Tuesday, November 29, 2011

Today Reframe: Bankruptcy, American Airlines & the Average Joe

Today's announcement that American Airlines' parent company AMR is filing for Chapter 11 Bankruptcy protection illustrates one of my most important points about shame and how to Reframe Shame in our own lives.  Ironically, it's also a poignant example for the Occupy Wall Street folks to point out to those still questioning their message.

The common refrain in our culture upon hearing about someone who has filed for bankruptcy is "What a lazy bum!  Why don't they just pay their bills?!"  Typically the person is labeled irresponsible and one deserving of much scorn. 

Unfortunately, much of that ire comes from the misinformed notion that everyone who files for bankruptcy is doing so fraudulently or that they all have lived an irresponsible life and are "gaming the system": lavish vacations, expensive jewelery and luxury vehicles, all on the credit card.  Even former President George W. Bush signed a bill into law to prevent "abuse." 

That notion, however, doesn't reflect the reality and it doesn't give us as citizens much credit about our integrity.  In fact, most bankruptcies are filed as a result of divorce, job loss or insurmountable medical bills.

It was amazing to read the comments regarding my appearance in a Chicago Tribune article about my bankruptcy (The Tribune has since taken down and closed the comment section).

While there were many who commented, supporting my decision and gave me kudos, there were equally as many who called me terrible names and made disgusting judgments about me.  Had they actually read the article, however, they would have noted that I used to have a credit score in the 800s (likely better than theirs), a very low credit card debt and I didn't purchase a condo that was beyond my income.  I, like many unemployed Americans in this country, had not led a reckless lifestyle and was not "gaming the system."

All this didn't matter though.  Upon hearing the term "bankruptcy," one is immediately labeled with all of the negative terms we have available in our vocabulary.

Contrast this response to the business community. 

When a business fails to meet its financial obligations and file for bankruptcy, its leaders are lauded as "savvy" for protecting the interests of its shareholders.  More often than not, we also observe a rise in stock prices immediately following the announcement. I once remember a CNBC reporter on the floor of the NYSE actually say how savvy an organization's leaders were for saving that company and its shareholders' interests. 

Bankruptcy is a legal tool for use by individuals and corporations in the US.  Let me repeat that: It is LEGAL.  We treat individuals who use that tool like criminals and we applaud corporations who use it, as if their intentions are any less questionable, especially when you have an organization like AMR announcing the bankruptcy while also announcing they still have $4.1 Billion in the bank.  During my bankruptcy, had I still had a significant amount of money in the bank, I would have likely had to forfeit it.  I won't even discuss how irresponsible corporations can be knowing bankruptcy is coming.  Would you manage your personal finances that way?

In addition to being legal, bankruptcy also allows people, and corporations, a new beginning and a fresh start.  An excellent example of how bankruptcy, when used appropriately, can help individuals find success is Walt Disney.  Walt Disney filed for bankruptcy in 1923 with his first attempt at a film studio.  He would go on to create an entire empire.  That's not all, "honest" Abe Lincoln, Milton Hershey and many other "famous" Americans have filed for bankruptcy and ended up becoming wealthy and successful.

Now I'm not advocating that everyone go out and file for bankruptcy.  Furthermore, I'm not advocating that IF you file for bankruptcy, you will go on to own a wildly successful empire like Walt Disney.  I'm simply stating that the notion that we, as individuals, should be slammed for looking out for our best financial interests when hit by unfortunate, often unforeseen, circumstances is hypocritical. 

For corporations, we don't organize mass boycotts of organizations that file for bankruptcy, do we?  No, but as individuals we are blacklisted for eight years (it used to be seven, but Bush's law changed it to eight) from obtaining favorable interest rates, buying a home, a car, etc.  Where's the fairness in that?

If you've had to file for bankruptcy or are thinking about it, remember that it's not the end of the world, it's a new beginning.  Learn from any mistakes, if any, and move on.  The shame you may be feeling is a result of the negative judgments coming to you from societal cues.  If you truly fell on hard times through no fault of your own, bankruptcy is in your best interests.  You, like corporations, need to look out for your best interests to remain competitive in this market.

Best wishes!

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