The Interview continued…
“I imagine you’re wondering about what the job pays,” Peter went on. “I’m sorry to say it’s not that great to start with at just over 28 Grand per year. But the good news is that, if you’re doing a good job, we can bump that up by about four Grand more.”
I looked at Peter expressionlessly. That’s poverty wages for a lawyer. Then you take into account even just student loans and wardrobe requirements (court clothes aren’t cheap) and you are broke (or worse, as I found out). Plus, Coos Bay was an expensive town in which to live. Rents were high.
“If you’re still here after a year and you’re doing a good job, we can get you reclassified to a ‘Deputy District Attorney 2’ position, and that has another significant bump in pay bringing it to over 38-thousand a year.”
“Okay,” I replied. “Is there room to grow from there?”
“That depends on a lot of factors we don’t know yet,” Paul said. “Since you’ll be on the Juvenile Department side of things, you’ll be charting new territory. Over here on the adult side, I’m always going through young prosecutors just because Coos Bay is so remote. I’ll be honest with you - most of them want to get a few years of experience and then go back to the city to make some real money in private practice. Will that be a concern if we hire you?”
“Well, as long as I’m happy with the job and you’re happy with me, I don’t see myself going anywhere anytime soon,” I responded. “I absolutely love this area – it was a target of mine to move to before I came out here. Money is an issue - don’t get me wrong - but I’m not a greedy person. I can wait a while to make the big bucks…just don’t make me wait too long!” I finished with a big grin and obvious humor.
***************************
Coquille, Oregon, February 1996 continued…
I had realized on the road to Portland after Tami “Dear John’ed” me that I was now totally financially fucked. After taxes, I was bringing home just over $1,700 a month. The rent on my duplex that I had to move into to accommodate Tami and her things was $925 per month, leaving me just $775 for all the other routine monthly bills (gas, electricity, water, sewer, garbage, gasoline, insurance, food, etc.). Let’s say that those bills came to $600 total, on the low end with me eating very cheap. That left me $175 for my other bills, which included over $27,000 in credit card bills and almost $40,000 in student loans. The move before Tami’s arrival tapped out the rest of my borrowing ability on my credit cards, and when the student loan bills started, I knew it was over. I was in debt I could not hope to repay, and I had no means of making additional money while working for the county. My monthly income could not pay my bills as they were due, meeting the definition of “insolvency.” It all meant I had to file a Chapter 7 “no asset” bankruptcy.
This was my personal low point, my “rock bottom.” And it had absolutely nothing to do with alcohol, drugs, or any other such personal problem of the like. Just a few months ago, I had a stellar credit rating, and now, it would be scarred for years. It felt humiliating, like the ultimate personal defeat, and I was determined to keep it as quiet as possible so as to “not embarrass the Office” or myself any further.
My Chapter 7 was the result of some good and bad decisions, depending on how you look at them, but it was also every bit as much a result of circumstances beyond my control. Through law school, my father was dying of prostate cancer. He was diagnosed right after my first year. (Was I supposed to quit? Hell no.) Because dying of cancer is not cheap, my father was hanging on financially by a thread and only made it because his co-workers in the California Department of Corrections donated thousands of hours of sick and vacation time to him to keep him on the State’s payroll and insurance. He was not a financial resource for me.
On the other side of my family, my mother and stepfather were still paying off tens of thousands of dollars of medical bills for a three-year long misdiagnosis of a serious medical condition developed by my stepsister. Plus, they were in the midst of trying to find and buy a house in Oregon and make the move from Minot, ND to Oregon. Long story short, they were not a financial resource for me either.
The only ways for me to pay for law school were student loans, working more hours than formally allowed by the school, and credit cards. So I did.
Now the bills were due.
As soon as I crunched the numbers and realized I had to file bankruptcy, I started planning out how to do it. Bankruptcy is complicated and even as an attorney, I didn’t have the time to get up to speed on banko law just for my own case. Besides, there is a wise saying in the legal profession: he who represents himself has a fool for a client. (ALWAYS get an attorney, regardless of the type of case or court you’re in.) There was no way I was going to risk the complexities of even a so-called “no asset” case without proper representation, so I started looking. I found an attorney who only did Chapter 7 “no asset” cases for a flat fee of $500 plus filing fees. Before I saw him, however, I strategized on how best to get through it and how to pay for it.
Chapter 7 cases normally consist of primarily consumer debt, i.e., credit cards (taxes and student loans are generally not dischargeable). I didn’t have a car payment as I owned my car outright. I was able to keep my car because its value was low enough to be covered by my exemptions. In bankruptcy, the law allows you to keep various property up to given dollar amounts that are covered by certain categories of exemptions, including a floating exemption amount that varies with each state (or you can choose the federal exemptions).
