Bankruptcy made me a better person

On my birthday in 2010, I appeared in front of a judge in the US District Court of Northern California and had my Chapter 7 Bankruptcy recorded. I walked out of that room, no longer in debt and no longer a homeowner. My last landlord had told me “I have never seen a credit score that high”. Those days were gone.

The years leading up to that day (the financial services sector meltdown, the housing crisis, the Great Recession) seemed like a blur by the time I stood before the judge. Two years before that birthday, my credit union was absorbed into the winning bidder in a forced merger, and plans for combining systems and layoffs became clear. On the last business day of 2008, the VP of HR took my security badge in return for my final paycheck and bought me lunch, then sent me home to start 2009 as an out of work banking executive.

For that next eight months, I diligently searched for another job. Historic unemployment, especially in the banking industry, worked against me. The few job openings that did get posted received so many applications that recruiters had to use filter rules like “only look at candidates who already have jobs”. I was told bluntly that having previously been leadership level, few would even consider me for a manager role. At the same time, I was competing for leadership positions against candidates with significantly stronger resumes. As summer wound down, I accepted that I would not be able to keep my house.

I found a bankruptcy lawyer and scheduled a consultation. I went to the appointment, answered her questions, and listened to her advice then signed paperwork to file. She gave me instructions for how to proceed and two books to read. One of the books stated boldly on the first page: “filing bankruptcy does not make you a bad person”. Reading that I felt some odd combination of a stomach punch and a wave of relief.

Then the waiting began. I paid my car loan and insurance, and my utilities for almost a year before my first mortgage holder began foreclosure. Once that happened, things moved quickly. Less than two months later, I stood before the judge. A month after that, I moved out of my house, slept in my car a few nights before settling into a new rental, and began to rebuild. Two years later, my credit score was in “Average” territory, and I was regularly offered credit, although at higher rates.

Having worked in the credit union industry for most of my career, the presence of a bankruptcy on a member’s credit report had only ever been just another attribute in the calculus for lending decisions. When it was someone else, bankruptcy really didn’t mean anything to me. When I started the process, however, it felt like a failure. It meant I could not make good on the agreements I had made with lenders. I was not a man of my word. That book on bankruptcy telling me I was not a bad person for doing this was like hearing a sane voice speak truth to the insanity of my financial situation. It helped, but it still took time to sink in.

Until a month or two before the foreclosure, I told very few people what I was going through. Part of that was embarrassment at what I still thought of as a failure. Mostly, though, it was the need to be able to go out and interact with people without seeing pity or judgement in their eyes. “Oh, there’s Russ - his life is crap these days - let’s buy him a drink and see how he’s doing”. Not sharing the truth made it possible to avoid those moments. If someone asked pointed questions, however, I told the truth. That behavior was a choice I made and would make again. By going through the process, bankruptcy lost most of its sting - and today I can easily see how it made me a stronger and more compassionate person.

Still, when I mention my bankruptcy, it’s usually in the sentence “I filed bankruptcy in 2010 ON MY BIRTHDAY”. For obvious reasons, that is rarely said without emotion. Being able to see how something difficult was pivotal, helping make a better future, doesn’t take away the pain or grief of that transformation. To anyone else having to take those steps, however, I am a willing sounding board or shoulder on which to cry. If I offer to buy a drink and find out how you’re doing, there is no pity or judgement behind my eyes - just a person who’s been there too.