Middle Class Climbing Out of Bankruptcy

Need helpThis post is part two in a two-part series by Brooke McDonald on how the current economy creates a climate more conducive to bankruptcy for middle class families and senior citizens, lessening the traditional stigma of bankruptcy as limited to young people or caused by careless spending. Part one examined how and why typical bankruptcy filers have shifted to embody a more everyday profile.

For Americans sagging under the burden of debt-induced bankruptcy in 2013, the journey out of the shadow of debt likely seems impossible. With average salaries dropping, higher taxes, and the average costs of college, homes, and healthcare skyrocketing, a person already entrenched in debt may feel hopeless. According to one survey by Bankrate, 24 percent of all Americans have more credit card debt than money in the bank.

But even middle class individuals sinking in the mire of debt can get out. There is a way up and out.

Take the stories of those who have found the foothold and climbed out.

Success stories: Overcoming debt


For some, debt may bring you to the brink of bankruptcy and back. People like Donna Freedman, who has written about overcoming incredible debt after divorce and going back to college as an adult, has survived debt without actually filing bankruptcy.

After leaving a long-term marriage, Freedman had used up all but about $100 of her savings account to support herself and her disabled adult daughter. In several years she managed to acquire a scholarship to help with college, pay off her divorce debt, and start saving. She went from living paycheck to paycheck to actually succeeding in life – after a year of working odd jobs, receiving work study support, and getting help from the food bank.

Carrie Rocha and her husband also recently climbed out of deep debt. With $50 to $60,000 accumulated from student loan debt, a car loan, tax debt, and a home mortgage they were still paying, Rocha and her husband became debt-free in less than three years. Rocha, a mother of four, writes a blog called www.pocketyourdollars.com and recently published a book called Pocket Your Dollars: 5 Attitude Changes That Will Help You Pay Down Debt, Avoid Financial Stress, and Keep More of What You Make.

Surviving bankruptcy

Many individuals have filed for bankruptcy and since then regained a fresh outlook on life, establishing savings accounts, investing afresh, and finding new ways to not only get by, but to do well financially.

Jessica Firger, a writer for Elle, filed for bankruptcy after years of “unremarkable expenditures” including low averages salaries, unemployment, grad school, health costs, student loans, and credit card expenses. Altogether, her situation, like most middle class individuals and families, was more complex than just overspending.  She tried to go it alone, writing checks to creditors and asking her bank to delay payments, but eventually, bankruptcy was the best option.

And Firger has survived. She writes that although her credit score will take some years to recover, “I can live with that,” and adds, “The fact that I’m still standing – housed, clothed, and fed – surprises many of my friends, and some barely conceal their disgust at my financial condition, the big scarlet B on my chest.”

Bankruptcy lawyers will be the first to tell you that the face of the average bankruptcy filer is more and more modest than you might think – from an everyday journalist to a mother of four. The majority of bankruptcy claims are not just for people who’ve mismanaged their budgets. Today bankruptcy filers are commonly middle class or older couples or individuals whose debt burden has become too great to bear, often not as a fault of their own.

Middle class phenomenon

A recent book from Stanford University Press “Broke: How Debt Bankrupts the Middle Class” looks at how the “staples of middle-class life” are more costly than they ever have been – so that a college education, homeownership, starting a small business all become greater financial risks in our economic climate. The book points out how debt has invaded the middle class and that “All indicators are that consumer debt will be a defining feature of middle-class families in years to come.”

The rise of middle class debt is a fact of life. But there is hope in debt. It is possible to get out of bankruptcy and pay off debt – and those discouraged by the perceived stigma of individual bankruptcy should understand how Chapter 7 bankruptcies have the potential to bring incredible relief when all other options and attempts are exhausted. Because this type of filing allows debtor protection and wipes most (but not all) debt off your slate, filing for Chapter 7 bankruptcy is often the route to escape debt for individuals or families who see no other way.

People discouraged by the “stigma” of bankruptcy should realize the stigma is going or is simply gone. In today’s economy, bankruptcy has been redefined. It is not a path of shame. It is a financial path increasingly traveled by the debt-ridden, by the elderly, by the middle class, and it leads to freedom.

Brooke McDonald is an avid writer and online contributor for Twin Cities bankruptcy lawyer Chad A. Kelsch at Fuller, Seaver, Swanson & Kelsch, P.A. She enjoys covering legal issues and has worked as a reporter for a legal publication.


Freedman, Donna. “Reader Story: Surviving and Thriving.” (June 2010) Retrieved from: http://www.getrichslowly.org/blog/2010/06/06/reader-story-surviving-and-thriving/

Firger, Jessica. “Going For Broke.” (July 2012) Retrieved from: http://www.elle.com/life-love/society-career/jessica-firger-files-for-bankruptcy

Johnston, Susan. “How Paying Off $50,000+ in Debt Inspired a New Business.” (December 2012) Retrieved from: http://money.usnews.com/money/personal-finance/articles/2012/12/24/how-paying-off-over-50000-in-debt-inspired-a-moms-new-business

Link to Part One in the series.


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