You are not alone

Facing the fear of filing bankruptcy is unimaginable to most. How and why someone finds themselves in this position are the often asked questions. For some it’s of their maintain doing, while others are forced into it but for many different reasons.

For a couple of years (as my business was having significant issues with volume), it seemed as though I was stranded alone on an island facing an ever so slow rising tide. There was nowhere to run or camouflage. My options were to either stay there and eventually drown, or, I could swim against the tide facing exposure…… but at least I would be swimming towards a distant light.

With me, it was always risk versus reward. That was a philosophical staple of being in business. But now those words represented something entirely different.

In this case, not taking a risk meant staying on the island and sight the water rise. But taking the risk meant dealing with the albatross (although was my livelihood) that was hanging around my neck.

The crushing and continual blows that my business was taking on had left me in dire straights. I decided to take the risk of cleansing myself of all business attachments which would include filing bankruptcy.

The current national economic troubles today leaves minute doubt that many others are, or soon will share my predicament. It’s not the raze of the world, but it may not be easy either.

What they must realize is that they are not alone and that their circumstances have been repeated over and over again.

The purpose of this text is to define the how and why I chose this path.

Pressure

With a debt service that was spiraling out of control, the pressure of filing for bankruptcy as an option was mounting. I felt like I was being choked in a tiny gloomy room with no way out. Trying to claw out of that room and that residence was wearing me down physically and mentally.

Every joyous or entertaining moment I had during this time was chilled by the reality that I was in a situation that I could no longer fix. Facing the fear of filing for bankruptcy was going to be my last obstacle, or so I thought. Except that I would have to find a diagram to deal with the humiliation that would certainly follow.

Bankruptcy would have to be an action of a last resort.

I’ve always been a winner in things that I do and never gave up or succumbed to a challenge. I am a grinder…… always willing to stick with things and persevere through whatever road blocks appear.

Knock me down a hundred times and I’ll get up every time.

But this time things were different.

I would watch my neighbor walk his dog in the early evenings and wonder “what is that like? ” Imagine, I concept, how nice it must be to be able to just go out for a walk with a dog, chat with anyone else that may be out tending to their yard, then go fix dinner without worrying about how I am going to sustain my business afloat for another week.

Certainly my neighbor was living in what seemed like a dreamworld to me.

Unless one has been there, the enveloping pressure of carrying an insurmountable debt load is merciless. At the end, I felt as though I was a punch drunk boxer that had fought one too many fights. But I realized that soon I was going to have to discontinue down on the canvas, as getting up again and again to continue this fight was going to do significant and probably permanent damage.

But if I lost this challenge of saving the business, then what?

First, the embarrassment of facing associates and family was going to be a difficult task. Me, bankrupt? No way? The apprehension of telling those involved would be as challenging as the bankruptcy itself I thought.

I was a winner. I can’t lose…… I don’t lose……. never………I am a grinder!

Next was recognizing that the consequences of filing for bankruptcy were vital. But I also realized that acting on this also provided a solution to a major problem.

Facing reality

I owned a business that had been in operation for 15 years, the first ten of which were mostly debt free. Personally, I had car payments and a mortgage, while all other debts accumulated were business related. My credit score was over 800 until the past year, and had fallen to 750 by the time of filing because of credit usage.

The business I owned was a retail store that at one time had been two stores. Expanding to a two store operation is what began a debt cycle that eventually grew like a cancer, devouring profits, cash dart, and sanity.

As a precursor to the national economic woes, this retail business had trended flat in volume for several years.

The volume during peak months in years past was always enough to terminate a negative cash flow and usually effect some excess cash into the company bank account. However, for the past couple of years, the peak months were no longer supporting the slower summer months.

But lines of credit did. I had become a mini version of General Motors, Chrysler, Ford and millions of other small businesses. Borrow some money now, pay it back later…… except that finally the economy was in the early stages of crashing.

Florida was struck by an abnormal hurricane season in 2004. Four hurricanes struck the state within a six week period during that volatile summer. Each time a storm ventured near or through, business slowed to a halt in anticipation of a devastating strike. Although physical damages to the retail operation were held to a minimum, significant sales volume was lost permanently.

