This is the sort of column that doesn’t apply to everybody, but I think everybody knows somebody you might want to send this to.
And hell, I received the cutest damn email ever a couple weeks ago when, in response to a column about breakups, a reader said she had “read it at least ten times and will clip it to my evernote and it will be there waiting in an open-in-case-of-breakup-emergency notebook.”
So, here’s the bankruptcy column. I hope you, the casual reader, never need it. But surely some of us do.
About a year ago I was involved in a three-car accident. I was at fault; all three cars had extensive damage (mine was absolutely totaled), but miraculously, no one was hurt.[tagbox tag="personal finance"]
My insurance policy only covered $20k of damage on other cars. I began to receive letters from the insurance companies of the other drivers: it seemed that one driver had $17k worth of damages, the other driver had $22k. Their insurance companies paid them off, and then my insurance companies gave each of theirs $10k. The letters informed me that I now owed one company $7k, and the other $12k. (My car wasn’t covered at all, and I went two months in LA without a car. Finally my parents scraped together the money to help me buy a new one.)
I didn’t have that money. I still don’t. When I pay rent every month, I’m left with about $35 in my bank account. My folks aren’t doing much better.
Finally, a few of months ago, I received a call from my insurance company. The other two companies are suing me for the difference. As part of my coverage, my insurance company is providing me with a lawyer.
At first, this was a huge relief. She talked one of the insurance companies into taking a deal. But the other won’t accept any settlement, and usually forces people to go to trial. If I go to trial I will certainly lose and owe them the $12k plus interest plus all their legal fees. In addition, the actual drivers of the other cars have up to three years in which they can sue me for bodily injury, and she said that happens 99.99% of the time.
At this point, my lawyer began to tell me that bankruptcy isn’t all that bad. If I declare it, not only will the lawsuit go away, but the women from the accident won’t be able to sue me as well.
It kills me to declare bankruptcy – I’m 24, but unlike most people my age, I have no student loans to repay, no outstanding credit cards to pay off. I’m very good with what little money I have. It seems so unfair that a big company with a bazillion dollars like State Farm is going to go out of their way to ruin my credit over $12k.
I’m just so nervous that declaring bankruptcy will ruin everything. I’m not going to buy a house any time soon, but I’m looking to move out of Hollywood in a few months. How will I find a decent apartment with a cat, no job, and bankruptcy on my record?
I know from reading your column that you declared bankruptcy at a relatively young age and bounced back.
Dear, dear Emily. I am so sorry that this happened. I had to shorten your letter, in which you described the accident; even though you were at fault, I’m sure that there are few drivers who haven’t made a driving mistake once, and simply gotten lucky.
I have indeed declared bankruptcy, although I’ve mentioned it only in passing (see Bullish: The Career F*ckups I Made So You Don’t Have To).
I talked at much greater length about the failure of my company in Bullish: When To Make Massive and Ballsy Life Changes for Your Career. Specifically, the moment at which I was sitting in my beat-up car (which had been hit in a car accident, for which I received insurance money, which I used to pay rent instead of to repair the car) with a stack of collections notices on the passenger seat, fantasizing about stepping out of the car, shaving my head, and walking away, barefoot, down the street, into god knows what, but away from the giant tangle of failure that was my company and life.