I Filed For Bankruptcy. I Don’t Regret It.
by Starre Vartan
The sun was bright on the late-spring day I went to bankruptcy court. But inside, it was cool, and the tang of commercial cleaners cut through the dusty-corner smell. The waiting room on the third floor was generic; grey on taupe on beige, yet somehow still mismatched.
The courtroom was behind a faux wood door in the back of the room. I expected it to look like every courtroom I’d seen on TV— wood panelling, high ceilings, gothic.
When I walked in with my lawyer, we stood for a moment at the back of a large, plain room with rows of folding chairs. Large tables had been pushed together at the front of the room, where two youngish men in suits presided over laptops, a mess of wires and plugs winding across the table’s surface. A woman seated between the two men was already typing away, recording it all.
It was like being at the DMV—but instead of being bored, I was terrified.
How I arrived at that courtroom is a story both unique to me but also not all that different from the other Americans whose lives have been ruined by the financial crisis.
“mine is just one of many stories about lives forever shifted, worsened, by the financial crisis of 2008.”
Mine is just one of many stories about lives forever shifted, worsened, by the preventable financial crisis of 2008— the ripple effects of which haunt me to this day. It’s also one of the millions of stories about how America has profoundly failed hardworking people, telling us one thing about honest work and sacrifice, and then allowing criminals to shit on that idea and get away with it.
My grandma raised me when my drug-addict mother couldn’t, and when I was 21, she died and left me a little money—not quite enough to put down 10% on an inexpensive house, but almost. I had been with my partner for 5 years, I was nearly 28, and I had been taught to be careful with money. My little inheritance had been sitting in the bank. It was time to do something with it— something smart and responsible.
I was raising myself post-college, with no parent to lean on for advice, or a place to live if anything went wrong. I had to make it work, on my own. Everyone said buying a house was a wise investment. Everyone. My former landlord, a Harvard-trained economist, told us, “We love you as tenants but you are wasting your rent money—buy a house, it’s the only way to build equity in America unless you’re already rich.”
It was late 2004 when we bought a Victorian circa 1911, with a kitchen and bathroom from the 70s and the 50s, and vinyl covering the original hardwood floors. The back lawn was a patchy mess and there was a dead tree in the middle of it. But the house had good bones. Slowly but surely, my then-partner and I fixed up our new home. I felt safer than I had since my grandmother had died. I worked a full-time job, and on the side, I founded what would become an influential (but niche) award-winning website.
Then it all fell apart.
In short order, my partner and I both got into prestigious graduate programs in New York City, we began classes, broke up amicably, and then tried to sell the house as we had agreed to do if we ever separated. We were too busy with grad school to realize the economy was melting down. We weren’t able to sell the house for anything close to what we had paid; the housing market had cratered. I’d taken out grad school loans believing that I’d sell the house and use that money to pay off the loans.
Now, those dreams were shot.
For the next decade, I felt like a failure. Despite the prestigious program and my impressive resume, financially, I was in deep.
My website was successful from the outside; I had a significant social media presence. I was featured in news articles and women’s magazines. I made live TV appearances and booked speaking engagements. But still, my website and all that press didn’t earn me a sustainable living. Dreams of selling it for a hefty sum—or anything at all—disappeared.
Even though the very long, slow economic recovery from the financial crisis was completely out of my control, I felt guilty. I must have made bad decisions.
I couldn’t sleep. All night, I would agonize over my decisions. Give up on the house and walk away, and lose the little money I had? Maybe I shouldn’t have gone to grad school—which was pricey, but also some of the best years of my life? Should I dump my website that was doing so much good in the world and could (maybe, still?) be sold and prove hard work pays off?
“Work harder,” I thought. “Keep the faith.” I did yoga, I meditated, I tried to remember all the useful things my therapist told me and saw her whenever I could scrape together $100. I kept the house and lived there with roommates. I had a full time job and two paid side-hustles. I dated, and worked, and paid off the mortgage, and when eventually I met someone else, my ex and I tried again to sell the house.
