In Shock

Life's Curveballs: Financial Freedom Navigating Debt & Bankruptcy

• Teresa Baglietto • Season 1 • Episode 3

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In this episode, Teresa shares a personal story of financial hardship during the 2008 global financial crisis, highlighting the stress and challenges related to sudden job loss and accumulating debt. Joined by bankruptcy attorney Alia Khan, they discuss the common reasons for bankruptcy, differences between debt consolidation and bankruptcy, and the process and benefits of filing for Chapter 7 bankruptcy. Alia also addresses common concerns about credit impact and provides guidance on reestablishing credit post-bankruptcy. The importance of financial education, budgeting, and leveraging tools like bankruptcy for financial relief is emphasized, offering hope and practical advice for those overwhelmed by debt.

To learn more from Alia, be sure to follow her on Tik Tok and Instagram @thebankruptcyqueen
You can also visit her website and reach out to her directly to connect with her about your options. 

Contact Information:
Alia Khan
akhanlawoffices.com
(800) 419-8950

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Hi, everyone. Welcome to the show and happy Monday. On today's episode, we're going to dive deep into financial hardships and the stress from sudden job losses and unexpected bills that you may not be able to pay to the slow and steady accumulation of debt. Financial shocks can leave us feeling overwhelmed. Overwhelmed and completely stressed out. I know this firsthand because back in 2008, during the global financial crisis, I found myself facing a perfect storm of financial hardship. I had lost my six figure job. I had nothing in savings. I was going through a divorce, supporting three kids, one of which who was attending a private high school with a tuition. My income had completely vanished and I was drowning in a sea of bills from rent, utility, and credit card debt. I was using my credit cards to live off, maxing them out. every single time and then applying for a low interest loan to roll the balance over. And then guess what? I would start using my fucking credit cards all over again. I dug myself into a massive hole of debt. Mostly I was just trying to put food on the table for my kids. And I remember a time when a good friend of mine invited me over to her house. to go grocery shopping in her pantry, just so I could feed my kids. Imagine how tough it is when you're asking your friends for financial support. It's humiliating. I was going to thrift shops before thrifting was a trendy thing, like it is today, to buy my kids clothes and gifts. This experience was incredibly humbling and it taught me how critical it is to have a strong financial foundation. If you grew up in a household like I did, I lost my father at age 10. My mom became a single parent to four kids. And despite her coming from a very wealthy family, she had no experience managing money, which meant she couldn't teach us those skills either. And that's why I believe it's so important to start with the basics. If you're in over your head in debt, There are options out there that you can leverage to get out of debt and eliminate that mountain of stress. Today I'm joined by a dear friend of mine, Alia. She's a bankruptcy attorney who's seeing firsthand how overwhelming financial stress can be. Her clients represent people who are either drowning in debt have taken second jobs just to get by to other clients who may have large, homes, cars, and on the outside, they look like they're dripping in money, but they're actually buried in debt because they're living beyond their means. Sound familiar? That means they're spending more money than they're actually bringing in by charging everything to their credit cards. Alia has helped these clients overcome debt and take meaningful steps towards achieving that financial freedom. And today she's going to share some invaluable insights with us and we'll talk through what a Bankruptcy really means and how you can take control of your finances.

Alia Khan:

Silence.

Teresa:

debt like I did or maybe they decided to go through a debt consolidation firm given your expertise in this area, what are some of the most common reasons people file for bankruptcy?

Alia Khan:

Number one, they had job loss, or they got rid of their overtime, or experienced reduced hours. So they're not making the same level of salary that they were in the past. The next reason is divorce. Disability, things like that. Expenses have gone up since the pandemic, groceries, gas, utilities, rent has all skyrocketed and they're making the same income. So at the end of the month or at the end of the year, they have to rely on credit cards for all the other necessities that they can't pay out of their paycheck.

Teresa:

Do people come to you who might be considering debt consolidation instead of bankruptcy? What's the real difference between the two?

Alia Khan:

Yes, 50 percent of my clients. Come to me and they say I am in a debt relief or debt consolidation program and I'm paying X amount of dollars monthly for the next five years. That's usually what the debt relief company puts them in. those debt relief programs are not actually paying the creditors at all. They are putting money in a reserve and they're negotiating out with the creditors. as they please. So during

Teresa:

So, um, We'll see you again. Bye, everybody. Bye. Bye.

