By Leigh Neely
It was 1986, the height of the U.S. Savings and Loan Fraud Scandal, and one of the worst years of my life.
President Reagan was in office, and his trickle-down economy was getting worse every day. The trickle that had been coming to my house suddenly dried up, and my husband’s business folded almost overnight.
Richard and I were raised in Chattanooga, Tennessee and we were enjoying raising our three children there. We were both working what we considered our dream jobs. I was a creative specialist at a local radio station and Richard’s contracting business had been steadily growing since he started it in 1980. Times were good for us.
In 1985, the recession and its realities hit home for us, and we began relying heavily on credit cards. Our credit rating had always been perfect, so we had several cards in both our names. As Richard’s business began to decline, our debts began to grow . . . and grow.
He still worked daily, but was making less than half of what he had been. Soon we were being hounded by credit card companies for late and missed payments. We hated answering the phone because creditors were calling at all hours. We didn’t know our rights at the time and thought we just had to tolerate the calls. We didn’t know anyone who could help us.
Coming from solid working-class families, we were devastated. Our parents had all come from low-income families and moved from small country towns to the city to get better jobs. My father began working in the coalmines when he was just 15 years old. Both our fathers retired with more than 40 years of working the same jobs. We had a strong work ethic to live up to.
We made house payments intermittently, hurting ourselves by getting high late fees and creating larger payments. When the bank said they were foreclosing, we had no idea what to do. Thinking we would have to get out of the house right away, we decided it would be best to move. We knew Nashville was still growing and we were sure we could both find work there, so we decided to uproot our kids and move.
The move went well, but it turned out our home remained empty for months. Ironically when we moved Richard received contracts for jobs in Chattanooga, and I spent most of the early months in Nashville with our three children.
Even with both of us working, our debts became overwhelming. Someone suggested we file for chapter 11 in order to reorganize our debts and set up a workable payment plan.
In the bankruptcy attorney’s office, we finally found hope. She looked over all our debts and said, “Things are in such a bad way you need to file chapter 7, full bankruptcy.” It would mean a bad credit rating for 10 years, but it would also mean our nightmare would end. We took her advice and filed.
We lost our home, a car, most of the business furniture and assets we had. The day we went to court, we sat there anxiously while the judge recited the list of creditors to see if anyone was going to fight us. By the time he finished, we were emotionally drained. Fortunately, no one contested the judgment.
It was a long five years before we tried buying another house, and when we did we paid 22% interest on the mortgage. We got the loan because the house was only two days from foreclosure. The bank saw us as a way out and they thought we were a good risk.
I’d have to say the biggest lesson we learned was to not take credit for granted. When things were going so well we bought whatever we wanted and never stayed on any kind of budget completely unaware of where our money was going.
And last but certainly not least, learn your rights. Talk with your creditors. They will work with you to arrange payments.
On a personal level, I’d have to say don’t let the guilt bother you. Everybody makes mistakes. Growth does come from realizing what you did wrong and not repeating it.
For many years, Richard bore an unnecessary guilt, feeling what happened to us may have damaged our children in some way. The pride of home ownership is a big thing to a man. After all, it’s part of the American dream.
One day I knew that awful guilt was consuming him again. We were in the car barreling down the highway on our way to visit family in Chattanooga. I turned to our kids in the back seat and asked, “Do you kids remember those times being bad for you?” As it turned out our kids said they didn’t know anything at all about us having money problems.
We had lost our home, but kept our family together.