Note: Blog entries are supposed to be short. We live busy lives, we don't have time to read a ten page
Friday, July 1, 2011
Bankruptcy Blues: an excerpt from THE ROAD HAS EYES
Note: Blog entries are supposed to be short. We live busy lives, we don't have time to read a ten page
comic essay on the bankruptcy process. It's from my memoir, AVOIDING THE POTHOLES: ROAD STORIES IN A CHANGING AMERICA. I hope the piece entertains you and holds your attention.
I admit I need to do some editing. That's always the case. Just not today.
One morning I woke up, did some simple addition and concluded that I was thirty seven thousand dollars in credit card debt. I still had six thousand to go on my car loan, so that made a debt load of forty three thousand dollars. How could this happen? I’m legally single and without dependents. I own no stocks, bonds, properties or other convertible assets. I am a man utterly without collateral. So, my question “how did this happen?” is a rhetorical utterance, because I know how it happened. I spent more than I earned, it’s that simple. If we see this happening on a larger scale, as an entire society goes bankrupt, the same basic laws apply. The only difference between me as an individual and our society at large is that society, represented by The Government, can print money. The newly printed money is really fake money, toy money, but it buys a smidgen of time because it’s backed up by history, prestige, momentum and the memory of immense wealth. It may be a few years before anyone notices that United States dollars look like little orange, blue and yellow pieces of paper about three inches long and two inches wide.
I got my first credit card when I was forty five years old. I had managed to live outside the consumer cycle for all that time, by being either a hippie or a bum. My time as a bum was still really ongoing when that envelope arrived in the mail, the one that said, “You have already been approved.” I thought it was a joke, I laughed. Who would give me a credit card?
I like being approved. People thrive on approval, it’s a normal human need. This Visa Card provided me with a credit limit of two hundred dollars, at an interest rate of twenty three point nine nine percent. Of course, a credit card is not really about its interest rate. Credit cards are a barge full of tricky charges, most of which are confined to the small print. The two most lethal words in the English language, “Adjustable Rate,” are stated or implied somewhere in that print. There are annual fees, late fees, cash advance fees, all around Desperate Ignorance fees. You’re dumb, and you’re desperate, so we’ll charge you a fee.
I didn’t know any of this at the time. I was still pretty much a bum, I was living in an in-law unit behind a house in San Geronimo Valley. The area is an enclave of hippies, new age healers, artists, crafts-people and bums hiding out.
I was excited about having two hundred dollars credit. My therapist approved. Having a credit card was a mark of responsibility; it meant I was turning into a mature adult, integrating myself into mainstream society. Provided, of course, that I kept up my payments. How much trouble could I get into, with a two hundred dollar limit? How much would the minimum payments be, eight dollars a month?
I didn’t know, at the time, that paying minimum on a credit card means that any amount, no matter how trivial, will take your next ten incarnations to pay off, or about six hundred years. Fortunately, credit companies don’t track future incarnations. Instead, they sue debtor’s spouses or any relative available for the unpaid sum. Eventually, our corporate-controlled government will pass laws allowing credit banks to force you to work off your debt. You will pass your days working in a cubicle in South Dakota, making collection calls for the bank and living in dorms with twenty four beds to a room. Lunch will be a choice between bologna or peanut butter and jelly sandwich. Spam or Macaroni and cheese is the menu for dinner. There WILL be movies every night, hell, we got plenty of movies. Disney will have the exclusive contract to provide Credit Default Camps with DVDs.
I racked up my two hundred dollar debt in one day. I bought a car. That was the kind of car I got in those days. I used a courtesy check from the card company (special interest rate of 29.9 percent) and bought an’82 Honda Civic. It turned out to be a good car. The starter was broken, so the car had to be hot-wired every time I wanted to drive. The gas tank had a crack halfway down its side. Anything over six gallons sent a flammable trickle of gasoline through this crack. I could never put more than five gallons in the tank. I had to be very careful about that. I got full disclosure from the seller about the vehicle’s problems. “Watch out how much gas you put in,” he told me. “Five gallons tops and keep track of what you got left in the tank when you fill. Best thing is to just get three and half.. I had a friend with the same problem, and he blew himself up.”