Still no luck, and I knew I wouldn’t get my money back. The area’s housing market, even 6 years after the crisis, hadn’t recovered. The house was a heavy weight on my shoulders. I loved it—it was the only home I had and held my grandmother’s lovely things. But I also hated it for being a burden.
I had been so responsible, so careful, for my entire adult life. I started babysitting and walking my neighbor’s dog at age 12 and hadn’t stopped working since. I had cared for my grandma in high school instead of going to parties with friends. I’ll never forget the feel of her hand in mine while we waited for the ambulance to arrive— she was drowning in her own lungs from congestive heart failure. When she died, I did all the work of cleaning out her closets and donating piles of stuff.
But at 35, I was more than broke, doing work I hated for barely any money. I couldn’t sell the house, and my debts were daunting.
“i become angrier. First, at myself, but then with the financial professionals that had orchestrated this financial crisis. ”
I become angrier. First, at myself. But then, as I learned more about the source of the crisis, I became furious with the financial professionals that had orchestrated it.
Bankers had taken whatever little financial security held by the middle-class—their home mortgages—and gambled with it for quick profits. They showed little remorse that almost 10 million people lost their homes, or that trillions of hard-working, regular people’s dollars—pensions, parent’s college savings, down payments—would be lost forever.
And while the country and politicians and Wall Street moved on, citing financial recovery and praising the strong stock market rebound, people like me were left behind. Forgotten.
To this day, fewer people own homes and more people rent, and housing is ever-more-precarious in the U.S. because of it. Some even point to the 2008 economic meltdown as the foundation for several of our current crises. Even worse, those who caused this destruction weren’t held responsible for their actions. People like me had to pay, but ONLY ONE top banker went to jail for a crime that ruined so many lives—many far more disastrously than mine.
When I couldn’t sleep, I’d often find myself fantasizing about going out in New York City and meeting guys who worked in finance. I’d chat them up, and if I found out they worked at one of the banks that had spurred the financial crisis, I imagined throwing drinks in their faces, spitting on them, slapping them, or even, some days when I felt particularly trapped, thought about kicking them “square in the nuts,” as my grandma would have said.
Even through my rage, I couldn’t let the house keep me in one place forever. I knew I had to make some bold moves. I moved with my current partner to the west coast when he switched careers in 2014, leaving the house in the hands of some laboriously and carefully vetted tenants. I sold my car for cash to make the move. I’d never intended to be a landlord and only made enough on the rent to pay the mortgage.
Newly arrived on the west coast, we were extremely lucky to get 10 months (!) of free rent from a friend-of-a-friend who needed someone to live in an unused house on a dirt road off a dirt road in the mountains of Oregon. I’d never accepted help like that before and felt guilty about it the entire time.
As for work, I could no longer trust a single paycheck anymore; the idea of putting all my eggs in one basket, and then that basket disappearing, was too scary. So I worked for myself. I began a freelance writing career, and the first couple years, I made about the same amount of money as I had in high school working as a cater-waiter on the weekends.
“i was depressed, couldn’t get enough work, and I woke up most nights worried about imaginary horrors.”
I was depressed, couldn’t get enough work, and I woke up most nights worried about imaginary horrors visiting the house on the other side of the country, my only home in the world filled with the things I still loved—my grandmother’s things, left to me, that she had collected or inherited.
It wasn’t until my third year of freelancing that I started making a reasonable salary. By then, we were living in California and my partner was in law school. It had been worth it to persevere, career-wise. I was finally doing the work I wanted to be doing. I didn’t have a car, but I paid my share for rent, food, and Netflix.
I knew that if things kept going well, I could start paying off my debt. And then one of my credit card companies sued me. As in, I received a legal notice to appear in court. The notice had been forwarded to me from my house to my new address in California and a response was due in just days.
I had three options. The first two were non-starters: pay off the credit card company in full in the next month, or let them sue me and lose my house. I’d have no money and negative credit. Or, I could go bankrupt. Hopefully keep the house, have bad credit for a few years and then recover. And most of my debt would be wiped out (though some student loans can’t be discharged in bankruptcy).