Lines of credit took a hit from this.

Shortly after that summer storm season of 2004 had calmed, expenses began escalating. Liability insurance, fleet insurance, utilities, and fuel expenses all rose dramatically and almost immediately. Increases in both rent and with the rising cost of labor, turned the battle to survive the cash flow issues into a daily struggle instead of a seasonal one.

Still, I went on pursuing the American dream. Credit was readily available, my credit accumulate was rated as excellent, so I set up reserve lines of business credit, just in case they were ever needed. The only difference for me at this point is that now, during the slower summer months, I was no longer getting paid like everyone else was.

I would keep telling myself “that it’s going to get better, it always does“.

But it didn’t get better, it was getting worse and I knew it..

Realizing that I had stepped through this one way door, it was time to face reality. Sure, I could have extended this for a noteworthy time longer, but why?

It was like being tossed around in a clothes dryer.

Inaugurate the door……. jump in, get beat up, feel the heat…….. go round and round and round. Then it stops……so you put in some more money, and the endless cycle begins all over again.

Round and round and round.

The Plan

I had decided in November a year ago to give the business one last and final shot for the upcoming peak sales season. The business had to maintain a certain level through this time, or I would end the doors by the summer. In the meantime, I decided to no longer seek more financing, and that the extended lines of credit currently in hand were going to be the last.

It was during this time that I quietly began researching options in closing the business just in case my hope for success did not prevail.

Selling or transferring the business was out, as the debt load was too high and the assets not worth enough.

That left only one viable option; filing for bankruptcy.

I had a lifetime of perfect credit, was a self-made success, and was well respected by industry peers, employees and other associates.

How could this happen to me? I never cheated on taxes, wages, or payments to vendors. I never lied to anyone because I wanted to hurry the business without ever having to remember what I may have said, or have to look over my shoulder being wary of a bad deed I may have done.

I ran the business in a neat, honest, and straightforward manner. I took care of my employees, many of whom had been employed for 10 or more years. But the business was in a nosedive and it was taking me, the pilot, down with it. The time to bale out was now as eventually it was going to shatter.

A stand up guy always keeps his word to others, so now it was time to sustain my word to both my family and myself.

Now, the anxiety of the fear of failing along with all of the dreadful things that go with it, set in once I had finally established a personal ultimatum in bringing closure to this hell that had shrouded over me. It was a depressing winter to say the least as the national economy was beginning a free fall downward.

Failure

Acknowledging failure was the key component in deciding to terminate the business.

There is no description appropriate enough to describe the empty and lonely feeling one has inside when the words “I am closing it down” are spoken out loud to others who are being impacted by my decision. The labor employed at the store was largely unskilled, and many were dependent on the operational success to maintain their earning levels.

Wrestling with when and how to disclose this to those that matter was something that I carefully considered.

But how could I tell anyone? I was always the one that had the answers, solved the problems of others, and gave advice when it was asked. I was the stand up guy, a person that many people trusted. I was going to let all of them down I thought, including myself.

What will some of these people have to do when there is no longer a place for them to go to work? If I give them advance explore will they abandon the store early to take jobs somewhere else, leaving me crippled to the loss of labor, or, to those that conclude, leave me vulnerable to the temptation of uncontrollable theft? I unexcited had to manage the business to the end.

Or do I unbiased indicate up one morning and say “it’s been nice, but it’s a done deal and the store is closed”.

There was no one to advise me, no one to say that a certain path was the right one to take. I was all alone standing in my hold shadow, facing the failure of a business and now having to utter those fateful words to those alive to.

At least by this point, I tried to tell myself “it was the business that failed, and not me”, and would continue to force myself to remember that through the turbulent months ahead that were coming too soon and way too fast.

In the demolish I decided to do the right thing after all.

I knew that I would lose my own self respect if I did not give the employees as considerable advance notice as possible.