I paid my monthly minimum on time, every month. In about six months, the card company notified me that my limit had been raised to five hundred dollars. Fantastic! I bought a set of tires for the car.
I was living as a free-lance anything: janitor, painter, carpet cleaner. I worked for a dry cleaners, I worked as a flower delivery driver. I survived by the seat of my pants.
My monthly payments were fifteen dollars. Not a problem, I always put a check in the mail at the last possible minute. I was always on time.
The card company raised my limit to a thousand dollars. It felt good, it meant that Visa Card trusted me.
I wanted to become a professional photographer. I bought my first digital camera. The payments went up to about twenty eight dollars a month.
Then I got another envelope in the mail. This one was from MasterCharge. “You have already been approved!”
Nice! They were offering me twenty five hundred dollars credit at a rate of sixteen point four percent. It was a Gold Card. I wondered about these metallic cards. Gold, Silver, Platinum. I wondered if there were cards for people on different economic rungs. Cards with metals both common and uncommon. A Uranium Card for nuclear physicists, with radioactive interest rates and loan half-lives that take millions of years to pay off. An Iron Card for weight lifters. The rates just go up and down, up and down. Heavy Metal Cards, shaped like guitar picks, for rock and rollers. Lithium cards for manic-depressives, with rates that plunge and soar, and plunge again.
I believe that credit banks operate with a fundamental yet covert philosophy. It’s called the We Don’t Give A Shit If You Pay Us Back Principle. By the time you have gone through the agonies of ballooning credit balances, of paying monthly minimums on seven different cards, of borrowing from one card to pay another, of paying late fees, overcharge fees, balance transfer fees and been suckered into “credit insurance” programs that protect you from being unable to pay your credit card bills, you have put so much money into the pockets of Citibank and Chase that even if you default, they’ve made a profit of twelve thousand percent, which more than offsets your default, when it comes.
In U.S. Dependencies like Guam, Saipan and Puerto Rico, Congress will enact loopholes in anti-usury laws, allowing Citibank to be what it really is: a loan shark. Rates of a hundred percent, payable next week or they send a goon to break your finger. What’s the “vig”, Louie?
Since I was unable to get credit, that is, low interest bank credit for a legitimate business loan, I used my cards to start my digital photography business. The problem was that my business took ten years to get going, and after five years I was paying almost six hundred dollars a month just to maintain the minimum payments on all those cards.
This was like taking six crisp one hundred dollar bills out of my wallet and setting a match to them. That money was gone, it would not reduce my debt, it would not purchase anything. It was gone. Wasted. At this point my repayment would take twenty six thousand years, or nine hundred future incarnations.
I was having a good spell in my business. I was enjoying some cash flow. I was always rescued by a last minute thing, a portrait session, a wedding, a house to paint, sale of a print or two. Somehow, I was able to keep up with these incredible payments. I made some large payments, bringing my balance down. That’s when the next round of offers came in: “You Have Already Been Approved!”
Wow. Capital One allowed me five thousand dollars in credit at a rate of eleven point nine percent. I took it! I needed a more sophisticated camera, and some portrait lights.
Pretty soon I was running five credit cards and I lost track of my total debt. I guess I lost track on purpose, so that I could live in denial.
I was the ideal customer for credit card banks. I racked up a lot of credit yet made minimum payments, on time. There is no better earner for a bank than a consumer like me. They don’t want me to pay off my loan, heavens no! They want to gradually load me up on debt, drag me down into the depths of high interest compound rates, and keep me there for the rest of my life.
The thrill began to wear off. For a while, I actually defined wealth as the amount of one’s credit. If I had a few hundred grand in credit, I was in pretty good shape, wasn’t I? Aren’t we defined by our debt? I saw my world as a kind of spending party. Need a new printer? Cool, I‘ve got credit. And I’ll keep making the minimum payments. I always do.
