I filed for bankruptcy twice — and it was the right choice both times

Writer Sarah Graves on why using debt was the right option for her family, even after filing for bankruptcy the first time

For most of my life, I considered myself a financial disaster. I always seemed to get in over my head with debt and then need a bailout, most often from my more well-off parents.

Because I felt so much shame around this, I dedicated my time to learning as much as I could about money. I thought financial illiteracy must be the problem, and if only I knew better, I would do better. But that didn’t work out quite how I imagined.

As part of my self-imposed financial “education,” I watched Suze Orman’s TV show. (Anyone old enough to remember that one?) As part of the show, people would call in to ask Suze’s advice. I still remember watching an episode where a guest asked for advice on how to get his finances in order after having been bankrupt twice.

Rather than dispense financial wisdom, Suze lambasted him. “How could you let that happen?!” There was no mistaking the incredulity in her tone mixed with intentional shaming. As a viewer, my first thought was not “poor guy,” but rather “at least I’m not that bad.”

But several decades later, I could be this caller. And as a result of this brand of financial “education,” I’ve felt no small amount of shame about it. Fortunately, over the years, I’ve learned to look at debt — and debt relief — differently.

How grad school ‘broke’ me

After college, I spent several years floundering until I figured out I really wanted to teach. However, after spending years as a substitute teacher in K-12 schools, I realized that classroom management wasn’t my forte, so I decided to become a college professor and teach adults.

So I headed back to school. Like many grad students, I couldn’t do this without taking on student loans. But I figured that was “good debt,” right? After all, it was getting me where I wanted to go.

As a full-time student, juggling a full-time job was nearly impossible. I took on a part-time job in an after-school program to try to mitigate some of my student loan debt.

But the job paid less than $200 a week, and tuition wasn’t my only expense. I also had to pay for rent, food and all my textbooks. That’s where credit cards came in. I quickly maxed them out.

Worse was that no one warned me about the reality of working in higher education. Now I know that getting a full-time teaching position is like winning the lottery. Depending on the discipline, only about 10% to 15% of Ph.D. graduates are ever able to find full-time, tenured positions.

Another factor I wasn’t aware of is that professorships are very specific. You can’t just have a degree in English; it must be in 19th-century British literature, or whatever highly specific thing the hiring school is looking for. I got my degree in world mythology. In almost a decade of searching job ads (I gave up after that), I never once saw a school looking for a full-time mythology professor.

My first job was as an adjunct professor, teaching part-time. Like many professorship hopefuls, I thought I’d pay my dues for a few years and then find a full-time position. But a decade later, I was still an adjunct, a job that requires a Ph.D. but pays barely more than minimum wage. At one point, I was working at three schools, trying to cobble together a living. Yet, I still could barely pay the rent.

I never managed to pay off the credit cards I’d maxed out during school. One summer, I called my dad in tears because I needed help, once again. But my dad, who was a lawyer, thought it would be more helpful to pay for a bankruptcy attorney.

I remember sobbing on a friend’s shoulder because I felt like such a failure. Bankruptcy? How had it come to this? I had accumulated more than $25,000 of credit card debt chasing my teaching dreams. (And that was on top of six-figure student loan debt.)

I blamed myself. I should have found a way to work full-time. I should have found a cheaper apartment. I should have never left the house to go out with friends. I should have lived on water and air. I was full of “should haves.” It never once occurred to me to blame the system that got me there.

What traditional financial advice gets wrong

As a freelance writer, I wrote about student loans for years. The more I learned about them, the angrier I got. I couldn’t believe what a corrupt and broken system the whole thing was. Originally intended to give access to students who couldn't otherwise afford college, the student debt industry quickly became a way for banks to take advantage of the disadvantaged.

The rhetoric surrounding student loan debt is similar to that of other kinds of debt, although, thanks to the banking lobby, student loan debt is the only type of debt that isn’t dischargeable in bankruptcy. However, the burden is still placed on “personal responsibility”: I signed the loan agreement and borrowed the money; therefore, it was my responsibility to repay it. Further, if I couldn’t, I should have known better.

Yet, responsibility can only be a factor when students understand what they’re actually committing to. Financial experts tell us student debt is “good debt” because it will inevitably lead to better career prospects. In many cases, that’s true. In my case, it wasn’t.

I went to grad school to follow my dream of becoming a professor. Yet grad schools notoriously churn out vastly more Ph.D.s than there are jobs. Very few students are aware of this until they enter the job market because it’s not the “dream” college admissions officials sell us.

Where does “knowing better” come in when we’re repeatedly told this is what we have to do to get the job we want?

Teaching is a particularly problematic profession, whether of college or K-12. Although the job prospects and pay are better in K-12 education, teachers at all levels are overworked and underpaid. Worse, teaching requires advanced degrees, which, for most, necessitates taking on student loans. Those loans rarely pay off. Teachers consistently rank among the lowest-paid professionals.

