What has happened to people who file bankruptcy?

This is a bit of a long story, but I encourage you to read it. If you read the whole thing, you will understand why bankruptcy may be such a prudent step for your family’s comfort and peace. This is the story of James MaGee, bankruptcy attorney, and his clients, Mr. and Mrs. P. I have changed their names to preserve their privacy. The story starts on July 21, 1995.

I must admit that up until December 1996, I had some really, really wrong ideas about “life-after-bankruptcy”. I incorrectly thought that bankruptcy resulted in years “no credit”. I wrongly thought that a bankruptcy filing put you “off the grid” financially for a long, long time. I thought bankruptcy meant no home loans, and no more car loans.

My view of life after bankruptcy changed completely in December 1996. As of December 1996, I had already been filing bankruptcy cases for a couple of years.

Lucky for me, in December 1996 Mr. and Mrs. P told me their story, and my eyes immediately opened. I learned from my clients Mr. and Mrs. P that their 1995 bankruptcy was a mere speed bump to a peaceful and productive future. I learned from Mr. and Mrs. P that a bankruptcy filing was in fact not the messy financial train wreck and permanent scar that I had incorrectly imagined.

First, let me tell you what I used to think before my December 1996 chat with Mrs. P.

In my first couple of years of bankruptcy work in late 1994, 1995 and early 1996, I was convinced that there was not much financial life after bankruptcy. Back then in the mid-1990s, I used to keep a box of facial tissues in my conference room for clients to dry the tears from their eyes when I told them (wrongly) that bankruptcy would have a significant and enduring impact upon their financial future.

Through 1996, I would talk to my sad clients in a very kind, but solemn and serious fashion. I would answer their questions and explain (incorrectly) that yes, I did believe that credit was hard to come by after a bankruptcy filing. Back then I would (incorrectly) explain by that eventually, someday way off in the future, that a bankrupt person could probably get a small car loan at a high interest rate, but that such meager grants of credit were likely to be very far off in the future, perhaps years away.

But, thanks to Mr. and Mrs. P’s story, I was in for a shock. Mr. and Mrs. P set me straight.

This true life story is why since December 1996, I have seen bankruptcy filing as a speed bump on the road to peace and financial stability for you and your family.

On July 21, 1995, I filed a bankruptcy case for Mr. and Mrs. P. It was a rather uneventful case and proceeded nicely through the system. Mr. and Mrs. P were renting a home at the time in 1995, and driving older vehicles.

Sometime around December 1996 (about 18 months later after the July 21, 1995 bankruptcy filing) Ms. P called me to advise me that she had extended the courtesy of referring one of her relatives to my office for a bankruptcy consultation.

I should tell you that I really liked working with Mr. and Mrs. P. They were hardworking folks struggling to take good care of their children. They were upbeat in outlook, and had devoted their lives to their children and family. They seemed dedicated to their jobs and impressed me as a “snapshot” of normal American people. They seemed the type to go out of their way to help others, and just like most Americans, struggled hard to balance their financial strain and responsibilities against their personal and family obligations.

Now, back to the story. In chatting with Mrs. P, I asked her in December 1996 “So, Mrs. P, How are things going?”

I was stunned by Mrs. P’s response. She replied to me in essence: “Very well, thank you, we just love our new home here in Puyallup, and I love my new mini-van. We have been here about eight months with our new home and car. I finally have a car big enough for the whole family. The house came with landscaping, shrubs and sprinklers, everything we needed, except the shrubs were a little small; but of course they will grow. We now have bedrooms for all of the children and no more jams at the bathrooms.”

Doing the math backwards, I figured that this lovely couple had purchased a brand-new fully landscaped five bedroom three bath home in Puyallup, Washington a mere ten months or so after a bankruptcy filing. And after chatting with Mrs. P a bit longer, I discovered that Mr. and Mrs. P’s mortgage was not at some crazy high interest rate, but was a rather normal VA loan.

So, in December 1996 I was blessed with the opportunity to completely re-think my personal view of “life-after-bankruptcy”. Thank goodness that Mr. and Mrs. P shared that there is quite a bright future after bankruptcy.

I have always been thankful to Mr. and Mrs. P for sharing with me their road to financial recovery. It did not take them very long. This lovely couple really helped me to understand that bankruptcy was scarcely a “speed bump” on their way to a new beginning. Mr. and Mrs. P’s bankruptcy case was the new beginning of a life that was much more comfortable and peaceful for their family.

Will your case be like that of Mr. and Mrs. P, a mere “speed bump” on the road to peace and a brighter financial future? Your future may even be brighter. I have had even wilder results. I have had clients who are actually in ongoing Chapter 13 cases who have managed to purchase new homes while still not even out of a Chapter 13 bankruptcy reorganization plan.

It seems to me that post-bankruptcy, or even in a Chapter 13 bankruptcy, we are in a world of “your job is your credit”. If you have the income to support the debt to acquire what you need and want, someone is there to lend to you for that home or car.

Frankly, the biggest problem some of my clients have had over the years is resisting the surplus of new credit card offers and car loan offers that they receive.