I never considered bankruptcy. I held the almighty Credit Rating in such awe that I would do nothing to besmirch it. Meanwhile, I became more and more miserable, as my anxieties focused on making the monthly minimum payments and seeing my income going into the fire. Get out the matches, dude, time to burn some more hundred dollar bills. I began to feel as though I were carrying a mountain on my back. I knew that I would never get rid of this mountain, that the rest of my life would be spent holding up this Sisyphian mass as it grew larger and larger.
This wasn’t fun any more. My outlook changed in a single week. One day, I simply looked at my situation. Within another few days I was there; I was prepared to file for bankruptcy.
It occurred to me that the almighty Credit Rating is a hoax. People go in fear of losing points on their credit rating. People obsess on the difference between six fifty and seven hundred. The terror of losing points on one’s credit rating is a ubiquitous American terror. It rides invisibly on people’s shoulders like a pair of wooden stocks, like a medieval torture device. Companies thrive on milking people’s obsession with their credit score. Go to freecreditreport dot com and find out your score. You’ll learn that your free credit report isn’t free. It’s a lure to sell credit monitoring services. For a monthly fee a consumer can track his or her credit rating and get even more obsessive.
Every American can get a free credit report once a year. That’s the law. You won’t get it at freecreditreport dot com. You’ll just get more crazy.
Radio stations are flooded with commercials for get rich quick instructional CDs, books and videos. Every time I hear the word “free” on the radio I laugh and I visualize gullible wannabe entrepreneurs panting to exploit this amazing opportunity. I’ve always had a maxim regarding American marketing techniques. It’s simple: contempt sells. Hundreds of commercials promise the consumer an income of five to ten thousand dollars a month by investing in the stock market. Best of all, the CD is free! Or how about this? Make money using the internet! You don’t have to buy inventory, you don’t have to store inventory, all you have to do is sell stuff on Ebay that you don’t even have! Let your computer do your work for you. Earn money while you sleep! And best of all, the CD explaining how to pull off this miracle is FREE! Wow, (the radio voice says) now I can quit my day job, and pretty soon I’ll own two houses!
Hey, wait, what about Real Estate?! There’s a book telling me how to earn a fortune buying up foreclosed properties. The introductory CD is Free! The word free should be spelled eff arr dollar sign dollar sign. FR$$.
The people making money on these programs are the people selling the book or CD. If the program worked so well, why would these entrepeneurs spawn thousands of competitors? Imagine a radio commercial sounding like this (provide your own cheesy radio-announcer voice):
“Want to get rich on the internet? Make five thousand dollars a week from the privacy of your own home! All you have to do is buy our book, "How to Get Rich on the Internet by Writing How To Get Rich on the Internet Books!" Your own book, "How to Write How To Get Rich on the Internet Books" will soon be a hit and generating fantastic income. Your satisfied customers will be writing their own "How to Write How to Write How to Get Rich on the Internet" books and will in their turn be raking in the money. In Step Three, you will branch out into other "How To" book fields, such as "How To Publish Your Own How To Books On the Internet", "How to Soak the How To Book Instruction Market on the Internet", and "How to Invest Your Money Earned from Writing How to How to Books on the Internet". Then, in the final phase of our instructional program, you will learn how to write How To books on any subject at all, such as "How to Learn Russian in Ten Minutes", "How to Write How to Learn Russian In Ten Minutes," or "How to Write How to How to Learn Russian in Ten Minutes in Ten Minutes". The possibilities are infinite! Start raking in the cash now! All you have to do is pay us to learn how to do anything on the internet without knowing how! Visa, Mastercharge, Versatron, Intellidebt, AutoCarLien, Prodeduct Utilities Bill, all forms of payment accepted!
Call 1-800-Howtohow or go to www.howtohowdy.com”
Let me admit that, initially, my new philosophy, my ‘credit score is a hoax’ pose was a bit of bravado. I was still scared. What if one of us got sick? What if I wanted a new car? What if Fox and I decide to upgrade to a better motorome? What if what if what if?