Alia Khan:

by this creditor, but I've been diligently making my payments. There's no actual protection in that situation. Other clients come to me and say, I'm thinking about debt consolidation. I'm thinking about debt settlement, but what's the difference between that and bankruptcy? Chapter seven bankruptcy is It's one the best relief out there. You wipe out your debt. All of your credit cards, your personal loans, medical bills, old tax debt, vehicle repossessions, payday loans, all of that gets wiped out, assuming you qualify for chapter seven bankruptcy. That's not the same as debt consolidation. Debt consolidation is a payment plan and you don't wipe anything out. You're paying toward, these that you have.

Teresa:

Are there different kinds of bankruptcy?

Alia Khan:

Chapter seven is the favorite amongst bankruptcy attorneys and it's the favorite amongst clients because you get to wipe

Teresa:

Yeah. Okay. Silence. Silence.

Alia Khan:

and they need to file a chapter 13 to put a stop to a home foreclosure or car repossession or income that they make is just too high. to squeeze them into a chapter seven. Now a chapter is better than a debt settlement or debt relief program because a chapter 13 you are getting protection from the federal court. It's still a five year payment plan, but at the

Teresa:

Okay. That's the person that runs the, that's, that's the um, The VIRP, has had significant meetings with, with, uh, President Trump's official official advisors for Trump. Uh, to, to address, to address the, uh, the questions, the questions that are being raised by, uh, federated elections.

Alia Khan:

who make

Teresa:

So I'm going to start by explaining what is trans. And how does it work? So, um, to make this a bit more use friendly, I'm going to show you how to input a trans to the, um, to the book. So, um, if you look at what we have here, this is a, uh, a trans template. and I'll see you in the next video. Bye.

Alia Khan:

do other things like put money in a retirement account. Put money in an emergency savings. Put money into a 529 if they choose to do that.

Teresa:

What if they have a car loan and they're making payments on the car loan? What happens to the car in chapter seven?

Alia Khan:

Nothing happens to the car. You get to keep your car

Teresa:

Okay.

Alia Khan:

as you continue to make payments. You make your payment directly to the vehicle finance company. If you

Teresa:

Okay. Um, Yeah. Okay.

Alia Khan:

and it's only valued at 22, 000, for example. You have too much negative equity. You could walk away from your car in the chapter seven bankruptcy, and that entire amount would be wiped out. And after the bankruptcy is completed and your case is closed, you can go finance another vehicle.

Teresa:

Okay. Where is it? Not as smart as I thought it was. It's as seamless now. You're there. It's as smooth now. So instead of me asking you to get in I'm sorry, excuse me. I'm asking you to get in front of this thing. I asked you to get in. This thing. I'm asking you to get in. This thing. You are a man. I'm sorry. I'm sorry. I'm asking you to get in and sit in front of this thing. I need to know exactly what's going on in here. very much. Bye bye. Silence. Right. Okay. Okay.

Alia Khan:

if I live

Teresa:

very much. We'll see you tomorrow.

Alia Khan:

they can actually protect when they file for chapter seven.

Teresa:

There's a stigma that filing bankruptcy is bad for your credit and that once you filed, you never have the opportunity to get new credit to apply for. A car loan, a home loan. You touched a little bit on that, but do you find that when new clients are coming to you, that's a big concern for them?

Alia Khan:

Yes, that is the first thing they ask my office. Will I ever have credit extended to me? Will I be able to finance a car? Will I ever be able to buy a home? during the life of the bankruptcy, so let's just say chapter seven, it's a three month long process. All of your credit cards that you were putting obviously things on of that becomes null and void and all of that debt gets wiped out your personal loans, your credit cards, things like that. your

Teresa:

Right. Bye bye. Okay, Okay,

Alia Khan:

up to about 650. you purchase

Teresa:

Okay. Okay. Okay. Okay. Okay.

Alia Khan:

of options for people who have filed bankruptcy they can have credit extended to them. But you are absolutely right, Teresa. That is the first question they ask, and they, they are very afraid.

Teresa:

Yeah. Yeah.

