Chapter 13. Is Bankruptcy Right for You?

Even if you're on the right track, you'll get run over if you just sit there.

Will Rogers

Bankruptcy can do some great things for some people. Just ask Connie. Connie Hartwell was an 83-year-old, desperate woman when bankruptcy relief gave her a new lease on life. Bankruptcy was her last chance before her financial life completely unraveled.

In 1977, Connie purchased her home for $30,000. She originally had a 30-year fixed-rate mortgage loan with monthly payments of $207.63. In 1988, Connie was approached by a door-to-door salesman who suggested that she make a variety of home repairs, including the installation of new vinyl siding and windows. In order to make the repairs, the salesman referred Connie and her granddaughter to another lender to finance the repairs and consolidate other outstanding loans.

The salesman and the new lender gave Connie, who had limited financial resources, a loan that nearly doubled her current interest rate in the principal amount of $137,611.01. After Connie informed the lender that she was having trouble with the monthly payment, the lender refinanced her loan twice in 1991. Eventually, Connie entered into a new loan with a principal amount of $149,150.00 that included a balloon payment at the end of the loan term that was greater than the principal amount. The monthly payment of $2,005.71 equaled 98.5 percent of Connie's and her granddaughter's combined incomes.

It was not long before Connie and her granddaughter ...

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