I’ll relieve you of the suspense right now. My bankruptcy was a complete success. The first thing that happened was that car dealers showered me with offers. It’s the standard procedure for a bankruptcy. There are business entities whose most lucrative product is helping bankrupts re-establish their credit. Car dealers are foremost among these entities. All kinds of people wanted to help me re-establish my credit. Offers poured in. The first few months, the offers were terrible. The credit cards were loaded with sign-up fees and yearly fees, and the interest rates would shame any loan shark. I got those “You have already been approved” deals all the time. After a few months the offers settled down, became more like the offers I got before I went bankrupt. I accepted one card: no sign up fee, no yearly fee, interest at eleven percent. I keep that one credit card, and I stay below two thousand dollars in total debt. I make large monthly payments when my balance gets too high. Every offer that comes along goes into the waste basket. I have one credit card. Two thousand dollar limit. Period.
Wait a minute, wait a minute! I have to confess something. I wrote that last paragraph before gas prices hit the roof. It’s getting tougher to function and make ends meet. I sort of broke my rule. I haven’t exceeded my limit. I did, however, take on another credit card. That card is sitting in my wallet like a radioactive pellet, just waiting to leak through and contaminate my world. It scares the hell out of me, while at the same time it comforts me. Its purpose is to backdrop serious emergencies. I haven’t used it. I don’t want to use it. I pray that nothing happens to force me to use it. I just pray and pray.
My attitudes have changed. I don’t spend money just to have something I want, like a new printer. My camera gear is getting old. That’s the way it will have to be. I can’t afford the latest, neatest gear.
What I’m saying is that it’s almost impossible to escape the world of credit cards. They keep coming back like the Terminator’s metal arm.
Have I mentioned that I feel like I’m really getting screwed? Have I just come out and said it in so many words?
I feel choked with anger. I am so frustrated that I need a pitcher of margaritas or a bottle of Vicodin. (I am, of course, exaggerating dramatically for effect here. I’m not an alkie or a dope fiend, no no no.) There are a hundred rip offs dipping into my pocket every day. There are dozens of virtually undetectable drains on my income. This isn’t a free country! It’s a very expensive country.
In the last decade I have found myself trapped by invincible shackles. I have hit the wall of middle age. I have just enough medical and chronic pain conditions to place me at the very center of the health insurance vortex. I have no choice but to be a consumer. I am now the victim of medical blackmail. Insurance and drugs are so expensive, they dominate every aspect of my life. Why? How can one blood pressure pill cost four dollars? It costs pennies to make. We all know that. The Big Pharm companies scream “Research and Development! Marketing! How can we invent those orphan drugs that will help a few thousand people and conspicuously demonstrate our compassion? Our expenses are staggering!”
There there, Big Pharm, don’t cry. Poor Pfizer, you’ve worked so hard to ensure that our aging males can have erections. Don’t sulk in a corner, Glaxo. We know how much you love us. Your efforts have controlled our cholesterol, have saved our lives time and again! Your executives deserve those boats and planes, they’ve earned those vacations at hotels in Dubai that look like flying saucers and cost four thousand dollars a night. They deserve the call girls and the Bugati sports cars, the Rolex watches and the gated estates overlooking the beach at St. Moritz. They’ve worked hard for our benefit.
I often fantasize about what I could do if I didn’t spend half my income every year on health insurance and prescription co-payments. I wouldn’t be living in constant anxiety. I might be able to save enough money to travel and have some fun. I might be able to get my car fixed. I could repair that weird flub flub sound it makes in the right front wheel. I could afford my dog’s dental work, the removal of those extra teeth that are going to become a nightmare in three or four years.
I’m old enough to remember a time when health care wasn’t everyone’s ball and chain. I remember when a factory worker could support a family and mom could stay home and pay some attention to the kids. I remember when people didn’t endure sour stomachs and panic attacks thinking about their credit card debt. I remember when my dad made enough money from his small business to provide a decent middle class standard of living for his family. I’m old enough to remember the way things shifted so suddenly in the late seventies and early eighties. No one had ever heard of HMOs. Then, suddenly, they were everywhere. Our big industries, like steel and auto manufacture were under assault by the Japanese.
De-regulate everything! We have to compete with a free hand!
I’m not an economist or a political scientist, I don’t understand how our society was co-opted and undermined by an inferno of greed. I only know that a corrupt and devious corporate cruelty has turned middle class people into paupers and terrified debtors.
Dammit, I’m angry!
