you owe, and no amount rationalization—claiming that the people you are planning to stiff are even more unethical than you are—or of hypothetical future philanthropy, changes that.

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Sorry, your encouragement is falling on deaf ears.

Obviously, so here it ceases.

[Milton]

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Originally Posted by swampwiz I suppose that it is good karma to pay off all creditors properly - but does that extend to such institutions that have tried to trip me up and screw me over at every turn, and that have made reckless decisions with their own capital (to enhance shareholder value and to pay obscene executive bonuses) such that the government that I help support with my taxes had to bail them out so that financial infrastructure would not completely explode? Should I feel guilty that these institutions made cold hard investment decisions on me that happened to turn out poorly at this time?

It's possible to rationalize virtually anything, if you try hard enough.

[REWahoo]

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It is only an ethical movement which can rescue us from the slough of barbarism, and the ethical comes into existence only in individuals.

-Albert Schweitzer

[M Paquette]

Hmm... I think here we have an example of why investing via prosper.com and similar peer-to-peer lending mechanisms can be risky.

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When I borrowed the money, I made a promise that subject to the bankruptcy law, that I would pay back the debt. Well, by going bankrupt, I will have kept my promise, since bankruptcy allows a debtor to legally change the promise.

By this reasoning, swampwiz should be jumping onto prosper.com and getting every penny he can, since his plan says he will have kept my promise.


This seems perilously close to intentional default fraud.

[queeneev]

I can't say what I really want to, so I'll just say....1) wow, and 2) shame on him. Methinks swampwiz may not return here, since no one really "felt the love" for his plan. I hope he learned a little something.

[randyman65]

Unfortunately, many other feels the same way that he does: that he deserves to be paid more, that he shouldn't have to pay his debts, that "the system" will provide him.

Unfortunately, as we all know, there is no "system". Its my money, your money, and that of our grandchildren. I'm already helping people to buy new cars and giving $8,000 to people who can't save money for a down payment. I get the feeling that many of us will not only have to sacrifice to finance our own retirement, but that of those who didn't save for later in life and have been "cheated" by Wall Street. I have received no more formal education in finance than anyone else in this country, but I do understand the relentless rules of humble arithmetic. Pensions aren't free, welfare isn't free, and healthcare isn't free. Its just easier to pretend it is when the gov't is one hannding out someone else's money.

[SciFiFan53]

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Originally Posted by randyman65 Unfortunately, many other feels the same way that he does: that he deserves to be paid more, that he shouldn't have to pay his debts, that "the system" will provide him. Unfortunately, as we all know, there is no "system". Its my money, your money, and that of our grandchildren. I'm already helping people to buy new cars and giving $8,000 to people who can't save money for a down payment. I get the feeling that many of us will not only have to sacrifice to finance our own retirement, but that of those who didn't save for later in life and have been "cheated" by Wall Street. I have received no more formal education in finance than anyone else in this country, but I do understand the relentless rules of humble arithmetic. Pensions aren't free, welfare isn't free, and healthcare isn't free. Its just easier to pretend it is when the gov't is one hannding out someone else's money.

I agree completely. The OP is/was a pathetic excuse to try to justify a really ugly way to run away from responsibility. If this is the way that even a fraction of people feel today, we better all run for the hills - and get your survival stuff together!

[growing_older]

Unless lenders have very short memories (and they might) knowing that many people are willing to walk away from debts like this could have a chilling effect on extending future credit to anyone. Lending standards have tightened considerably from the free for all that got us into the credit mess. Perhaps they will be tightening even more if a wave of voluntary bankruptcies materializes.

[randyman65]

I recall images on TV in NYC of people lined up around the block the day before bankruptcy reform took place. I also recall the difficulty of gettingmy first credit card, the extensive interview for my first car loan, and once getting refused for a loan because my credit union thought it would be too much debt for me (it would have been).

The point being that at one time, financial institutions could not palm their bad loans off on someone else and had to take on the risk themselves, and that at one time people were expected to be able to reasonably pay their debts.

[Milton]

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Originally Posted by queeneev Methinks swampwiz may not return here, since no one really "felt the love" for his plan. I hope he learned a little something.

Perhaps the "desirable" Eastern European ladies will be more sympathetic ... especially if they don't speak English.