It should be their option as to how long they continued to work there, and not mine. The store was certainly going to face some premature exposure with the public by doing so, but that was the price that had to be paid. I did for them what I would have wanted to be done for me had I been in their shoes.

I was determined to leave the business with my self respect in hand and my boots still on.

I too was one of the casualties. But “I” was not the failure; “it was“.

Of that I was certain.

My hold perception of personal failure was placed on my shoulders solely by myself. Once the decision was made to cease operations, I finally realized that it was just the business that had failed.

Now I had an unenviable but recent challenge to face.

It’s just the beginning

After I had decided to close down, I retained an attorney about one month prior to closing the store. I had done much research during the winter months, and basically understood the process, it’s effect on me, and time frame that the bankruptcy was going to take. I also learned through research of potential pitfalls that lay ahead in case of objections posed by creditors.

Even though I was never completely clear of when I was closing until the date that I finally decided to do so, I had to plan ahead and make determined that I would not be in any kind of violation about the use of business credit.

In my case, I filed both a business bankruptcy and a personal chapter 7 bankruptcy. Filing a business bankruptcy wasn’t absolutely necessary since any creditors of the business would be coming after me personally anyway. But after consulting with the attorney, I felt the cleaner course of action would be to do both.

Filing both meant more money for the attorney but more peace of mind for me.

Preparation for filing included documenting the exact address and account number of everyone that I did business with. Even those vendors that were not creditors being owed money were listed on the final petition. It ended up being an enormous petition.

After several visits with the attorney’s paralegal, along with several corrections, the petition was finally in order to submit to the court.

In the meantime

As if the bankruptcy itself wasn’t stressful enough, I was still unemployed and receiving no income. Everyday was spent either job searching, furnishing more documents for the attorney, or both. The store closed in mid June, and by mid August I unruffled had neither a job nor an official filing date. My spouses’ wages were not enough to aid a family of four, while our savings account was continually shrinking .

The pressure of everything being incomplete was mounting.

It seemed as though mountains were on my shoulders and my knees wanted to buckle. I just wanted to move on with life but couldn’t. I was in limbo, or so it felt. Yet I knew that I had to stand tall, and now so more than ever.

This was my test. My alarm of failure was my personal enemy. And soon it was to be faced head on.

The Petition/341 meeting

By late August, everything finally seemed in order for the filing of the chapter 7 bankruptcy filing. The attorney’s office filed the petition electronically to the bankruptcy court, and within a day of receiving the petition, the court set a 341 meeting of the creditors about four weeks later. In my case, I had two separate 341 meetings; one for the business, and one for the personal filing.

All along, I had heard horror stories about the 341 meetings in front of the assigned trustee despite my attorney’s assurances that the meetings were generally routine.

I arrived early to the meeting for my personal chapter 7 filing and found myself alone in a separate room waiting for my representation and also for those others going before the trustee. I sat there anxious and very apprehensive of having to appear in front of the trustee with a room full of strangers.

What was shocking though was the diversity among those present. I felt especially taken in by the amount of elderly that were filing. I assumed their presence was largely due to unpaid medical bills.

Fortunately, for when the meeting started, I was to be the 5th out of 6 attendees. If the trustee was of the panic sage type then at least I would be prepared.

But once the first person went before the trustee, I immediately felt at ease.

Not because the trustee’s questions were exactly as my attorney had described, but I felt at ease because my new path was officially being set. The road to recovery and removing this big pressure was soon to be station in motion.

When my turn came, the trustee went through the routine questions and had one final question about a joint savings account held by both my wife and myself. He further asked me to provide to his office with savings account statements showing transactions from the previous six months.

No problem, or so I thought.

In Florida, a joint account is considered to be immune from the trustee’s claim, and the legal term is “tenancy by the entireties”. That’s as long as the spouse on the account is not filing nor has any legal connection to any of my debts.

In my case, my spouse was never keen with the business so she would not be affected by my bankruptcy.

The second day’s 341 meeting for the business chapter 7 was with a different trustee. Knowing what to expect this time, I was actually looking forward to going.