To further amplify my vulnerability, I have taken yet another credit card. I spent up to the limit on the last one after my car broke down. I needed brakes, a catalytic converter and a new clutch.
My debt has climbed to about three thousand dollars, and I’m paying about a hundred dollars a month. I can live with that. The debt stopped climbing a year ago. I’ve kept pace with my payments, I occasionally pay the bill down by a few dollars. This is familiar territory me. I understand the game, and the futile squirming that I must suffer to keep afloat because I’m not much of a money person. I’m an artist-person, woe is me. I am aware that more millions of people are now living the same way. The economy has gotten bad and there are many new recruits to the kind of life I’ve always lived. I have a certain amount of psychological armor against this insecurity. It doesn’t freak me out. I know that a lot of people, new to poverty and crushing debt, are soaking in a torture acid of anxiety. I’m sad about those people.
This has everything to do with the move of Fox and me from house to motor home. We were not forced to move out of the house. True, It got too expensive. We saw our resources diminishing and a future where our age was going up as our income was going down. We saw an economy edging towards bankruptcy and we wanted OUT as quickly as possible, we wanted a way to reduce our earthly footprint.
We WANTED to live in a motor home! After the trip in Yertle, the epic voyage to Arches National Park, the idea became more and more appealing. We didn’t know whether or not it would work out. It was a tremendous risk.
Declaring bankruptcy was also a tremendous risk. What if “they” came and took away our motor home? It was half in my name and half in Fox’s. What if “they” took my camera, my computer, my car? I didn’t know they wouldn’t. I asked several lawyer friends of mine, and they assured me that such things would not happen. I had no real assets. My possessions were exempt. I would be fine.
In spite of these reassurances, Fox and I spent a nervous couple of months.
In 2005 there was a major change in the laws regarding bankruptcy. These changes tended to favor the card companies. A bill was passed called The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. I love that: Consumer Protection Act. The so –called intent of this act was to prevent people from racking up a lot of debt with the intention of going bankrupt after spending oodles of the bank’s money. How is this protecting consumers? Give me a break. How many people do you know that are exploiting credit card companies with the intention of defaulting? One, two, a hundred? How many have you heard about? Is it so common that an act of congress is required to protect us from these unscrupulous spenders? The real motive behind this Act is that the banks foresee a flood of bankruptcies looming in the near future. They want to be ready for this tsunami of debt, they want to get their rich butts to higher ground so that when the bankruptcies mount into the millions, they will be safe and capable of forcing debtors into losing the pants they wear, the shoes they walk in. I can see it now, America. People walking around in blankets.
I hired a good lawyer. She was a little hobbit of a woman who wore thick glasses and neat business suits. I had the feeling that in court she was a cyclone, that her antagonists quaked in terror when she opened her briefcase. She charged one fee, two thousand dollars, in advance. She always let me know what was happening, she communicated with me regularly, instructed me in what to do and what not to do.
One of the stipulations of the new law is that debtors must pass two courses in money management and credit awareness. To this effect, a host of companies have arisen to cater to the expanding market of bankruptcy cases. The whole shebang is done online, and it costs about three hundred dollars. The debtor must first pass a credit counseling course. The material in this course is not difficult. The test is a multiple-choice quiz with some pretty silly questions.
The questions go like this: “What is the correct way to use credit cards?”
Answer One: To buy cool things like cell phones, shoes and car accessories.
Answer Two: To finance trips to Hawaii and Disneyland.
Answer Three: To be used as an occasional aid to pay emergency expenses when cash is short.
Question: What is the best way to manage one’s credit account?
Answer One: Put off paying to the last minute.
Answer Two: Build up a lot of debt and make minimum payments.
Answer Three: Pay off debt as it arises, maintaining the lowest possible balance.
These courses are designed for the average American genius. It’s a case of having questions reveal more than the answers. What kind of people find these questions challenging? My god, are we in trouble, here in America? Is this what we’ve become? Consumer morons?
I am the American economy in microcosm. I was encouraged, no, I was seduced, into borrowing beyond my means. Who am I? I am poor! I don’t feel poor, I live a great life, but on paper, I am poor. Why would banks lend me money? Yes, I am responsible for my debt. My greed is at fault. No question.