For that reason, I often wished I’d chosen a different profession. But here’s the kicker: The world needs teachers. If we told every aspiring teacher, “Don’t be a teacher,” there’d be a teaching crisis. (In some places, severe teaching shortages already exist.)

Teachers consistently rank among the lowest-paid professionals…But if we told every aspiring teacher, “Don’t be a teacher,” there’d be a teaching crisis.

It reminds me of so many rags-to-riches stories where outliers profess, “I rose from poverty; so can you!” But while outliers, of course, don’t prove the rule, there’s another piece that often gets lost in the conversation. There are so many low-paying jobs that are crucial to society. Yet, we blame those who take them for putting themselves in poverty. Instead, we should be offering more systemic support.

Realizing this helped me understand that blaming myself for the debt I had to take on to be a teacher, and then couldn’t pay off because I was a teacher, was a bit like blaming the victim. I can’t say I’ve never spent money “irresponsibly.” I’m sure there are some things I could have done differently. However, none of those things would have been significant enough to have a substantial impact on my overall financial situation. Ultimately, this was more about a broken system than needing to “know better.”

Here we go again

After working for many years as an adjunct faculty member, I realized I ought to find another job. I had gotten married, which helped my financial situation somewhat. But we needed two incomes, especially with my son on the way.

It was harder than I thought it would be to switch professions. After my son was born, I no longer wanted to. I know that there are many two-income families where both parents work full-time jobs. But the flexibility teaching offered me was incomparable to most other professions, and I didn’t want to give that up.

My husband has a job in corporate America, where it’s challenging to get time off, even when using his allotted vacation days. When my son was younger, we had him in day care. But day care is hella expensive. After the COVID housing crisis hit, our rent nearly doubled, making day care an impossible expense.

Keeping a job where I was home in the summers and could teach on Zoom whenever my son was sick or had a random day off was, and continues to be, extremely helpful in a country that makes parenting very, very difficult.

Case in point: After I filed for bankruptcy the first time, I was still enmeshed in a mentality of shame, and vowed I’d never put myself or my family in that much debt again. It also felt amazing to be free of that debt, and I never wanted to face another pile of bills that felt insurmountable.

But, as any parent knows, babies are expensive. They need strollers, Pack 'n Plays, safety gear, diapers, and new clothes every other month because they grow so quickly. And kids don’t get less expensive as they grow. Grocery costs increase, and housing costs increase. School supplies become a thing, and kids get interested in extracurricular activities. And, of course, there are still the clothes that need to be continually replaced as they outgrow them.

We managed all that with credit cards. Moreover, we could never get to a place where we could pay them down because there was always something new our son needed. At one point, I started using the money we needed to pay for household necessities, such as gas or groceries, to pay the credit card bills, and then we’d use the space those payments created to buy the gas and groceries.

I knew teaching had become untenable, but I still wanted to maintain my flexibility. So I took up freelance writing on the side, often writing into the night after we put our son to bed.

Freelancing helped keep us afloat for more than four years. But I was writing almost exclusively for one publication, mostly because I didn’t have to worry about my pitches getting accepted, and I knew I’d always have work. But then, without warning, they laid off all their freelancers.

I had a full-on panic attack until I realized a crucial truth: At that point, most of the money I was making freelancing was financing our debt. So I immediately called a lawyer and started the process for bankruptcy No. 2.

How I’m approaching debt now

Unlike the first time, I felt no shame initiating a second bankruptcy. I still remember Suze Orman shaming that caller. But this time, I knew Suze was wrong. Bankruptcy was a tool at our disposal, and a rather useful one for dealing with a situation that was not our fault and beyond our control.

I knew from the first time around that bankruptcy was not, in fact, the end of the world as I’d first believed. It freed us from being hounded by debt collectors or potentially sued when we couldn’t pay the bills. And though our credit scores took a temporary hit, it was only temporary.

We were still able to finance a new car after my husband’s was totaled. And, two years post-bankruptcy, we were even approved for a mortgage. My credit score is actually better today than it was pre-bankruptcy because I no longer have all that maxed-out debt.

I’ve also made no more vows to avoid debt at all costs. Sometimes debt isn’t avoidable, and that’s OK. I still have a credit card. I got it to help with my business expenses because I still write on the side, and it helps keep things covered for those times when my freelancing income is inconsistent. It’s a way to leverage debt as a tool, ensuring I can keep bringing in extra money.

Traditional personal finance messaging has us believe that we’re failures for maxing out our credit cards and ending up in bankruptcy court. But people rarely find themselves there because of frivolous spending.

Financial literacy isn’t the answer we need. I know plenty of what I “should” and “should not” do with my money. But it doesn’t change the fundamental reality that sometimes debt is necessary, and sometimes that means needing debt relief. What those of us who find ourselves here really need is understanding.

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