bankruptcy’s credit netherworld is a lonely, discouraging
process—as many Americans will soon find out
P. Joseph Potocki
squared, jaw thrust defiantly out, I reached for the door
to the Federal Bankruptcy Court in downtown Santa Rosa, Calif.
It was a warm and sunny late-May morning. I’d spent months
plowing through paperwork, pulling out clumps of hair and
reconditioning my backbone, preparing for this very moment.
A strange psycho-kinship with Bert Lahr’s Cowardly Lion had
grown inside me as I prepared to engage a similarly great,
powerful and really scary wizardry. Having for many months
played out alternately ruminative and then self-loathing excitations,
as though completing this process required each day for my
yin to duke it out with my yang, finally, my paperwork was
assembled and I was set to enter the vestibule leading to
the federal crypt of my financial ruination.
My plan was to swing open the door, beeline it to the clerk’s
counter, plunk down the fee, file for debt relief and slither
away incognito. Instead of making a quick break to the counter,
I was greeted by two uniformed officers, each smiling knowingly
and laconically, instructing me to remove my belt, empty all
pockets and place everything, including my wretched ream of
requisite paperwork, onto an X-ray conveyor belt.
That’s symbolism for you, subtle as the plague. But only just
now has that symbolism dawned on me, fully six months after
the fact. Perhaps that’s because when soliciting bankruptcy’s
scarlet letter, one is more inclined to focus on the deed’s
radioactive fallout than on some ethereal symbolism, no matter
how blatant the empty-pocket motif. Still, I swear I could
hear insolvency’s cosmic jester squealing himself silly with
glee at my filing, for yet another poor mortal schlub had
just checked into his Hotel California.
Or, well, maybe not.
According to the National Bankruptcy Research Center, October’s
consumer bankruptcy filings skyrocketed 40 percent from the
year before, fully 20 percent higher than September. From
the first of this year through Halloween, more than 900,000
people filed for personal bankruptcy. And looking back, 2007’s
numbers far surpassed those filed in 2006, it being the first
full year the highly contentious Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 was enforced. This draconian
legislative gem, a credit-card-industry-writ wet dream come
true, makes qualifying for Chapter 7 bankruptcy a far more
costly and difficult affair.
Consider for a moment that somewhat more than 300 million
Americans are breathing and buying stuff today. As of July
2008, our combined national credit card debt stood at $962
billion and rising. That means, on average, each household
carries about $11,000 on credit cards alone, never mind mortgages
and other ongoing financial commitments.
Chapter 7 leaves the debtor with a nearly clean slate when
all is said and done. However, while Chapter 7 provides individuals
relief considerations, one’s credit is toast for at least
seven years. But, once bankruptcy is granted, should one work
hard, live frugally and, as penance for sins against capital,
endure years of want and consternation, one reemerges a creditworthy
phoenix, ready to gingerly reengage the credit/debtor mainstream.
That’s because capitalism requires we prodigal sons and daughters
return to its fold in order to ensure capitalism’s own survival.
Perhaps authors of the Bankruptcy Abuse Prevention and Consumer
Protection Act forgot this. I say this because were he not
rehabilitated, but instead permanently vanquished, the debtor
would be lost to agencies of credit forever, made an outlaw,
hermit or kook, and thus be unavailable to institutional juice
rackets for future capital bleeding.
But even after a Chapter 7 bankruptcy discharge, not all debts
go away. Back taxes, child support and student loans do not
get eliminated by Chapter 7, though unsecured debt (i.e.,
credit cards) pretty much does. That’s the reason why credit-card
companies aren’t too keen on folks filing Chapter 7.
The plastic camp’s comeback was to write, lobby hard for and,
after innumerable legislative disappointments and with Blue
Dog Democratic support, ultimately shove a bill through the
2005 Republican Congress, gifting the credit-card companies
by screwing the consumer. George Bush, no doubt, took enormous
delight in inking this class-war declaration.
Though we’re closing in on three years since its passage,
this bill, commonly referred to as the “New Bankruptcy Law,”
imposes higher filing fees, mandates that a petitioner pay
for and complete credit counseling, and lards on additional
paperwork, compelling most attorneys to double fees for essential
bankruptcy services. Most notably, by injecting “means testing,”
which is designed to disqualify many people who wish to file
a Chapter 7, those turned away, should they still insist on
going belly-up, have been obliged to seek the far more costly
and drawn-out [insert horrific organ shrills and a deep bass
dum-de-dum-dum] Chapter 13 bankruptcy instead.
Earlier modern-day bankruptcy laws were designed to give a
fresh start to those whose debt load was so heavy they’d never
get out from under it. The idea isn’t so much an altruistic
or magnanimous one as it is a rational understanding that
people with crushing debt are a drain on society as a whole.
