The trouble started with the inheritance.
Eight years ago, the economy was booming and Jane Osick was on solid ground. She had manageable student loans, a stable job and excellent credit.
Then, in less than two years, she racked up $120,000 in credit card debt.
How did a sensible schoolteacher dig such a hole? Blame it on the inheritance — a house she helped refinance when her mother was ailing and then remodeled after her mother died.
"Looking back, what I should have done was stay out of it," said Osick, 48. "We should have let her lose the house, because what difference would it have made? She could have come live with me."
Instead, with her mother's health and finances failing, she and her sister refinanced the San Diego County house and put the mortgage under their names. After her mother died in 2006, Osick and her sister remodeled the house to sell. Everything needed replacing: the 1980s kitchen and 1960s bathrooms; the 25-year-old carpet, windows and doors; the rotted deck.
Osick juggled nearly a dozen low-interest cards to finance the project, but the rates ballooned along with the balances. Panicked but hoping to hang on, she gave up her Pasadena apartment, shed her stuff and moved in with a friend for a time.
Just as the remodel was finished, the market tanked and buyers disappeared. Osick found renters, but soon they stopped paying. The house ended up in a short sale and she in Bankruptcy Court.
It's often an illness or extraordinary event that pushes people into bankruptcy, said certified financial planner Jennifer Hartman of Greenleaf Financial Group in Los Angeles. "Everyone thinks, 'Oh, they just went out and spent too much,' but that's really not the majority of people in bankruptcy."
Three years into a five-year debt repayment plan, Osick is looking to the future with new financial purpose. Before, she lived within her means but never found extra for savings; now, even with a bankruptcy obligation of $525 a month, she has built up a six-month emergency fund.
This is the bankruptcy system working as it should. Not only has Chapter 13 made her debt repayment manageable, but it also has snapped her to financial attention.
But where to go from here?
Feeling vulnerable and adrift, Osick craves the stability of owning a condo. She also would like to replace her 2000 Camry that was destroyed in a 2011 windstorm.
Then there's the matter of retirement.
"I usually say if you can't afford to save for retirement, you can't afford to buy a home," Hartman said.
Osick earns $69,000 a year teaching English and French full time at a private high school and grading standardized tests on the side; last year, she read more than 10,000 essays. In her previous life, Osick didn't think she had extra for retirement savings, but her experience in bankruptcy has taught her otherwise.
The first thing Osick should do, Hartman said, is sign up for her school's 403(b) plan, which offers a matching amount for the first 5.25% of her salary that she contributes.
"You've got free money you're not taking," Hartman said. "At the minimum, take the free money."
Next, Osick should start building up her Roth IRA, currently in a Merrill Lynch account she opened with little thought; she doesn't even know how the money is invested.
Hartman recommended Osick roll over the $900 balance to a Vanguard account and set up automatic contributions.