Alia Khan:

going to be tanked forever and they'll never be able to do all of these things that people want to do, like buy a home and buy a car. But it's important they actually apply for credit cards again. I know it seems counterintuitive, but in order to build your credit score back up, you have to charge on a credit card. And.

Teresa:

exactly. Yeah.

Alia Khan:

up.

Teresa:

That's encouraging when somebody goes to a debt consolidation firm. Doesn't that have some kind of impact on their credit

Alia Khan:

when you're part of a debt consolidation program or a debt relief program, your credit score is not rehabilitating in a positive way at all. It's still showing delinquent late payments, nonpayment, many clients think, erroneously that the debt consolidation company is paying all of their creditors on a regular basis and they are not

Teresa:

Sociology. Oh, Get it together. Oh, Get it together. Do it. Do it Do it Yeah. Yeah. Okay.

Alia Khan:

When they get sued or when there's delinquent payments, Your credit is taking a hit throughout that entire time until everything is

Teresa:

Wait. Oh my gosh. I'm so sorry. Hello. Oh my gosh. yeah, I mean, I'm not going to, uh, can you hear me?

Alia Khan:

that way.

Teresa:

Have them do their homework and research and really vet out what's the best option for them. Silence. Silence. Silence. Silence. Silence. Silence. Silence. Silence.

Alia Khan:

your credit score and your credit report is still reflecting the debt is sitting there for a bankruptcy. As soon as we file your bankruptcy, it's going to show zero balance on all of your credit cards and personal loans. then three months down the line. Everything is going to show discharged and your case will be closed. So you have nowhere to go but up a chapter seven bankruptcy.

Teresa:

Is it harder for someone to reestablish their credit through debt consolidation than filing for, chapter seven? Easy for me to do that. Then I will tell you a little bit more about myself, and uh, what kind of people I am and see my sense of humor and how it all gets rolled together.

Alia Khan:

many times clients have come to me and said, I'm being sued. When you're being sued by Capital One, Capital One, for example. That's going to reflect on your credit report and it's tanking your credit score. Even though you thought you were making payments toward your creditors chapter seven bankruptcy, your score tanks temporarily. Then it goes up, then it tanks again. And then once your case is closed in a couple of months, You have to take some initiative to start repairing your credit. The only way to do that is by applying for credit cards or an installment loan.

Teresa:

Debt consolidation sounds scary. You've got this risk, and dependency on this firm that could be misrepresenting your case to these creditors or banks. And next thing you know, you get a call saying, hi, this is Capital One. We're suing you because you owe us XYZ. It sounds much riskier

Alia Khan:

exactly. You hit the nail on the head. It's, there are so many and they are in competition with bankruptcy attorneys and we are in competition them. We don't refer to each other, if you have a small amount of debt, let's just say you have 5, 000 worth of debt, that is something where a debt relief or a debt settlement company could help you

Teresa:

And now, we're going to do a little bit of an analysis so we're going to look at how so I'm a student at the University of North Carolina, and I've been here for a few years, and I've never really lived in a dorm, and now I'm going to look at the units that we use for these programs.

Alia Khan:

without payment. It's unethical. Consolidation doesn't ask you for money up front, they hide it within their fees. If you look at the contract, you've paid the debt consolidation company double than what you would have paid a bankruptcy attorney and a bankruptcy attorney is wiping out your debt. The debt consolidation company not only is charging you their own personal fees, but they're not wiping out your debt at all. You're paying it back.

Teresa:

Let's say. I want to file for chapter seven bankruptcy and I'm in a situation where I don't have the money to pay you. What are my options

Alia Khan:

My office tells them stop paying on everything,

Teresa:

Okay. Okay. Okay. Okay. Okay.

Alia Khan:

or family, or number four, they have a friend or family member pay on that person's credit card. I take credit cards from Grandma or Uncle Joe,

Teresa:

Right. Okay. Okay.

Alia Khan:

about

Teresa:

Hi,

Alia Khan:

anywhere between 2, 500 to 4, 000. Depending on

Teresa:

everyone. Bye bye. Um,

Alia Khan:

they could never pay that off in Yes. I said, yeah. I guess so. Yeah. Yeah. worth of debt, and you get your life back. There's no amount you can put on being able to sleep at night. they feel so much relief on the day we file it's.