The deeply indebted may even pose serious threats to the social
fabric, should they engage in illicit activities, taking desperate
actions to relieve their condition.
Still, while the intent of this most recent bankruptcy legislation
was to inhibit folks from filing, it’s failed big-time. The
scheme was to punish those who insist on filing by creating
smaller, higher and more numerous new hoops for them to jump
through, and by levying additional fees while providing a
bogus alternative route to debt settlement via industry-funded
“nonprofit” debt-collection agencies, established to surreptitiously
do the credit card industry’s dirty work.
But get this: With a month and a half left in 2008, the first
10 months of this year’s bankruptcy filings already far eclipse
those of 2007. What this means is that by year’s end, more
than a million Americans will have chosen to lose or will
have filed to lose significant chunks of their worldly possessions—fair,
square and legal. All this even before Bush’s Orwellian “ownership
society” expels its last ghoulish gasp.
(And, it seems, Dubya’s pals, the very same guys who literally
conceived, designed and implemented our “New Bankruptcy Law,”
and have driven the world economy to ruins, won’t face bankruptcy
themselves, but can be found instead feasting on bailouts
ladled out by Henry Paulson at the taxpayer trough.)
on one darn second there, fella,” comes the fair-minded retort,
“aren’t you just excuse-making with fancy smoke and mirrors,
aiming to defray your own fiscal missteps and shortcomings
at the expense of easy targets? How about addressing your
own mistakes and taking personal responsibility for your actions?”
OK, then. You’re absolutely right. I take 100-percent full
credit for my personal financial tribulations. While we as
a culture have plenty to blame an inequitable financial system
for, my personal misadventures in capitalism were definitively
of my very own making.
That’s partially because I knew better, and screwed up anyway.
I tunneled my way into credit default after a lifetime of
scrupulously avoiding plastic and massive debt.
Here’s how it happened. My wife was working at a brokerage
firm and doing pretty well. This allowed me the luxury of
a few years of research, writing and lecturing, which, shall
we say, didn’t exactly pay the bills, even though her work
did. Finally, it was gently suggested I find the means by
which to supplement my meager income.
I first cast about for ways to bring home the bacon that didn’t
necessarily involve hard work. There wasn’t much to choose
from. Taking stock of my skill set, it occurred to me that
I was passably good at least three things, namely: reading,
writing and holding forth. San Francisco being our residence
at the time, it struck me that visitors might actually pay
me to drive them to and fro, regaling them with fun-filled
facts, figures and fables regarding our most famed and beautiful
Bay Area environs. I’d provide high-end, personally customized
tours of the city, Monterey, Yosemite and wine country to
cultured individuals with really deep pockets. Hallelujah,
these tourists were aching, I was certain, to pay me fat,
easy money for a really good time!
Jeez—the impenetrable depths of self-delusion. All it took
was the two-week 2004 San Francisco hotel strike and its subsequent
seven-week lockout aimed at all but one of the hostelries
at which I’d curried concierge favor to bring my little business
to its knees.
Me being Rust Belt born and bred, I had and still maintain
well-defined sensitivities to labor. I never, ever cross a
picket line. This, however, was the first time my support
for labor actually cost me mine. That said, I don’t regret
it. Self-dignity, too, is pricey.
I conducted not one tour during the nine-week course of this
strike. Once the matter had been settled, the concierges I
had so fawningly cultivated were perfectly content to ladle
out tours I might have conducted to other tour firms who’d
shown no compunction about crossing picket lines in the service
of the moneyed caste. It was all quite understandable, but
understanding it didn’t address my ever-mounting debt. And
with debt came it’s attendant demons: vodka, filterless coffin
nails, mounting fat, marital anguish and severe depression.
My cholesterol and blood pressure skyrocketed, and I was on
the verge of diabetes. I could see no possible way out. I
even briefly fantasized a really terminal solution.
Fortunately, we decided to cut costs, move up to Sonoma County
and do the conventional work thing. But even with steady work,
the bills kept mounting. Credit agencies assured me I’d not
be forgotten, and I could barely make it out the door to work
each day. The remainder of my hours I drank, slept or shoved
that day’s stack of bills atop its growing sibling’s mountain.
I even took a meeting with a kind and thoughtful credit counselor
who told me, “You’re fucked.”
And it’s not like I didn’t see the train wreck coming. Fact
is, prior to this, I’d long been philosophically opposed to
living beyond my demonstrably simple means. I knew credit
cards were nothing but trouble, but came to a point in life
where I joyfully deluded myself into believing I was ripe
to try my hand at hardscrabble “bizness.” My foregone conclusion
was that success would be mine, reflecting on potential negative
repercussions every bit as long and thoughtfully as Sarah
Palin reflected on the offer of the vice presidential nomination.