“i had a complete and total breakdown. I wept and screamed into a pillow and cried so much I got dehydrated.”
I had a complete and total breakdown. I rolled around on the floor of my bedroom and wept like I hadn’t since my grandmother had died. I screamed into a pillow and cried so much I got dehydrated. I sat outside and cried some more. I felt like complete and utter shit, a garbage-person, a loser.
Then I got a lawyer, who filed the paperwork to let the credit card company know I was declaring bankruptcy, which stopped their suit in its tracks.
The bankruptcy paperwork took months. And I spent most of those months crying and feeling like a loser. Now I had real, hard evidence of my failure. It sat in a folder on my desk, staring at me every day.
I took stock of the “mistakes” I made, which at the time, all seemed like responsible, conservative choices. I bought a house. Went to a prestigious graduate school. I spent my money carefully, and used a credit card for the essentials, like school books, a laptop (that I’m typing on 9 years later), food, and train tickets to get to school (which was cheaper than living nearby). I worked part-time all through college and grad school. I always worked 2,3, 4 jobs at once. Partnered or not, I have always paid my fair share of the bills.
Before it happened to me, I thought people who went bankrupt were irresponsible, buying things they didn’t need, and taking loans out on fancy cars and going on lavish vacations. I didn’t even have a car or health insurance, I cut my own hair, did my own nails, and got clothing second-hand. I had nothing of value other than the house. When I flew, I scrounged air miles.
As I looked around the ad hoc bankruptcy “court room,” I didn’t see any flashy people. I saw Americans. Of every race, men and women, parents with kids, and lots of elderly people (my lawyer said most of them were going bankrupt due to medical bills). Everyone looked solemn and sad. I’m sure many of them felt the shame I did. Some people were crying.
In turn, each of us had to get up in front of the room and speak to the lawyer who represented the state of California, and get grilled. I didn’t realize that bankruptcy is a public process. Because I had a small business (I formed an LLC for my website years ago), I got extra-grilled.
The shame washed over me as I answered the questions.
The elderly man who went after me was so nervous he stuttered. The 20-something woman who was my lawyer’s other client shook the entire time she was questioned.
After it was over, I walked in the sunshine to a bar and drank three vodka martinis in quick succession, something I’ve never done before or since.
I now recognize that bankruptcy is a tool, one that’s used by wealthy people quite often—famous people and successful entrepreneurs use bankruptcy to move on from failure, and so did I.
This month, I’m three years into my five-year chapter 13 plan (there are different kinds of bankruptcy)—I pay a set amount each month and at the end of the 5 years my debt is cleared and I get to keep my house. In the interim, several of my hefty private school loans have been discharged, which is not uncommon, but also not guaranteed. My credit score has already started improving. Some days I feel lucky to have kept my house, but other days I’m angry, thinking of the millions made by the bankers who weren’t punished for gambling with all our futures, and losing.
The shame and feeling of failure has lifted, slowly, over the years. Now I know you can take responsibility for something horrible (I have), without blaming yourself for it (I don’t). I can’t regret graduate school, where I learned so much, and I no longer punish myself for buying a house.
I was just caught up in something far larger than myself, and did my best under the circumstances. That’s all any of us can expect of ourselves.
My writing is going really well and I’m doing the work I have always wanted to, including penning essays like this, and reporting on endangered animals and environmental issues. I still have a home and my grandma’s things, which I will keep until I’m very old. I think even Marie Kondo would agree that some things are worth holding on to.
This past year, I’ve started talking about my bankruptcy, to normalize it. Because it is normal.
Every year, hundreds of thousands of Americans use this financial tool to start over. I did, and despite the years of pain, shame and self-recrimination, I’m glad I did it.
I hope that other women facing financial hardship will be kinder to themselves than I was.
Starre Vartan is an independent science journalist and creative writer who was once a geologist—and she still picks up rocks wherever she goes. You can find more of her articles here.
