NEW YORK (MainStreet) — Kristina McKinney was left with no recourse when her mother used her identity and rented six apartments during her stint in the army, leaving her on the hook for the unpaid rent.
When the creditors started garnishing her wages, McKinney, 23, who is now a manager at a Walgreens drug store in Colorado Springs, Colo., faced only two heartwrenching options - file a police report and send her mother to prison for fraud for the leases she signed over five years or file for bankruptcy. Unable even to obtain a cell phone contract or rent her own apartment because of the debt, McKinney decided her only option was to file for Chapter 7 in January.
“I feel like I did the right thing even though it sucked,” she told MainStreet. “The debt made me look like an irresponsible person.”
“I don’t have that much to my name, but I did it more so that we could survive since I am about to have a baby,” she added.
While many Millennials and Gen X-ers may have more debt than assets, they should determine if they need to file for bankruptcy
Seek Counseling Before Filing
McKinney sought the free advice of a free credit counselor from Transformance, a member of the National Foundation for Credit Counseling, which provides free or low-cost credit counseling for consumers.
“She was super nice and talked me through the process,” she said. “She made me feel like I had options and didn’t treat me as though I was stupid.”
In 2011, McKinney’s car was totaled during a car accident, and because she did not purchase gap insurance, she still owed $13,000 out of a $23,000 car loan. The auto loan, plus the thousands of dollars she owed the creditors of the six apartment buildings, meant that she would have “been in debt forever,” she said.
“I am not a hateful person and did not want to file a police report and send my mom to jail,” McKinney said. “The apartment debt made it impossible for me to climb out of debt without filling charges against my mom.”
Consumers are required by law to seek pre-filing bankruptcy counseling, which can “expose them to other options such as a debt management plan, settle with creditors or not pay the debt at all,” said Catherine Carter, a Colorado Springs, Colo. branch manager for Transformance, a member of the National Foundation for Credit Counseling, which provides free or low-cost credit counseling for consumers.
Deciding Whether to File for Chapter 7 or 13...