I seduced myself into believing that by signing up for one,
two, three, four—or even five, hell, who’s counting—of the
siren-sounding offers landing in my mailbox each day would
merely jump-start my can’t-miss business. I’d use plastic
scrupulously, pay off my debts each month, then cut up the
cards and be done with them, using them but briefly to launch
me toward that first hard-earned million.
So here I was, embracing modern credit innovations, keeping
up with the times and going with the flow. I’d bought my own
bullshit, and on high-interest credit. Indeed, I’d finance
my small business the new-fashioned American way: naively
and stupidly. Damn, it was so quick, and so insanely easy,
using credit cards to keep my tiny concern afloat, while fate
tap-danced all over it; using plastic to make van payments,
sky-high commercial insurance payments, promotional costs,
travel expenses, state fees, taxes; finally, even using plastic
to meet basic living expenses, awaiting the big payback, while
medical bills piled up and my ultraspecialized business sank
into the dead zone.
Early American debtors hardly relished being locked in public
stockades, suffering the taunts and produce projectiles launched
their way. Others spent all their time ensconced in prisons.
These unfortunates, in addition to fielding ever-mounting
room and board charges to cover their own imprisonment, compounded
debts that got them there, with interest. Colonial and even
post-Revolutionary imprisonment featured small, stark, stank
and drafty jail cells, the so-called gaols, derived from the
Latin word for “cage.” Disease was rampant, and like this
Bush era, you could be tortured. Not surprisingly, a good
many died while confined in debtor prisons.
Back then, one’s former high standing, philanthropies and/or
exemplary national service counted for nothing against owing
a buck. Take for example one Robert Morris, chief financier
of the Revolutionary War and signer of the Declaration of
Independence. Morris was our nation’s first superintendent
of finance, but none of this meant squat when, in his latter
years, his investments turned sour. Morris was sentenced and
subjected to four brutal years in an American debtor’s prison,
prisons that weren’t closed until well into the 1830s.
I don’t claim membership to this earlier vanguard movement,
but do feel part of a recent groundswell. Call it “bankruptcy
chic,” though with numbers climbing madly it’ll be hard to
keep it an exclusive club for long. The way it’s going, bankruptcy’s
destined to become as commonplace as Kleenex.
But for now it remains a timeless and even fashionable club,
one whose eminent membership includes Henry Ford; Donald Trump
and fruit-juice maven Anita Bryant (each of whom went broke
twice); Milton Hershey, Henry John Heinz and Meat Loaf; industrialist
Charles Goodyear; kings Edward II and Phillip II; Rembrandt,
Handel, Mozart and Gutenberg; presidents Jefferson, Lincoln,
McKinley and Grant; sporting greats Bjorn Borg, Lawrence Taylor,
Steve Howe and Johnny Unitas; showbiz stars Lynn Redgrave,
Richard Harris, Randy Quaid, P. T. Barnum, Larry King, Mickey
Rooney, Debbie Reynolds, Buster Keaton, Margot Kidder and
even Donald Duck’s dad, Walt Disney; songbirds Tom Petty,
Toni Braxton, Mick Fleetwood, Natalie Cole, Merle Haggard,
Jerry Lee Lewis, Cyndi Lauper, Isaac Hayes, Marvin Gaye, Tammy
Wynette and Willie Nelson—not to mention most of the Jackson
Of course there are reams of famous bankrupt writers, including
the wizard himself, L. Frank Baum, Mark Twain, Oscar Wilde,
Raymond Carver, Daniel Defoe, Don Quixote’s Cervantes; and
bona fide characters like Aleister Crowley, Buffalo Bill and
John Wayne “Where’s my weenie?” Bobbitt; even geniuses like
Bucky Fuller, Stan Lee and Nikola Tesla, not to mention satanist
Anton LaVey, Emperor Norton I, Melvin Belli and Francis Ford
So in the end, what has going bankrupt taught me? Well, it’s
led me into a great job, where I’m paid to think. I’ve dropped
30 pounds, exercise daily, have better than optimal blood
pressure, take no medications and show no signs of diabetes.
I no longer drink, smoke or suffer depression. I’m a recent
vegan convert. Our family lives in comfortable “affordable
housing,” I’ve crawled out from my cave and have made new,
exceptionally wonderful friends, and I look forward to a long
winter of writing, reading, plotting, scheming and dreaming—all
well within my financial means. Life today is filled with
hope and optimism. If that’s a fate worse than debt, well,
I’ll live with it.
barred from enjoying credit for some seven years, P. Joseph
Potocki is a staff writer for the North Bay Bohemian,
an alternative newsweekly based in Northern California’s wine