I was a frustrated man with no money being treated to the most sophisticated sales technique on the planet. Borrow this money! We’re offering it to you, it’s easy, just apply online and we’ll have your credit approved in five minutes.
Got it almost paid off? Here, we’ll lend you some more. We approve of you! You’re a good person! We like you! Here’s five grand. You can pay it off any time you want, just make sure you meet your minimum and we’ll get along great. No one will call you, no letters will arrive. Gee, you know what? Our records show that you have five credit cards, and owe a total of twenty thousand dollars. That makes you a good credit risk! You wouldn’t have all these cards and owe all this money unless banks trusted you. Here, another ten grand in credit. Fine! Pay us back when you can!
The credit counseling companies who advertise so heavily on radio and television are flourishing. They will help you pay down your debt! In fact, there are reputable companies and disreputable companies. The business is predicated on the simple fact that credit banks are willing to let you pay off forty percent of your loan at a reduced monthly rate. This is a fact. Almost all of your card debt can be drastically reduced. The counseling agency is there to do the paperwork, run interference for you, comfort you in your distress. That’s what the honest companies do. The dishonest ones will have you send your payments directly to them. They will take your money and do nothing. They will not pay your creditors. They will reassure you that all these harassing phone calls that have begun are normal. Wait a couple of months and they’ll die down. Don’t worry, sir, the man with the generic foreign accent on the phone says, don’t worry this is the normal procedure. We have negotiated your credit to ten percent of what it was. We are paying your creditors, and in eighteen months you will be free of debt! Isn’t that wonderful?
I called one of these crooks. He wanted to start the program right away. “I can sign you up right now, you can stop worrying about the letters and the phone calls.”
“How does it work?” I ask.
“It’s simple, “ he replies, “you just make one monthly payment to our office and we’ll take care of the rest.”
“That sounds easy enough,” I say.
“Great, then you’re ready to start,” responds the man.
“Don’t you need my application, some paperwork?” I question.
“Oh no, that’s not necessary, just give me your phone number, social security number and address and we’ll get started on the paperwork right away.”
“Uhhh…I think I’ll wait on that.” I hung up very quickly. I felt as if I had avoided a rattlesnake bite.
I never got any letters or phone calls. I made every monthly minimum payment until my lawyer filed the papers. Within three months, all my creditors had been notified, and there was no point in calling me or harassing me.
I took, and passed, the two courses, via the internet. I filled out a lot of paperwork. I waited some months while my lawyer did whatever it was that she did.
Then my hearing date was scheduled. I was going to walk into a room where it was possible that representatives of all my creditors would confront me with my irresponsible behavior, accuse me of being a crook, question me about purchases I had made three months before I filed for bankruptcy. Why did you buy this lens in August? When did you decide you were going to file for Chapter Eleven? Did you know you were going to file when you bought this lens? How many assets did you transfer in the year before you filed? What are you concealing from us?
Waiting outside the courtroom I was nervous. My lawyer toddled up, looking harmlessly fierce, like a rabbit with giant fangs. “Just answer the questions,” she advised. “Don’t add anything, don’t talk too much. It’ll be fine.”
The doors opened and I entered the hearing room. Five or six other cases were on the docket, so I sat in a folding chair with my fellow bankrupts, while three trustees sat behind a semi-circular dais. A tape recorder was turned on.
The trustees didn’t look like monsters. They looked kind of nice.
My case was first on the docket. The blonde trustee swore me in. Then she asked me two questions.
“Do you understand the implications of your filing Chapter Eleven?”
“Yes, I do, ma’am.”
“Have you been truthful with the trustee in your documentation?”
“Yes I have, ma’am.”
“Thank you very much, you will be notified of your bankruptcy within sixty days.”
That was it. I walked out of the court room a free man. It was a very happy day in my life. I could return to my cozy motor home and tell Fox that it was over. Nobody was going to take anything away from us. Except my forty three thousand dollars in debt.
America is, after all, a wonderful country. The system needs a little tweaking, but it is a wonderful country.
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