One thing to realize about bankruptcy is that your property is given “quick sale” value that depends on the item’s age and condition. In other words, it’s rummage sale or pawn shop value for everything, and short-sale values for real estate, vehicles, or other property of value. For the average Joe, that usually means they keep all of their stuff and their case is deemed “no asset” because there are no non-exempt items of property worth selling to pay creditor claims. It means that when you receive your discharge, all unsecured consumer debts (i.e., credit cards and other unsecured debt) is wiped out completely as if it never existed. The downside is that your credit is negatively affected to the worst extent for at least eight years (though it can be rebuilt sooner for most purposes other than buying a house).
The first thing I did after accepting that Chapter 7 was inevitable for me was to stop paying all my credit card bills and student loans. It just didn’t matter because bankruptcy would default all of them anyway. I paid the bills I had to pay to stay alive and sheltered but that’s it. I did this because when faced with the choice of paying the necessary bills to live, like rent, utilities, food, and the like, or unsecured credit cards that you are about to have discharged in bankruptcy, paying the credit cards seemed like a really dumb idea. Also, I needed to save the cash first to pay my attorney and the filing fee, then to save up as a reserve because I would no longer have access to credit. I would have to live cash and carry for a few years using only a debit card.
The next thing I did was put in my notice to move. My landlord was an understanding woman who took charity on me because of the Tami situation and she applied my last month’s rent deposit, saving me that out-of-pocket expense for a month. I had to find a cheaper place to live - half of my monthly income was just not sustainable for rent. I started looking for a new place.
Since I had previously vowed to never bring disgrace or embarrassment upon the D.A’s office (see Chap. 17), and there was an adjunct to the Bankruptcy Court that met in Coos County, I would have to get creative to avoid being published in the local paper or worse, be seen by one of the local attorneys at my Meeting of Creditors. That would just create a slanderous rumor buzz that could ruin me in Coos County before I even made it to my 6-month job review with the promised $4,000.00 raise. I worked with my attorney to figure it out.
The solution was to time the filing of my petition in the regular Bankruptcy Court in Eugene, Oregon, using my sister’s address in Corvalis (close to Eugene) as my current address because I had not yet secured a new residence. I had to use it as my current mailing address. It was true on the day of filing the Petition, and that’s what matters – your facts as of the day of filing. That maneuver kept my name out of the Coos Bay paper of listed banko filings and it drastically reduced, but not eliminate, my risk of running into an attorney who knew me at the creditor’s meeting. Within days of filing my Chapter 7 Petition, I signed the lease for a new one-bedroom basement apartment overlooking Coos Bay (it was an incredible view!) for $450, less than half of what I had been paying. That helped tremendously for my available cash flow. It was humble but livable for just me and a cat.
As soon as you file a bankruptcy case, an automatic “Stay” is legally in place that forbids any and all collection activities against you during the pendency of your case, including the staying of any pending lawsuits on your debts (any lawsuits on consumer debt get dismissed after the Notice of Discharge when your banko case is over). Within about a week, the Court sends out a Notice of Bankruptcy Filing to all of your creditors listed in your petition and ALL THE COLLECTION PHONE CALLS TO YOU STOP! No more harassing phone calls, threatening letters, or lawsuits to answer.
I was fortunate in that my creditors didn’t know yet where I worked. Still, I was very relieved when my phone went quiet at home.
The typical Chapter 7 case back then took three months from filing until the required Meeting of Creditors. This was the one and only hearing I had to attend. Mine was in Eugene in the Federal Courthouse building. The purpose of this meeting is twofold: first is for the Trustee (or his representative) to question the Petitioner (me) about the truthfulness of the facts provided in the Petition; and second, to give creditors an opportunity to challenge listed exemptions. The reality for most people in Chapter 7 is that no creditors show up to the hearing because it is a waste of their time for a clear no asset case, leaving the Petitioner to simply attest to the truthfulness of their Petition. The Trustee may have a few other questions to ask, usually for clarity, and that’s it. Unless there is some issue that arises, like an accusation of bankruptcy fraud, perjury or something similar, all you do after the Meeting of Creditors is wait about another sixty days for the Court to issue your Discharge, ending your case and freeing you from the debts asserted in the Petition.
In my case, the rummage sale value of my property was jack-shit. The only things I had of any value were a few firearms, a couple of suits and handed-down sports jackets, and my car, and again, they were all rummage sale value and covered by the exemptions. After about ten minutes or less of answering the Trustee’s questions about my Petition, I was done with my part of the case.
It was about sixty days later exactly that I received my Notice of Discharge, and let me tell you, it was one of the best days I had ever had. I felt like a mountain of stress had been lifted off of me, and I felt optimistic about my financial future for the very first time since high school.
It felt like being rescued from nearly drowning to death.
I felt like I had my life back.
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