Teresa:

I bet they do. The number one reason people are stressed is due to financial

Alia Khan:

Mm

Teresa:

struggles, hardships

Alia Khan:

Creditors don't only call debtor or the person who used the credit card. They call family members and friends. They call the person's job. if they sue you and you don't answer the lawsuit because you blow it off. They will send judgment to your employer and your employer is mandated to garnish your wages within 10 days. It's shocking. And so that's an emergency filing at that point

Teresa:

it.

Alia Khan:

you probably didn't even owe that actual dollar amount originally. That is all of the fees. Penalties costs associated with the lawsuit that is tacked on and they will garnish your wages until it's paid off and many try to get an exemption and say, Hey, I can't

Teresa:

Thank you.

Alia Khan:

this. But guess what? No judge

Teresa:

Silence.

Alia Khan:

going to actually grant you an exemption. You have a job. Therefore, can pay off the debt. You're not insolvent in a wage garnishment situation. The good thing is. If you get a wage garnishment order or you get a lawsuit, don't feel hopeless, you can file for bankruptcy and it goes away permanently.

Teresa:

Bankruptcy doesn't seem as negative as many of us think it might be you can still, reestablish your credit, have the ability to buy a home buy a car down the road.

Alia Khan:

Right, and whatever that looks like for people. Some people, they don't have college bound children or some people have a pension. I do think most people want an emergency savings fund. If there's a car repair that comes your way, if there's an emergency medical bill. You need a little buffer in your savings account to pay that. It allows

Teresa:

Yeah. Yeah.

Alia Khan:

you to truly build. Well, if you are strategic about it, know, everyone's situation is different, and they may still be living paycheck to paycheck, at least they're paying for the important things like rent, car payment, food, utilities, gas, and their money isn't being thrown at all of this junk debt, is credit cards, paydays, personal loans.

Teresa:

Right, it may be impossible for them to ever pay that off.

Alia Khan:

It's mostly impossible. I'm honest with clients and I say, you make 000 a year. How are you going to pay 50, 000 off, in your lifetime? They never thought about it that way. don't think that they're looking at their salary and looking at the amount of debt they have. They're so. frustrated and ashamed and stressed and all of the feelings that people have when you have financial hardship it's your chance to say, Hey, I need to wipe out this debt and I need to walk in to the next year. Being able to start thinking about budgeting better. To, they're forced to live on their paycheck for a period of time. So that forces you to budget.

Teresa:

Yeah, I look at my own personal situation where my mother had no idea how to manage money. She was a housewife living in a very social world, playing tennis, playing golf. And the last thing on her mind was let's put a budget together. And live off of it. And we ended up, years later, after she blew through our savings, sadly we had to go on food stamps I remember my brother and I being at the store with her hiding in the background because we didn't want. Any of our friends to see our mom paying for groceries with food stamps. And we lived in a country club. Like that was unheard of people didn't do that back then. As parents today, it is our job to help educate our kids on managing their money because there's so many people out there who don't know how they were never taught and schools don't have courses.

Alia Khan:

Absolutely. And that's what a lot of clients say. They say, my parents were in debt too, and I never got any support or help from them. And now you're asking me to. Do a good job with managing credit and colleges extend credit to 18, 19 year olds who don't really know how to manage their money. There's a million reasons why people get into debt and some reasons are very sad and other reasons are just basic budgeting whatever the reason is. The client is very scared and nervous that as their attorney or the actual federal court trustee is going to ask them, well, why did you get into debt? Let me tell you, nobody cares. My job is to tell you. Hey, you qualify for bankruptcy, or you don't qualify for bankruptcy, and here's what you can save. And here's what you get to keep and here are all the protections you have and here's the process and how long it's going to take.

Teresa:

As their attorney, when they're going through this process, what is your role versus what they actually have to do? Mm hmm. Mm hmm.

