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The Bankrupt Professor

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By Liza P. Gray

Every month I make the same trip to the post office. I drive my compact car to the next town over, jockey for a parking spot, and walk up the steps. Once inside, it is the same ritual: "I need a money order and a stamped envelope, please," I tell the postal clerk. She knows me by now and we usually chat.

I wonder if she is curious about my monthly request. Deep down, I am convinced she knows the truth: I am bankrupt and I need a money order to send to a bankruptcy trustee.

I am in the middle of a Chapter 13 bankruptcy, with about two years before my case is closed. The experience has been one of the most humiliating and illuminating of my life. As a tenure-track professor with a stable job, I theoretically should not be in this situation. But I am. And I bet there are many other bankrupt professors out there, too.

It was completely mortifying to state my profession to my bankruptcy lawyer. After all, I am a college professor. I am supposed to have my stuff together. My job is secure. My future is bright. But as soon as I named my workplace, the lawyer said: "Oh, I have other clients who work there."

Let me be clear on this: I do not advocate or encourage anyone to file for bankruptcy. However, being a bankrupt professor has created some interesting and unpleasant situations for me that are worth noting.

I came to academe a few years ago after a career in the "real" world in communications. My salary was never very high. I was used to making ends meet, but, in retrospect, I relied far too heavily on credit cards.

The trouble started the winter after my graduation from college, when I charged six tickets to a New Year's party on my credit card for me and five friends. When they paid me back, I spent the cash instead of putting it toward the credit-card balance. Over the next decade, my credit balances topped $20,000. An illness sent me over the financial edge.

I am not alone. Researchers at Harvard University interviewed more than 1,700 people who had filed for personal bankruptcy in courts across the country. The results showed that half said that illness and/or medical bills led them to bankruptcy court, according to the report released in February.

It wasn't a life-threatening illness for me, but the added expenses of doctor's visits, prescription medicine, and deductibles that put me deeper in debt. This was coupled with the expense of the cross-country move I financed myself because my teaching job was only a temporary position at first.

My career switch to academe came with a $5,000 drop in pay. My financial situation began to spiral downward and I was simply not able to pay anything off. The decision to file for bankruptcy came after many sleepless nights, anxious days and consideration of the options.

My lawyer determined that my salary was actually too high for me to declare Chapter 7 bankruptcy and be relieved of my debts right away. So I filed for Chapter 13 bankruptcy, which means that I pay back a portion of my debt every month to the bankruptcy trustee.

That seems fair. I am glad to be repaying what I can. I filed last year, before the new bankruptcy laws took effect. In April Congress passed sweeping legislation to overhaul the bankruptcy code. One of the provisions is that fewer people can file Chapter 7 to liquidate their debts and more people will be required to file Chapter 13, like me, and repay a portion.

Being bankrupt means that I cannot have any credit cards while I am in Chapter 13. That is fine with me, I've learned my lesson. But it does make things sticky as a professor.

For instance, going to academic conferences requires a credit card in order to reserve a hotel room or book a plane ticket. I have to use my debit card, which means the money comes directly out of my account. Sure I get reimbursed for those things, but not until weeks or months down the road, which means I end up jumping through a lot of hoops to do what other faculty members handle without a thought.

For one conference, I used my debit card and borrowed money from a family member, then paid that person back when I got reimbursed. In another instance, I used my debit card to reserve a hotel room and found out that the hotel put a hefty hold on the card -- leaving me with very little money until I checked out.

A few family members and close friends know my situation. Others do not. I would rather fall into a real hole, not just a financial one, than tell my frugal father.

It is embarrassing to be my age and still getting by paycheck to paycheck. My finances are tight all the time, since I am now living within my means and without a credit card. But on the surface, I look like I am doing well.

Colleagues seem confused when they talk about buying houses and ask why I am still renting. Why? Because I can't get a mortgage. Not for a very long time.

I desperately need to teach overload classes for the extra money. But my supervisor is concerned with overloads taking up too much of my time since I am still on the tenure track and supposed to be focusing on research. So the possibility of extra income from added teaching is out for at least the next year.

Even holidays prove problematic. Last Christmas, my colleagues decided to chip in to buy gifts for the chairman, as well as the secretaries. Unfortunately, I was tapped out and simply could not cough up the needed cash. I finally told one colleague why things were so tight and she spotted me the contribution.

I am involved in a student organization on the campus and sometimes needs will arise in which contest fees must be paid upfront or supplies purchased in advance of reimbursement. Can't do that either.

This essay is meant to be illuminating, not whiny. My financial problems are my own fault and I am trying to correct them. In about two years, I will be done with my bankruptcy case and will begin the long process of rebuilding my credit. Meanwhile, I sometimes talk to my students about the danger of credit-card debt. They don't know I am bankrupt. But they do know that I once succumbed to the lure of plastic and that I hope that they won't do the same.