What’s it like?An Honorable Person Files for BankruptcyBy: Jillian McKenzie I’ve often thought of myself as a “girl scout,” even a goody-two-shoes. I bring back library books on time. I return telephone calls. You can always count on me, if I say I’m going to be there.
My personal checkbook recently reached $10,000. I’ve had the same account for decades. During that period, the bank changed hands five times, not me. The economy took its toll. There were mergers, downsizings, and collapses.
As a freelance writer, my income has always been precarious. Yet all the while, I hung in there.
I paid my car guy. I kept up with the utilities. I even paid the mortgage on my house-for ten years. There was a certain self-righteousness to my reliability.
I was proud of my A credit rating. It became a sport to me to shop for clothes at thrift shops, seek out a trusty used Honda, and turn to cheap things for amusement-like listening to books on tape and working out at the health club.
For more than 20 years I lived on the edge like this-happily, healthily. Then in 1997 a series of events conspired to push me off. A well-paying consulting job ended. The house had plummeted in value, due to Connecticut’s real estate crash of the early 90’s. It was now worth $50,000 less than the mortgage still owed. As the gods would have it, I had trouble finding new work assignments.
What to do? Like many Americans, I turned to easy credit. I maxxed my Gold Card. I got a personal loan. I neglected to file my taxes for that year, something extremely out of character for me.
With these flimsy underpinnings, before long, my whole financial structure came crashing down.
I once heard someone sum up the benefits of saving. Interest accrues. Your money grows-exponentially. Well, of course, it’s just the opposite with debt. The interest piles up. If you’re late with a payment, you get a penalty added. And the interest gets applied to that. This downward spiral is so negative. You start to have an air of desperation: “What if the check doesn’t come by Friday.” Each and every payment becomes critical. Otherwise the fragile operation will collapse.
This was a new experience for me: being late. Being late with the mortgage payment. Holding off on paying a $53 car tax (only to have a sheriff show up!).
My style had always been to be personal. So indeed, I did get in touch with creditors. I told them my sob story. I asked for more time. And generally they were obliging.
But there comes a point--especially with big institutions--when it all comes crashing down. They don’t care that you write op-ed pieces on planting more trees in city parks; or that you do substitute teaching for $60 a day ($51 take home). They want their payments. Or else.
Well that “or else” came last year when the bank threatened foreclosure on my house. What a comeuppance this was for Miss Perfect, who having done no wrong in the past had never needed a lawyer.
There is sort of a happy ending here, or at least, a happy middle. My brother, who is well heeled, stepped in to help. He was able to convince the bank to do a “work out”. That is, they agreed to stop the legal action, if he paid them $78,500 in cash, the present actual value of the house.
In other words, he bought it. I became a tenant. At least, this made my monthly lodging expenses go from $1,215 to $740. Some day I hope to be able to buy it back.
But some problems remained. I continued to have trouble landing the kind of business consulting assignments that pay a living wage. I did do a lot of freelance writing in the local press. That brought prestige and satisfaction, but a pittance in pay.
By April 2000 I was in debt to the tune of $20,000. That doesn’t sound like much. But when only several hundred is coming in, it starts to appear like a massive mountain. And I worried, that like Sisyphus, I never could make any headway on it.
It was at that point, that I decided to explore bankruptcy. It finally hit me. I was in over my head. No matter that I had “tried so hard”. No matter that I had been a good citizen for so long. I had to throw up my hands.
To me as a writer, even the word “bankrupt” was off putting: It meant empty, no longer useful, and fruitless. These are hardly inspiring notions. And they threaten self-esteem.
I came into the office of Attorney Anthony J. Salzarulo preoccupied with such doubts. Like a caller to the Dr. Laura show, I asked for advice on my “moral dilemma.”
Was I a terrible person for considering this route?
All I wanted was a fresh start.
Wasn’t everybody allowed at least one screw-up in life?
And was this going to be mine?
These were the kinds of questions I peppered him with. And I found him to be thoughtful in response.
“Bankruptcy is not something to be taken lightly,” he said. “There are consequences. And being here does bring out uncomfortable feelings in most people.”
He went on to explain, however, that filing for bankruptcy can be a valid route for some to explore. It is a legal course of action. The founding fathers themselves made provisions for allowing this. Such a measure could indeed give people that “fresh start”. But, as importantly, it had value for society at large.
What was the alternative? he asked. Should people be forced into poor houses? Should they be forced underground or into a life of crime? Obviously, such outcomes were not beneficial.
When someone got the chance to rebuild anew, that could mean new productivity, new gains, new taxes paid, etc., he said.
Again, Attorney Salzarulo stressed, “It’s not that this is something to be taken lightly. There are lots of procedures to go through, lots of checkpoints. The federal court must make sure the person filing is honest, and has no hidden assets or income.”
The lawyer, who is also trained as a Certified Public Accountant, says he particularly likes working on bankruptcy cases, because this is one arena “where you really can help people.”
Those who appear before him represent all types. Many are skilled, trained, and proficient. They have made bad deals. Or they’ve been hit with bad luck. He cites a woman who was stricken with Multiple Sclerosis. The mother of young triplets, she had no health insurance. And her medical bills were astronomical.
Sometimes these financial catastrophes are beyond individual control, he continued. Other times, indeed, they are due to personal failings and mistakes. Somebody gambles. Somebody drinks. There is a litany of human weaknesses.
Nevertheless, bankruptcy can provide a means for a fresh start.
In my case, at first, the lawyer counseled against filing. “You’re young,” he said. “You have skills. You’re capable of earning money.”
His reasoning made sense technically. I agreed, but not psychologically. I was bummed out from having gone through such a hard time for the past ten years. I was yearning to begin anew.
The very thought of it infused me with energy. If my $20,000 debt were gone, that would mean some $500 a month in payments I wouldn’t have to make. My creditors were not the butcher and baker and candlestick maker. Rather, they were two banks and one credit card company.
Nevertheless, I was welshing on an obligation-let’s call it what it is. But in human terms, I had done everything I could. I had made endless calls in quest of work assignments. I had sent out endless queries. I did substitute teaching; wrote articles, took all sorts of assignments.
I could live with the idea of bankruptcy, I reflected. Circumstances had been beyond me. At least, to a large degree.
Now indeed I would have the chance to survive, to work on what I believe, and to continue to be a functioning member of our economy.
Even if I didn’t come up with a plum of a consulting assignment, I now knew I could always come up with something that would get me through the month. With this debt relief, even being a Kelly Girl or substitute teacher could do as subsistence wage.
So I decided to move on it. It was a big plunge-like getting a divorce, or moving cross-country. But I’m pretty certain I made the right choice….
