THIS COULD BE YOU.
This could be you sitting in the living room of a house that you’d never notice otherwise, a low brick suburban thing, the inside walls painted with care by the people who’ve made it their home, with a dog resting on the floor and a pair of cats trolling for attention.
This could be you telling your story, about a husband and wife who tumbled off their middle-class foundation, who thought they did everything right, who keep spreadsheets and budgets, who pay all their bills, who work hard and bring home a decent paycheck, whose debt is not out of the ordinary.
Not out of the ordinary. You don’t read much of that in the newspaper. You read about victims and fools, people who lost everything or screwed up big time — people nothing like you.
But these two — there’s nothing unusual about them at all. They get up in the morning, they go to work, they work hard, their effort is valued by their employers, they bring home their money and they pay it into their house and their cars and their taxes and their groceries and their medicine.
There’s no American dream in that. It’s the standard agreement. They went to college, they work in offices, they each bring home thirty-some thousand dollars a year. They bought a house for $150,000; in the two-car garage is a 12-year-old SUV and a 6-year-old economy sedan with eight payments left.
There’s no fancy jewelry, no steroidal television set. They play by the rules.
This could be you agreeing to tell your story as long as the newspaper doesn’t use your name, asking to be anonymous because you are anonymous — that’s all you ever wanted — and you want to stay that way, because you are so ordinary that no one would ever suspect you’d gone bankrupt, a condition you describe as ”the dirty little secret of the middle class.”
You’re ashamed. You’re embarrassed. You, the one who does the household finances, you feel like you’ve let the other down. You look at your preschooler and you wonder whether you’ve cost him some future you never even got a chance to plan.
You look at each other, and even though you know with cold hard reason exactly how you got here, you still wonder:
How did we get here?
The middle class is shrinking. The rich are getting richer and the poor are getting poorer. These are kitchen-table ideas that are also facts, quantified by census charts that show two lines diverging, lines representing what some might call the haves and the have-nots. This couple, in their late 30s, are members of the first generation that may not do better than their parents.
That’s even truer in Ohio, which ranks among the very bottom of states where incomes are not keeping up with the cost of living. In many, many households, the pieces of a middle-class lifestyle dangle by a thread. If one thread breaks —
Last fall, after a Beacon Journal report detailing this troubling information about the new strain on the American middle class, the newspaper conducted a series of focus groups. Over seven sessions, 41 Northeast Ohio adults representing a wide range of backgrounds discussed their own lives in relation to that broad notion commonly known as ”the American dream.”
Most offered a humble definition of that dream:
”A good paying job; owning a home; opportunities for everybody.”
”Probably owning a house, or doing better than your parents and hoping that your kids can make the same step.”
”Working hard and then, after working hard for all these years, being able to have a sense of security.”
Collectively, they offered a profound body of real-life evidence to support the data, reaffirming that middle-class incomes are being eroded by the rising cost of maintaining a household.
Virtually everyone in those sessions expressed some version of fear — a constant, mostly subconscious gnawing, the realization that one unexpected event could bring this dream down. A major medical expense, a layoff, an elderly parent or boomerang child joining the household.
Among all those focus group participants were these two, the only married couple to sign up. In separate sessions, they each told how one job loss from which they both expected to rebound quickly instead dragged on — for one month, then two, then three. By the time of the focus groups, a year had passed and even though she was re-employed, it was too late.
”The American dream is different for each person, and it changes on your circumstances,” she said then. ”My dream is just to be able to keep my house.”
Those who heard those remarks reacted the same way you might have reacted.
That could be anyone.
That could be me.
As you trace back through their story, you understand why they thought they would be all right.
They met when they were in their 20s and married in 1998. Both area natives, they’d each graduated from local colleges, managing to do so without debt. With side jobs and help from their parents, they entered the work force ready to earn and contribute to society, assuming the mundane nobility that defines the American middle class: the notion that millions of anonymous people each do their small part and the nation moves steadily forward.
He was working as an advertising copywriter; she was a home health-care administrator. They bought a house in Canton and then, within a year, her company disbanded and she lost her job. Three months later, he was laid off as well.
To keep up with their bills, they ran up some credit-card debt — about $25,000 — but they got back on their feet and they worked the credit-card payments into their new household budget. He found another job with a software firm, but it soured in 2001, when the dot-coms bottomed out. The company downsized by about 70 percent; he bailed and landed in a job he liked better, making $35,000. She went to work for a bank, bringing home nearly $55,000.
Their family income of $90,000 was well above the median of $59,184 in Summit County, where they would soon move. And although their individual incomes were somewhat below the combined median wages of $114,000 for a couple their age and race with college degrees, they were managing just fine.
