My Story - Part 1

Eight years ago I filed for personal bankruptcy.

The summer of 1997 was the final chapter in what had been a long, slow decent into a financial abyss. I had made a lot of stupid financial and personal mistakes, any one from which could have been recoverable, but as a sum total became completely overwhelming. My seemingly-endless mistakes included marrying and subsequently divorcing the wrong person, buying a mobile home (instead of real estate), and investing a small inheritance I received in 1989 into a business that ultimately failed. My problems were further compounded by the fact that despite having a supposedly "marketable" Bachelor's degree in Computer Information Systems, I was chronically underearning. During my worst earning year, which was in the middle of the tech boom days, I earned a paltry $8,000.

About a year before I started contemplating bankruptcy, I had found a job that finally paid something. I was still being underpaid probably by $20,000/year, but it was certainly better than what I'd made during my worst year. Unfortunately, it was not enough to cover the debt service on the massive debt that I'd foolishly incurred operating my business. It was a high-tech business, with a lot of overhead, and I kept investing in it, thinking that if we just were able to get one more piece of software or tool, it would give us the competitive edge to "get over the hump." By the time I took the job, the business was failing but still open, and I was having to take $500 or more out of my paycheck pay the business' bills. At the end of the month, after everything was paid, I didn't always have enough to buy groceries...

I felt like a complete deadbeat, but couldn't see a way out of the problem. The job was 50 miles away and the two-hours-a-day commute was killing both me and my car. My life had degraded into an endless cycle of wake up, drive, work, drive, work and then crumble into bed so I could do the same thing the next day. During evenings and weekends, I worked as much as I could, trying to keep my flagging business generating at least some income so that I wouldn't have to give it my entire paycheck. Things got so desperate at one point that I had to call my father to buy some groceries because I didn't have enough to eat.

One by one, I started calling creditors to see if they could do anything to help me. Could they lower my monthly payment, or drop the interest rate? The mortgage on my mobile home (which by then had depreciated to the point where it was worth about $40-50,000 less than what was owed on the loan) plus the space rent was whopping $1,200 a month. I'd hoped that the bank would be willing to drop the almost 14% interest rate to something a little more reasonable. I was willing to pay everything I owed, I explained, but I simply wasn't earning enough money to cover it all. Even the mobile home park made my troubles worse because they required the homes be owner-occupied, so renting out the house (or even a room) was against the rules. Everywhere I turned for help, the answer was a resounding "NO!"

If' I'd managed to get a break somewhere, I might have been able to avoid filing. If the park manager would have allowed me to rent out the house, if the bank had been willing to drop the interest rate, if the housing market hadn't have gone so soft so that I could sell the home for what I owed, or if my boss would have given me a raise even close to market rates, I might have been able to turn things around.

After getting no help from my creditors, I consulted with two attorneys, a CPA and a financial planner. All of them said the same thing, "You would be foolish not to file bankruptcy." In July of 1997 I found a bankruptcy attorney, and by that September my petition had been filed. The worst day of that period was the day of my bankruptcy hearing. My bankruptcy filing was one of the largest they had ever seen, because I had listed some 1,200 customers that were receiving services from my business. The trustee accused me of deliberately ripping off my customers. "Take their money and file for bankruptcy," he said loudly. It was all I could do to hold back tears. Afterwards, I had to go back to work and pretend nothing had happened.

As part of the bankruptcy proceedings, I surrendered my mobile home. I'd tried to give it back to my ex, since it had been awarded to me in our divorce, but that didn't work out. The ex told me the house was my problem, so I gave it back to the bank. With ruined credit and two pets, I couldn't rent an apartment. In November 1997, I moved most of my possessions into storage, and moved into a beat-up 18' travel trailer that I'd bought for camping several years before.

The last night in my house I slept on the floor. All the furniture had been moved out, and I had nowhere else to go. The next morning, I climbed into my truck and trailer with my cat and dog and headed out into world of semi-homelessness. As I pulled away from my house for the last time, I felt both a huge sense of relief and regret. I wondered what would happen next...