Biggest Bankruptcy Myth Is That It Couldn’t Happen to You

Who is this lady sitting in Bankruptcy Court? By all appearances, she is successful, hard-working and reliable. Her parents taught her always to honor her commitments, to work hard, to take few risks. She’s not the type of person I’d expect to see flaking out on her creditors. Yet, there she is, facing the Orange County Bankruptcy Trustee along with 7,497 others in Central District in July, 1992. Is she unique, the only one who, through some stroke of karma, found herself there? Of course not.

But even as I faced the trustee, it was as though I was someone else. This could not be happening to me. This only happens to deadbeats, to people who are irresponsible or people who are lazy. WRONG! WRONG! WRONG! said the lady in me who knew better, the one who struggled and fought the possibility of Chapter 7, who denied this could be happening to her. Once I accepted the reality, I saw what I couldn’t or wouldn’t see before. Circumstances and events were beyond my control, and bankruptcy happens--it happens to human beings, to people who are good people, people like you and me.

As I look around, I can see that many of my business associates (those who incurred expensive property debt, or leased expensive cars based on anticipated rising income or property inflation, the ones with a pocket full of gold and platinum credit cards) could easily be sitting beside me. It could be them charging groceries on MasterCard because there’s no more cash and nowhere to turn. Last week an income of $150,000 a year; this week the unemployment line. Or maybe, like me, they ventured off and started a new business only to be flattened by limited recessionary spending.

I used to believe there was always a way to handle debt and credit if you were intelligent and had business savvy. As I saw my business failing, I contacted all my creditors, requesting that they understand the economic times. But all my good payment history counted for nothing--they refused to work with me. A few were courteous and helpful; most were rude, pushy and took on an attitude that conveyed to me that I was scum. Perhaps dealing with “excuses� all day long brings on that attitude. One of my creditors, Signet Bank MasterCard, shared with me that they experience 800 to 1,200 bankruptcies a month. Obviously I wasn’t the only one with a problem.

Some days I wanted to give up and accept bankruptcy as inevitable. Other days I was determined to endure the harassment and honor all my commitments regardless of how long it took. It was only after I discussed it with an attorney friend that I saw reality and faced the fact that I had no alternative.

Then came more emotional chaos. I interviewed more than a dozen attorneys, some specializing in bankruptcy, some generalists. The specialists had developed a jaded, judgmental attitude even though these are boom times for them. The generalists had no time for me; I represented only a flat fee and a lot of work.

As the months rolled on and I continued to ride an emotional roller coaster, it became obvious that creditors, attorneys and almost all others with whom I came into contact believed exactly what I had previously believed: Bankruptcy was an unpardonable sin; it couldn’t happen to them. Perhaps they, just like me, have to believe in the myth that it only happens to other people--just like believing accidents or illnesses only happen to other people. To think otherwise is to think the unthinkable.

I know better now. My two-year ordeal has changed my life, my attitude and my values. Sure, I’d like not to have lost everything. I’d like to still have my credit, drive my BMW. But because I’ve known the other side, I’ve rediscovered me and what’s truly important--sort of like what happens when you confront the death of someone young and vibrant and you face your own immortality. And bankruptcy has served to show me my true friends, versus the friends of my former trappings--a lonely lesson. But most of all I’ve learned not to judge, because it could be me or you, and this time it was me.