All creditors are invited to attend a 341 meeting at which time they may ask questions to the debtor or to object to a debtor’s filing. But rarely do they show up.

Except for mine.

But it turned out not to be a expansive deal as the creditor was the attorney of the former landlord of where the business had been located. Their appearance was regarding some assets left at the plaza. Nevertheless, it had been unexpected.

Waiting game

Once the 341 meetings are finished, the day calendar becomes very well-known. Generally within 60 days of the meeting and if there are no objections from any creditor, the trustee will discharge all debts listed on the petition.

Two weeks after my 341 meeting I received a letter from the trustee requesting more information regarding our joint bank accounts. This time he wanted complete statements showing all transactions of both savings and checking accounts that we held jointly.

One week later the trustee sent me a novel letter.

It was earth shattering when I opened it.

The trustee was filing an objection to my petition in general, citing the fact that we had moved our accounts from one bank to another after consulting an attorney, and because we had the protective clause of “tenancy by the entireties” inserted onto the signature card at the fresh bank.

He claimed I was fraudulent in my petition, and had attempted to hide assets from the court. A hearing in federal bankruptcy court was soon scheduled. I was horrified at the concept of this dragging on and on.

I was tranquil jobless and we were living off our savings account, but now the trustee wanted that too. I thought how unreasonable the trustee was, as we had moved the accounts on the advice of my attorney because we were trying to prevent a potential set off as my former bank had been one of my business creditors.

What was fraudulent about this? My attorney said they would try and get the instruct resolved as he didn’t assume the trustee had aptly reviewed all of the documentation regarding the accounts in question.

About two days before having to appear in federal bankruptcy court, the trustee finally relented after reviewing all of the documentation and promptly canceled the hearing. Thank goodness my attorney proved suitable.

Now the waiting game was nearly over even though the 341 meetings were held well past 60 days.

Since there were no other objections from the trustee or any creditors, I finally received gawk that my bankruptcy discharge was final. It took nearly 90 days from the date of my 341 hearings, but closure was finally in hand.

Advice

There is one thing that I wish I would have handled differently regarding my bankruptcy.

I should have made the decision to close the business and file much sooner than I did. In retrospect, once the business debt had reached a certain level, I should have began the process then. And In my case, at least one year earlier.

If you have the option and are prepared, do not delay. The pressure of mounting debt and either waiting or hoping for a solution can be nothing but torturous. I know this for a fact.

Remember the clothes dryer earlier…..round and round and round.

As far as handling the bankruptcy itself, there isn’t much that I could have done differently. Some roadblocks were encountered, but I stammer any bankruptcy with assets will have those.

The trustee is always going to try to commence the door to any assets they may believe the court is entitled to.

I would advise anyone in financial trouble to do worthy research and know what you are getting into. I was already aware of the process before I ever spoke to an attorney. I had made determined that I was not going to violate any time constraints on the use of lines of credit. This is important.

Be aware that all debts may not be dischargeable. Abuse of credit may be one of those.

Do not play games with hiding assets whether they be bank accounts, vehicles, or boats, and listen to your attorney.

Examine the details of your petition with a delicate tooth comb. Develop sure every creditor’s address and account number are lawful. I had found more than a handful of errors in my petitions, and kept finding them until a week before the 341 hearings.

If you do not understand fully what is going on, ask your attorney. Although the attorney has your best interests at heart, they are not you.

The future

For the first time in a long time, the future is now.

I no longer get calls from telephone solicitors nor an endless supply of credit card offers ( I started getting some recently however) through the mail.

I can go out and chat with a neighbor, fix dinner, and watch the news without worrying about a potential bankruptcy.

During the bankruptcy process, I gained employment after endlessly searching for over four months. I was blissful when I was offered a management position with a national corporation. There are level-headed some financial concerns, but there is now time to rebuild credit and establish new ties in the corporate world.

I no longer carry the weight of the world upon my shoulders, but most importantly, I am not afraid to tell anyone that I had filed bankruptcy. I realized that there was no shame in filing, and that the world serene does exists after doing so.

For that I am grateful.