A couple of years after the birth of their child, they moved into this brick suburban house where they now live, with a nice yard and a manageable mortgage, taking another small step forward. Their only significant expense outside the basics were medical bills and prescription costs related to her chronic back problems. Prescription co-pays alone cost them $450 a month, but she runs a careful budget. It was nothing they couldn’t handle.
When the interest rates were right, they took out a second mortgage to pay down credit-card debt, a fiscally responsible move.
Then, as these things often happen, the bank where she worked got swallowed by a much larger bank, which analyzed its new holding and identified redundancies in services and eliminated her division. She was downsized.
This was a setback, but not a crushing one. They had a young child at home, and her commute to Cleveland had long been a burden. She had a solid work record in a common field — mortgage lending. She had three months’ severance pay, more than enough to tide them over until she found another job.
A month passed. Two. Then three.
Finally, she found something. Not a great fit, but a job with a mortgage company. She arrived her first day, relieved, but almost immediately things seemed wrong. The job was not at all what had been described to her, she says. It was shady, she says. Cold calling, high pressure. She didn’t feel right about it and decided it would be better to make a clean break and keep looking.
She felt like she was doing the right thing. The ethical thing, even. What she didn’t realize is that by accepting the job and then quitting after a single day of orientation, she had disqualified herself for unemployment benefits. She had worked for the company for only a matter of hours, but she’d been paid — $42 — and the rule was clear.
As a result, she forfeited 26 weeks of unemployment at $416 a week, or $10,816. She tried every appeal, but was denied.
Four months passed, then six. The severance was gone and she cashed in her 401(k) pension savings account, slightly bewildered. She lost 20 percent of her nest egg to taxes, and another 10 percent to early withdrawal penalties, leaving $4,731.63, which they applied to their credit-card bills.
How could it be this difficult? She was doing everything right, sending out resumes, scouring the ads. She kept broadening her search and lowering her expectations.
”CareerBuilder became my friend during that time. We had an ongoing relationship,” she says.
He was bringing home his paycheck, working every extra hour he could, picking up freelance jobs. They’d cut deeply into their budget. They’d analyzed every expense and trimmed everywhere they could. They eliminated their cell phones. They switched their grocery shopping from Giant Eagle to Marc’s ”Deep-er Discount” store.
They managed to pay every bill. She had always been in charge of this function, and took pride in her efficiency — she’d worked in banking; she knew her way around a spreadsheet.
”He’s the left brain; I’m the right brain,” she says. ”This is how our relationship always had been.”
But February 2007 arrived and she went to pay the bills and the money wasn’t there. She figured and refigured, but it just was not there. In a matter of eight months since she had lost her job, this couple who’d done everything the right way, who’d never questioned their secure place in the midstream of America, found out just how close they were to falling like a stone.
”I felt guilty; this is my fault,” she says. ”I felt like I had disappointed him.”
He looks at her from across the couch and he says she never should feel this way, and he appears entirely sincere. Maybe this was the thing that saved them — some intangible thing, some strength of love and commitment, something about good times and bad, sickness and health. Maybe. Whatever it was, they didn’t panic. They contacted a bankruptcy attorney. The lawyer told them they’d done exactly the right thing in acting sooner than later. They still had not missed a bill payment, but their credit-card debt had mushroomed to about $55,000. They weren’t bankrupt, but they were at its lip, staring straight down into its deep pit, bracing themselves to fall as best they could.
It seems odd to hear this story, which suggests there is a ”right” way to fall. It begs the question of why it happened at all.
Why does it seem wrong that she couldn’t find a job when everything in her resume and her demeanor suggested nothing but grade-A employability? Why does it seem wrong that a family with no unusual spending habits, with some available cash, with a carefully controlled budget, even with family and friends helping them along — why does it seem wrong that it all fell apart so quickly?
Here’s why: because it could be you. Because their example reveals the fear that no middle-class American can avoid completely: the fact you are one blind-side punch from losing everything you’ve worked for — and make no mistake — you’ve worked hard, you’ve done the right things, you are a good person.
You’ve earned something. You’ve got something. But that also means you’ve got something to lose.
The downtown parking deck quickly turns into something from a slapstick chase routine. They’re in the right place, they think, but they can’t find their way to the bankruptcy hearing.
The aging SUV with an ailing differential climbs one level, then another, him looking for an opening as she double-checks the Google maps printout to confirm — yes — they’re at the right place. They park, and every door they try, all over the deck, is wrong. They find themselves on the opposite side of the massive office complex from where they’re supposed to be, looking down onto a grassy hillside. Five minutes till the pre-hearing meeting with their bankruptcy attorney and they wind up back where their wandering began, only to realize that they were in the right place to begin with.
