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My main topic today is the debt cycle and bankruptcy. This is a topic that Americans have, like Pavlov’s dogs, been trained to view with revulsion and disdain, because a person has to have truly fucked up to place themselves in such a situation. Bankruptcy equals failure, and Americans hate failure, unless the person filing bankruptcy was a millionaire already. Trump’s bankruptcies barely rate a mention. Corporate bankruptcies are similarly not a problem, because it just means that they suffered some kind of misfortune, and it has nothing to do with vulture capitalists taking them over and putting them in massive debt so that the vulture capitalists get their investment back immediately.
But when an individual declares bankruptcy, he or she is suspect and can be judged severely. And they are, particularly by themselves. Americans will go to great lengths to avoid the shame of poverty, particularly if they are poor and white. White people are so ashamed of poverty that they will spurn charity, mostly because it makes them feel bad about themselves. In fact, this bothers them so much that it will make them vote against their own self-interest.
We can trace a lot of this back to the Calvinist reformation. The resulting Protestants, believed in predestination, which is the belief that souls are predestined by God to go to hell or heaven. Therefore, a successful person was seen as a “blessed” person who was almost certainly marked for Heaven. An unsuccessful, or poor, person was probably going to hell. This went hand in hand with the Protestant work ethic, which basically meant working your ass off all the time while avoiding anything fun, so that you would earn the success that God would grant you.
Conveniently, this meant that if a person was already wealthy and successful, they were in God’s good graces. The poor — not so much. And here is the acorn of American thought that has become the mighty oak of “If you’re suffering, it’s your own damn fault, so fuck off.”
Some Protestant cults — pardon me, sects — became so obsessive and weird that England was obliged to encourage them to migrate to America. And so they did, and here it was that they made a war on Christmas before the modern war on Christmas, burned supposed witches, and turned antiblack racism into a White-Jesus-approved religious mandate, because clearly black people were not predestined for heaven.
But they also brought along their belief that hard work was enough to be successful, in spite of plagues of locusts, several Depressions, the dust bowl, and everything else. Eventually, a revised cult — pardon me, sect — grew up that became today’s Prosperity Gospel, which basically says that if you’re rich, then God loves you, and if you’re poor, God thinks you’re shit.
This is the cultural framework for our American shame of poverty. It’s also why so many poor white people fight against progressive reform that would actually help them. I’ll give you an example.
My ex-husband Homer was born in 1952. His folks were blue-collar workers, and unlike most middle-class households, his mother worked because she had to. One year when he was quite young, they were obviously a struggling poor family. For Thanksgiving, a family down the road saw this and brought them a box of food for Thanksgiving dinner. This shamed Homer’s father. What shamed him even more was that the family who gave them the food was black. Homer told me that the food went into the trash. His father would rather starve than accept charity, especially from black people.
In 2021, we live in an age of ever-expanding debt. It’s easy to come by, and for many, it’s the only way to make ends meet. In a nation where a significant percentage of families can’t come up with $400 for an emergency, we turn to debt. That means credit cards, loans, or even worse, payday loans, which are legally allowed to charge rates as high as 600%. Naturally, the only people who make use of these loans are the poorest and most desperate, which ensures that they will remain forever impoverished. Which seems like the idea.
It is ridiculously easy to find yourself a few emergencies into the hole, and the more debt you take on, the more debt you are likely to take on. If you take up a few offers to “buy now and pay later,” you may quickly find yourself with more money due in monthly payments than you have. And sadly, the more vulnerable you are, the more likely you are to be in debt. Disabilities, chronic illness, sudden illness, job loss, pay cuts, and divorce are all just a handful of the potential finance-wrecking circumstances of American life.
The American banking system is happy to have you paying monthly interest until you die. It doesn’t matter whether you actually pay off your debt or not. The likelihood is that you will pay them far more than you owe over the long haul anyway. And they count on your internalized shame to prevent you from declaring bankruptcy and trying to get a new start. They also count on politicians.
In 2005, Joe Biden helped spearhead the Bankruptcy Abuse Prevention and Consumer Protection Act, which did nothing to protect consumers and everything to protect banks. This law made it harder to declare bankruptcy in some circumstances and made it completely impossible to discharge student loan debt, which has result in an entire generation of debt slaves who can’t afford to start families.
Nevertheless, an individual can still declare Chapter 7 bankruptcy in some situations, and dammit, if you need to, you should. I know because we did. I contacted a bankruptcy lawyer in 2019 when I realized I didn’t have money left for groceries. It was the smartest thing I’ve ever done.
