It Happened to Me: I Declared Bankruptcy

Unlike sex, when it comes to credit cards, I don’t remember my first.

Aug 8, 2011 at 3:02pm | Leave a comment

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Unlike sex, when it comes to credit cards, I don’t remember my first -- not its name or what it looked like -- but I do remember when I started to cheat on the first.

I had had one “for emergencies,” a card linked to my mom’s that I rarely touched (and if I did paid her back immediately).

When I moved to New York at age 20 to go to law school, even though I didn’t have a job (I was living off student loans), credit offers kept making their way into my mailbox, and I happily accepted. While a lot of people use their college years to experiment, I was super nerdy and pulled off a double major in three years. All the wildness hit when I was alone in a new city at a school that was harder than anything I’d ever attempted academically.

Most of my friends were working and thus had disposable income. I was let loose in a city that never slept, with 24-hour transportation, drinks, concerts and shopping galore. It didn’t happen overnight, but I managed to rack up $30,000 in credit card debt. I wish I had all those receipts now to embarrass myself with my meaningless purchases, but they are long gone.

I know at one point, I owned over 1,500 CDs, which I’d obsess over constantly. If I liked a band, I had to have every single, every import, every obscure 7-inch (remember those?). It wasn’t a matter of wanting them so much as figuring out a way to get them; not getting them immediately didn’t even enter my mind.

For the most part, I paid the minimums, but when I got an American Express card is when the spending got out of control. This was around the time I also started ditching my law school classes. And in both cases, once I made the initial baby step into bad behavior, taking the next one seemed easy in comparison.

By the time I tried to get help, it was basically too late. If I’d had a full-time job and been able to make steady payments, it’s possible I could’ve paid down my debt, but with my small part-time job and cobbled-together student loans, I was barely making a dent and racking up more and more fines every time I was over my credit limit or late with a payment.

I discovered that I could mail in a check that I knew would bounce, get advanced the credit, then make a cash withdrawal. I figured if the credit card companies were too stupid to not wait for the checks to clear before recording my payments, why should I care?

I answered the phone one day, something I categorically stopped doing once the creditors started pursuing me night and day (including weekends), and was told this practice is called check kiting.

I wound up leaving law school after three years without a degree. The last semester was a blur of fear and avoidance. I’d skip class because I didn’t understand what was going on because I hadn’t done the reading, promising myself I’d catch up, but instead I’d surf the Internet or go to a concert, get further behind, and feel too embarrassed to go to class, not to mention nervous that I might get called on.

It was a similar pattern to my spiraling credit card debt. I finally decided to try to do something about the problem and signed up with CreditGuard USA, a debt consolidation company. They compiled all the cards I owed money on and issued me a monthly lump sum, plus, even better, assumed the task of dealing directly with the credit card companies. That still didn’t help, though, because I was earning so little. It would have taken a ridiculously long time at the rate I was going, and I was soon going to have to start paying rent and student loans.

I’d pushed the idea of bankruptcy aside because I’d been told such horrible things about it -- that it would go on my credit report, that I wouldn’t be able to get a credit card for seven years, that it would make it hard to find an apartment.

Only one of those, the credit report, turned out to be true. I managed to get two apartments, one of which I’ve been in for 11 years, and new card offers appeared within a year of filing bankruptcy. That shouldn’t be someone’s primary (or even secondary) motivation to declare bankruptcy, but it’s not as dire as I was led to believe.

Filing bankruptcy was one of the best actions I’ve ever taken. While severe, it wasn’t as drastic as what I was dealing with nonstop phone calls, increasing debt and no way to pay it off. The mental strain of that time period was intense, and though this was 10 years ago, I still don’t answer my phone if I don’t recognize the caller and dread 800 numbers.

So just after I left law school, I initiated the process. It was extremely humbling to walk into the lawyer’s office I’d found via Volunteer Lawyers for the Arts and be greeted by a former law school classmate, one who’d made good, while I was temping as an admin assistant. But once I started the paperwork, I felt such a weight lift from my shoulders.

I would get to start over, which was good, because I was about to start paying over $150,000 in student loans (for a degree I never finished), plus interest. At the time owning that Galaxie 500 box set or pair of Fluevogs seemed of vital importance. I thought each purchase was simply about the purchase, and the idea of spending only what I had seemed silly somehow; that’s what credit cards were for, right?

Looking back at, say, that box set that has gathered dust that I’ve barely listened to, I see that a lot of my spending was about the frenzy of the acquisition, the moment I handed over my credit card or clicked “purchase,” and the way that during that transaction, I could forget about everything else in my life.

I can’t lie: that moment is still a rush for me. I go into an automatic pilot state similar to when I’m eating cereal directly out of the box, except that when bingeing on food, the high of the first hit quickly diminishes, the high of a shopping score, whether it’s a dress, shoes or fancy purse, feels more powerful and lasts longer.

I have an item I can admire and tell myself I’m getting value out of it, which I usually am, but that would be the case whether I could afford it without resorting to credit or not.

I know I’m probably supposed to wrap this up with some kind of lesson about what I learned and why I’d never do it again. I’d like to think I wouldn’t get into over-my-head debt again, but I still love to shop, and it’s not always for practical things.

I wouldn’t ever get an American Express or other card with no monthly limit. The cards I have now have relatively small credit lines ($1,500 and $2,000) and I do my best to pay them down when I can. My income fluctuates and there are times when charging a few vital things on them tides me over until my next paycheck. I’m not going to apologize for that, but I truly wouldn’t wish the hell of my debt experience on anyone else.