Finally, they enter the concourse of the Shoppes at Akron Centre — the downtown plaza formerly called Orangerie Mall — and locate the storefront government office.
She’s clutching a thick folder of papers as they enter the beige, undecorated domain of the U.S. Department of Justice’s Office of U.S. Trustees — the place where Chapter 7 bankruptcy hearings are held.
With rows of padded chairs all facing a blank wall and two closed mahogany doors, it feels more like a doctor’s waiting room than a government office. Add the plate-glass windows overlooking the mall commons, with the faint strains of Muzak and the scent of I.C. Sweets’ popcorn drifting in, and it all feels slightly disconnected from reality.
Clients sit stiffly next to dark-suited attorneys, some in informal conference, some chit-chatting about the previous night’s Super Bowl game with false calm. The debtors assume a uniform pose, sitting stiffly, faces drawn tight, eyes downcast, clutching sheaves of paper before them, braced for something.
It seems strange to realize that most of these people, after enduring a hearing of five or 10 minutes, will leave here simultaneously bankrupt and relieved.
This couple spent the weekend printing out the information they’d compiled — pharmacy records, tax returns, car payment transcripts, an appraisal showing their home to be worth less than they owe on the mortgage.
In publicly filed paperwork, the bankruptcy process scours every detail of a debtor’s existence.
A list of personal assets shows a collection of books and compact discs worth $300, clothing worth $200 and four cats and a dog worth $0.00.
In total, the paperwork lays their lives bare. It details the medical expenses that have been their greatest burden — currently $652 a month. It shows their annual $90 outlay for haircuts. And finally, it shows a discomforting bottom line: an average monthly income of $4,887.72 and average monthly expenses of $4,875.50.
A buffer of $12.22.
Compiling this information has defined the past weeks and months.
”It was on our mind most of the weekend,” she says. ”I was kind of short-tempered. You want to hurry up, get it over with.”
”I was kind of nervous,” he continues, ”kind of puttering around, trying to find things to do to occupy my time.”
Their attorney arrives and she runs them through a sort of pregame routine, a litany she could recite in her sleep — her office has handled 20 such hearings on this day alone. They nod and answer each question; they’ve been through every detail over and over for months.
He’s going to ask how much you owe on your house.
He’s going to ask if anyone owes you money that’s collectible.
He’s going to ask if you expect an inheritance.
He’s going to ask about your vehicles.
He’s going to ask how you found yourself in this position.
The wife reaches absently for her husband’s hand. He takes it.
OK, let’s talk about mortgage reaffirmations.
The hearings are running behind schedule, and the conversation settles into small talk. They mention to their attorney that they’ll celebrate their 10th wedding anniversary this year.
She smiles. ”Gonna do anything special?”
”With what?” the husband asks wryly.
And finally — after months of self-examination, of self-doubt, of self-consciousness, wondering whether something’s wrong with them or something’s wrong with the American dream — the mahogany door in the colorless wall opens and a man in a suit steps out and calls their names.
They enter with their attorney. The door closes.
Five minutes pass and they re-emerge. She exhales hard and her shoulders relax. They bid the attorney farewell.
”It’s done,” she says.
The road forward
They’ll pay about $900 for the equity in their cars and they’ll forfeit their $1,900 federal tax refund and $400 state refund. The bankruptcy will stay on their credit report for 10 years; for the first two years, it will be very difficult for them to get credit, and if they do, the rates are certain to be very high.
But their credit-card debt is gone. They’re back to zero. They’re keeping their house. They’re sure they can manage from here.
They return to the elevator and make their way back through the parking deck, retracing those uncertain footsteps.
”Well,” he says, ”if we ever have to do this again, we’ll know where to go.”
Some sort of order has returned, a recalibration of the numbers, the deficit wiped away. This couple will do nothing different from what they’ve been doing all along — living within their means, working hard and hoping that the lightning that struck twice is finished with them, and that holding up their end of the deal will be enough this time.
But what does that mean for the rest of us?
What does that mean for a couple — maybe you, maybe someone you know — who suddenly find themselves unable to provide their children the college education they thought they could afford?
What does that mean for someone whose corporation is ”restructuring,” someone wondering from behind cubicle walls what will become of her?
For someone whose medical insurance claim has just been denied?
What does that mean for a middle class that is undeniably shrinking, in a state where the struggle is harder than most?
Where does the lightning strike next?