There are some hurdles in bankruptcy, though, so be prepared. First, you do need a lawyer. There is no way around this. There are also filing fees. In my state, I had to pay half up front. That came to $750, which is a lot when you’re broke. In order to come up with that, my first step after talking to our lawyer was to quit paying our debts. Some of those debts were deducted from our banking account automatically. That meant getting a new bank account at a new bank and closing the old one. But my wife’s paycheck gets deposited by Social Security, and that took two months to switch over, so I just tried to keep my old bank account as empty as possible. It was loads of fun.
Filing paperwork for bankruptcy is a job in itself. I had to dig through my files to get all the information required, from home appraisals, car titles, and valuing our possessions. That part is scary because it feels like you might lose everything. But hang in there. You’re not likely to lose much.
Once your application is filed, you have to show up with your lawyer in court. The county guy on the other side of the desk is not your friend. He’s going to try and see how much he can squeeze out of you for your debtors. He’ll ask questions. You’ll answer them.
This will happen in a room full of other people, just like yourself, who are filing bankruptcy. Old people, young people, angry people, sad people. All of them are suffering people, who hope this will make things better for them.
Afterward, the county guy will talk to your lawyer, and they’ll reach a settlement. In our case, it meant handing over virtually all of my tax return that year. That was about $4,500. It was worth it.
What little I had left of my tax return went to my lawyer. That was worth it, too.
Undoubtedly, if you’re an American reading this, you’re wondering how it is that we got in such bad financial shape. And all I can say is that it was a confluence of things. At the time, I had a good white-collar job, but I hadn’t had a raise in more than 10 years. My wife is disabled and in a powerchair full time, which meant buying a used ramp van that was still really more than we could afford, but how else is she supposed to get around? On the day of our bankruptcy hearing, that same van had a dead battery. I managed to find a taxi company that had ramp vans, but the round trip to the courthouse cost us $100. The prior year, we helped my sister-in-law move to an assisted living home near us after she had a series of strokes. That cost us money that we never really got back. And a series of regular, everyday household emergencies like sewer line repairs add up, particularly when they go on the credit card.
But really, we don’t have to defend ourselves. Bankruptcy is what we needed to do, just like it’s what millions of Americans probably need to do in order to get relief. Anyone who’s ever played Monopoly knows that capitalism is a system in which the poor get poorer and the rich own everything. And all those supposed Christians out there who think hard work is the glory of the Lord but somehow think that a brown man who picks strawberries for 12 hours a day doesn’t work as hard as a CEO have completely overlooked the Jubilee year that the biblical Jews held every 50 years or so. That was when slaves were freed and all debts were forgiven, because even several thousand years ago, people could see that unending debt was a society killer. And believe me, bankruptcy is no Jubilee — we still pay our mortgage and the payments on the expensive ramp van. The difference now is that we can afford food and clothes for our growing kids.
I have learned something from this experience, which I will pass on here. First, needing help is nothing to be ashamed of. I wish more people could learn how to accept help.
Second, credit cards and the like are just evil. I got a secured credit card that I use regularly for the sole purpose of building my credit score. It has a limit of $300, and I pay it off every month. My focus, now that I can afford to, is saving and avoiding every other credit scenario on earth. You don’t need a Kohl’s card, even if it gives you an extra 10% off. If you don’t have cash on hand, don’t buy it. And if you have an emergency, well, do what you can with that, but avoid credit if at all possible. The problem when you’re broke is that this isn’t always possible. Which is why poor people remain poor. They are stuck in an endless cycle of debt, and the bankers are laughing all the way to their third homes in the tax havens of the Caribbean. And politicians of both parties enable them.
There are some policies that could help dig Americans out of this ridiculous situation. For example, maybe we should have a Jubilee year — one big reset for everybody. Obviously, a minimum living wage would keep a lot of people housed who currently aren’t or who are barely getting by. That wage would be closer to $30 an hour, not $15, by the way. Medicare for all would eliminate ridiculous medical debt, which in itself is a major driver of bankruptcy. Free college, which by the way is a thing in some countries and used to be a thing in California state universities, would help. And you know what else? Something called public banks. Those are banks that are owned collectively by the citizenry, and not by corporations. Public banks are citizen investments in themselves, and they are the best alternative to the corporate thieves who love debt slavery.
No doubt, some folks would rather avoid their feelings of shame than do something that would benefit everyone. But I’m here to tell you that bankruptcy is not the end of the world. For us, it was just the beginning. Everyone should have a shot in our society. Failure is not the mark of Cain, folks. Failure is just shit that happens to normal, everyday, good people, even when they try. Even when they work hard. We can — and must — do a better job of supporting our neighbors.