Alia Khan:

There's a lot of heavy lifting that happens prior to us filing the case and attending the court hearing together on zoom. So when they call our office, they get vetted. They have to give us information about their income, household size, assets. Then we tell them, yes, you qualify for bankruptcy. Now, these are all the documents you need. There

Teresa:

hmm. Uh,

Alia Khan:

There's a whole

Teresa:

I don't have any questions. If you've got any questions for 5010 or something, please do not hesitate to reach out. And I'm sure that these folks will answer any questions that you have. And we will be happy to help you. Thanks, everybody. So now, I'm going to go ahead and turn it over and give them the opportunity to take their questions. That's my passion for two weeks ago, I was excited to find out your success story. So, it's been a pleasure. So are you sure you want to do this? Is it going to be hard? It's going to be hard. Tell us how you feel about it. And what it looks like. Yeah. Okay? Yeah. Okay. Yeah. Okay. Right.

Alia Khan:

And then that's it.

Teresa:

You talked about how relieved people feel after they've filed.

Alia Khan:

Any client that ever talks to me after the fact is so grateful and so happy. The phrase I hear a lot is this is a weight that got lifted off my shoulders. I feel so much better. I feel like I'm in a better space with my children. I feel like I'm in

Teresa:

Hello, everyone.

Alia Khan:

I also think they didn't know that this process was going to be as seamless as it really is.

Teresa:

They go in frightened because of the unknown and you've educated them, guided them, coached them

Alia Khan:

for sure. I see a lot of comments on social media about bankruptcy being this immoral decision and people need to pay their bills. The client is crying and they feel ashamed they are coming to the table as bankruptcy being their last resort. Bankruptcy should be your first resort. If things are getting overwhelming, don't wait to get sued. If things are getting overwhelming, don't wait until there's a lien on your home. You

Teresa:

Right. Yeah.

Alia Khan:

Have a great team in place. I have one paralegal that I've had for about 10 years. We just hired another one. Those are the only two women you're going to be talking to besides me. And they are extremely kind to our clients. They make them feel better and is never judgment when you're speaking to our office.

Teresa:

For those that might be considering bankruptcy, you get to keep your car, your house, the things inside your home that you bought on credit card and reestablish your credit. It's a way for you to be able to start over There's tools out there for us for a reason, and I don't think people should be ashamed that they have to leverage them. And bankruptcy is one of them for financial hardship.

Alia Khan:

Absolutely. That's what I tell clients. And a lot of my followers as well. It is created federal relief for you. You're not breaking the law. The United States created it. For people who have overwhelming debt a way to

Teresa:

Yeah.

Alia Khan:

out of it and you get to protect your pension, your retirement accounts, home, your car. The point is you get to get rid of the debt that's bringing you down allow yourself to keep the things that are important to you.

Teresa:

For listeners who might be feeling overwhelmed. By their debt and in the state of California. How can they reach out to you?

Alia Khan:

They can go to my website. It's a con law offices dot com, and send me an email or call my office we can have them assessed for whether they qualify for chapter seven or not. If you live outside of California, we can refer you to an attorney. that we work with in your particular state as well. if you just want to hear about debt bankruptcy, you can follow me on Tik TOK and watch some of my videos. I am the bankruptcy queen and my full name is Alia Khan. You'll be able to find me fairly quickly. but thank you so much, Teresa. This was great.

Teresa:

I'm so glad you were able to join today. Thanks again. She really is the bankruptcy queen. Ali has 30, 000 followers, if not more. And that tells you there's people out there, 30, 000 of them. Looking for information on bankruptcy you can find her on Tik TOK or Instagram at bankruptcy queen. That's all one word. Don't hesitate to follow her. We'll have all the details of her email address and where you can contact her office in the notes of the podcast. Here's a quick recap of what we covered today. If you have questions about bankruptcy, reach out to Alia directly. If you follow her on Tik TOK she has a lot of content with questions, answers, Live videos, everything that you would need if bankruptcy is the path for you, don't be ashamed. Don't be embarrassed. It's a tool out there for you to take advantage of so that you can find financial freedom and alleviate that stress that's in your life, preventing you from sleeping and living. Once you've made that transition, You can then start putting a budget together and there's plenty of information out there on YouTube, different podcasts that talk about budgeting. So no matter what financial situation you find yourself in, just know that there's relief out there and you don't have to carry that burden any longer. Thanks for listening, everyone. Until next time.

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Teresa Baglietto

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