Over at Almost Frugal, Emily shares her story of bankruptcy. It’s an interesting read, but there are a few spots that gave me pause.

 

The short version of Emily’s short version:

She and her husband bought a franchise. Things were going well — car loans were paid off, they moved into a new house — until sales began to slip and a second franchise was purchased. Things fell apart thereafter, and the second store was closed after 15 months. They declared bankruptcy, and lots of things went to hell in a hand basket.

 

My initial analysis

Some of her personal strife I cannot imagine. Most notably, they lost a child: She was stillborn. That’s a tragedy regardless of surroundings, but amidst that much turmoil it’s industrial-sized salt (if such a thing existed) in an open wound.

So maybe I’ll sound like an utterly horrible person for pointing out the following. But so be it.

 

The Second Store

I’m assuming the decision to enter into a second store was not made lightly. Nonetheless, Emily specifically says that sales had already begun to slip when they decided to expand.

Knowing that the economy was rocky, this may not have been the wisest route. I don’t know the story behind that big step, nor do I know how Emily views the decision in hindsight. She doesn’t get into it.

So I could be reading into things, but the tone I inferred was one of nonchalance about what proved to be a financially fatal misstep. The summary skips from a bad economic climate, with corresponding slips in profits, to the decision to (rather obviously) overextend their resources.

Emily then goes on to detail how, at the worst point, they stopped drawing any money from the business at all. If they had, they wouldn’t have been able to pay their employees. I can only imagine the frustration of working “gratis,” as she put it. Still, there seemed to be a rather large pang of self-pity there, and it’s my understanding that most small business owners go through a period (or several) of making no money at all. When they’re not actively losing it.

Of course, Emily was coming off a financial high of making good profits, so this must have been an especially disappointing turn of events. Still, isn’t this a risk that she entered into, eyes wide open, when she and her husband bought the franchise?

Again, maybe I’m reading into it. But this next part, I know I’m not.

 

Bankruptcy

“I’m very grateful we had nothing of worth, the bankruptcy trustee had nothing to confiscate and sell.”

Yes, thank goodness those creditors won’t get more things to help make up for the losses they’re taking on your debts. Nothing but gratitude that those vultures — they want you to pay back what you spent! — don’t get your stuff to make up for taking a chance on you and losing. Suck on that, people who expected you to live up to your responsibilities!

“I do have regrets, too.  We never lived an expensive lifestyle, with exception of the new house.  Both of our cars are 10 years old.  Our only vacation these last few years was Las Vegas for a Domino’s Rally…  Sometimes I wish we would have taken a beach vacation or something.”

Indeed, it is a shame that you weren’t irresponsible and charged up more debt that you couldn’t (and won’t) pay off. You could have really stuck it to those creditors. You could have indulged yourself. After all, it isn’t like you’ll have to pay it back now.

“[Bankruptcy is] demeaning.  You feel like the lowest of the low.  The courts made us take this finance class which I could have taught, where we were patronized because of our lack of financial knowledge.”

I can understand frustration at being taught basic financial facts that you feel you already know. And yet… You bought a second store when the first one began to struggle. So perhaps you shouldn’t be so quick to dismiss the financial lessons contained in these sessions?

Perhaps you weren’t being “patronized,” but instead were given the opportunity to look into your situation and see any assumptions or miscalculations of finances that got you into this mess?

And even if all the classes taught was “Debt is bad. Live within your means.” maybe, just maybe, your miscalculations — whether of judgment, finance or simply underestimating risk — mean that they should assume you need teaching from the ground up.

Emily, you begged for a lifesaver because you were drowning in debt. I don’t think you should be allowed to sneer at what they give you.

 

Post bankruptcy

 

Perhaps I’m most disappointed by her (lack of) description of bankruptcy.

I know the focus of the piece is on the new chapter of her life, but she misses a chance to actually explain the process or the trials and tribulations that you experience.  Her summation?

“A few thoughts about bankruptcy.  It’s expensive.  It’s complicated.  It’s demeaning.”

She utterly fails to bring home the brutal reality of bankruptcy. The fact that it’ll haunt you. The fact that everything will be harder to get now. Nothing about any harrowing experiences from the process.

It’s just another case of people being overly glib about bankruptcy. Every missed opportunity like this simply reinforces the poor education about the process. There are rarely tales of caution about this kind of thing, just a (relatively) happy ending of how they’ve survived and are looking forward to building a new life.

I understand the need for a positive outlook. But aren’t we just telling people that bankruptcy is just like “Home” in the game of tag? You touch it, and you’re safe. Being chased? Feeling cornered? Just run to that spot, and no one can get to you.

Yeah, there are inconveniences. You attend some embarrassingly basic classes that you get to jeer about later. But after that, it’s over. The bankruptcy is discharged. In Emily’s own words,

“Post-bankruptcy, your slate is clean…Your life and finances become your own again.”

(To be fair, she goes on to discuss the responsibility that comes with that.)

But her opinions on life after bankruptcy seem even more glib than her opinions about the process itself.

“It’s a relief to be able to pick up the phone again without fear of harassment.”

Those phone calls? They are people who want the money you promised them. The money they gave to you to spend. Yes, debt collectors can be a horrid, abusive bunch. But to portray companies’ attempts to get what they are due as “harassment” is to get carried away with hyperbole.

 

Summing it all up

 

So that’s my “Starting Over” story.  We’re still standing strong, somehow our marriage is surviving… We’ve learned some hard lessons…  We’ve gained humility and compassion.

I’m glad that she feels they’ve gained from this. But I would really like to see some examples of that humility she talks, because I see none of it in this piece.

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