Ten Things I Learned After Filing for Bankruptcy

originally published in the Elizabethian February 20th, 2015

I recently filed for bankruptcy and I had a great time! I laughed, I cried, I answered some questions. I paid $1800. I may or may not have lied under oath. But, in the end, I learned a few things…

#1. There are several different kinds of bankruptcies.

The most common one, called Chapter 7, is for people like me who are actually broke. The others are mostly for rich people who are hiding their assets and just want to “reorganize” their corporate structure (which is a fancy synonym for “stealing”). There’s actually one for farmers too, which is strange because I thought they were all getting huge government subsidies to operate on all that GMO corn I keep hearing about. Wow. That’s kind of depressing.

#2. It costs a lot of money to go broke.

This one sounds like a joke, and that’s kind of what I was going for, but it’s also true! If you begin reading at #2 on lists or have forgotten the depressingly high figure I quoted way back at the top, I will retype it for you right now: $1800. That is the sum of money I had to bring in cash to my lawyer’s office before they would sit down and talk to me. I’ve been told you can pay a lot more than that, but I’m not going to pay a lot for this muffler, and neither should you. I had to stop paying my health insurance and credit cards for 3 months to come up with that kind of money. Hopefully you won’t need to sell a kidney or otherwise sacrifice your health like I did in order to go belly up on your staggering debt load.

#3. Or you can pay nothing!

I was technically fibbing a bit on that last one, because you can file bankruptcy without a lawyer. However, everything I read about declaring on the Internet suggested to go above and beyond to avoid doing so, and everything on the Internet is true. There are also lawyers that work pro bono on bankruptcy cases, but so many people are seeking help from these charity organizations that the process takes months. I figured by the time I was done waiting to file, law enforcement would be seeking to arrest me every time I swiped my card at McDonald’s.

#4. They’re all going to laugh at you!

This is an homage to last weekend’s terrific Saturday Night Live 40th Anniversary Special and also the answer to the question “How will most of your friends react when you tell them you’re filing bankruptcy?” People will laugh, they’ll tell you that you screwed up, and then they’ll remind you that you owe them 100 bucks on a bet from last year’s Superbowl. Don’t listen to those people! You know what you’re doing! After all, it’s not like you got yourself into a debt situation that took years to accumulate in a gradual slide, so you didn’t realize what was happening and were virtually powerless and wanted to bury your head in the sand like an ostrich instead of taking a hard look at how much money you owed. Right? Oh yeah. Oops.

#5. You can’t declare bankruptcy for Student Loan Debt.

Yes, that’s right. To the approximately 75% of you readers that are swimming in college loan debt and will be for the foreseeable future: you are officially screwed. Credit card debt, health care bills, car loans, and almost every other kind of debt can be liquidated and thrown down the memory hole. Not so with student loan debt, which last I checked, almost everyone age 18-30 in America has plenty of. You may think that’s unfair, and now you’re asking yourself how Brown University possibly expected you to pay off $185,632 in loans with a degree in humanities (*Brown currently charges $46,408 a year). To which I respond, maybe it’s time to find out what Brown can do for you? Too soon?

#6. You can start over.

After a long and painful series of unfortunate events, it’s weird not owing the credit card companies anymore. I can only describe it as having a large weight gradually lifted off your shoulders. Even now, a few weeks after filing and several months since meeting my lawyer, it still hasn’t hit me how real the whole thing is yet. It’s like waking up to a brand new day or going to an undiscovered country. There are so many possibilities out there that didn’t exist before.

#7. Bankruptcy court isn’t a regular court

You know that intimidating courtroom with the judge and the bailiff and the hard backed wooden seats that you went to from the time you passed a school bus with its stop sign out and the sheriff was yelling at you about how you could have killed kids? No, that isn’t the court you go to when you’re filing bankruptcy. It’s a small, informal room filled with nervous people like yourself and a bunch of lawyers dressed like they’re going to watch their kids play T-ball. When the judge arrives with binders full of things (not women), he or she will sit down at a table and call the names of people filing for bankruptcy. When your name is called, you and your lawyer take a seat in front of the judge while numerous questions are asked about your financial history and your dealings with the law office that is representing you. Answer a quick “yes” or “no” to most of these questions, and you’ll be ready to hit the road to financial freedom.

#8. You mean I’m not done yet?

Assuming you answered everything correctly in court and your lawyer filed all your paperwork correctly, your bankruptcy proceedings should be going smoothly from there, independent of any & all dealings having to do with you – except for one short and super long online test. The test is called a debtor education course, and you have to be logged on for at least 3 hours on a debtor education course website of your choosing in order to successfully complete the course. If you do not manage to complete the course in the generously allotted time of 30-60 days after filing for bankruptcy, then your case will be thrown out and you will have to re-file. No one wants to do that except paperwork sadists.

#9. You’ll be able to rebuild or re-destroy your credit within a year.

According to my highly paid lawyer (and I should know, I paid him), credit card companies will start offering you credit cards with exorbitant rates again within a year or so, and you would do well to sign up for them in order to more effectively rebuild your credit. Alternatively, you can max out your shiny new Best Buy store card with 27% interest and a $300 spending limit on useless home stereo equipment and choose to never pay it back. What’s the worst that could happen?

#10. Credit Cards aren’t as important as you think they are.

Last year, after I had maxed out my regular credit cards on a business trip to Las Vegas, I was able to use my bank’s debit card on hotel stay, car rental, and after I was fired, a flight back. So, as far as I can tell, your Visa card really is “Everywhere you Want to Be” and it doesn’t matter one bit to anyone that it’s not a real credit card.

To sum up: Yeah, you probably won’t be able to buy a brand new car for several years, but with all the money you’re saving from not paying Bank of America and Citibank, you can just buy it in cash!