Chapter 7 Bankruptcy: The Lessons I Learned, and Applying Them to Life

February 27, 2012 by  Filed under: Bankruptcy 

In 2011 I filed for Chapter 7 Bankruptcy in Colorado. It was a decision I made after I spent some thinking time on the situation at hand.

I had accrued more than $45,000 in credit card debt, and I had a mortgage, one baby with another on the way, and a wife who was mothering our babies as her full-time profession. I accrued this debt in a matter of months.

The debt I built up was from paying fees in tuition and traveling to some great seminars that taught me business and life skills. I went to a ‘free’ three-day seminar in March of 2011, and I filed bankruptcy in August 2011. The business offering the ‘free’ seminar “got me.”

In retrospect, I would not have changed any of my decisions, as I am so thankful for the lessons I learned. There are four of them to share here.

Lesson Number One of Chapter 7 Bankruptcy-Get Help

When contemplating this route for your financial moves, get some great consultation. I talked with bankers, lawyers, family members, friends, spiritual coaches, entrepreneurs, and sometimes strangers to learn all I could about the subject and experience. I took notes and studied terms from online sources as well. Gathering information is crucial.

Once I understood the process, I hired a lawyer. Now, for someone who is filing bankruptcy, money is tight-or at least it can be. However, when hiring a lawyer one must pay the fees for the best lawyer around. I chose a lawyer based on a few points: his ability to communicate, his recommendations during a consultation, and his proximity and knowledge to my state’s complicated bankruptcy laws. Each state is unique. You will want to make sure your lawyer is easy to communicate with because you may have a question or two. I had many.

The lesson here is that we all need help at times. I struck out in March to address my “problems” on my own. I had little communication with my wife and I was unable to identify what my true problem was. I did not have help because I did not ask. Once I hit this scary place in my life, I began to ask, and people came from all walks of life to support me in my time of need.

We must ask for help and, conversely, we must help others in their life journeys. I now help people every chance I get. I am constantly asking myself, “How can I help you?” And many times I will leave a conversation by stating, “Please let me know if I can do anything for you.”

Lesson Number Two of Chapter 7 Bankruptcy: See Reality

One main reason I found myself making the decision to file for bankruptcy was that I did not look at my reality. I had one baby, one on the way, and I was earning about $35,000 from a local non-profit organization. At the time, I had a fledgling LLC company and had dreams of bringing this thing into life and prosperity. I wanted to be a millionaire, and I was not seeing reality for what it was.

I had recently purchased a home and therefore had a huge amount of credit limit built up. (A side note: in order to put this into perspective, a ‘huge’ amount of credit for me at this time was $45,000, and I used it all, plus some. I earned $35,000 in salary while raising two babies and paying a mortgage that was 25% of my monthly income. It is all relative, and for me it was indeed huge.) I began using my credit, and after an initial purchase of $15,000 I never held back. My reality had shifted.

I kept on this path, and at each seminar I would use my credit card to purchase something new. At one seminar I purchased more than $25,000 of trainings and I was not forthcoming about this exchange to my wife. She was in the dark most of the time because I was not in my reality. I was afraid to talk about what I was doing-because I was afraid of my actions.

I had not identified my problem clearly and I thought it would be addressed by purchasing and attending trainings that were far away from my home and family. Then I began to purchase huge ticket items that I thought would give me some sort of quick return.

I was looking for a “quick” fix. And I learned that the only place success comes before work is in the dictionary.

It was not until I was forced into looking at reality by an individual, my family, and my own impending credit crisis that I began to wake up. I then realized I already had everything I needed. It was a true “Acres of Diamonds” moment. “Acres of Diamonds” is a fable of an individual setting out into the world to seek diamonds. He travels far and wide to realize at the end of his life that there always were acres of diamonds in his back yard.

What was my problem? I was playing life like a boy and not stepping up to my responsibilities in life-I had no money saved and I was not upholding my commitments to self or to those around me.

We must stop and think about our situations to see our realities. Asking ourselves “What do I not see?” and “What assumptions am I making that give me the reality I see?” are incredibly powerful. We can also use mentors and friends to tell us what we do not see. The great ones will tell us honestly-like an individual I worked with in August 2011. He would not let me slide an inch from seeing the reality I had created for myself and my family.

Lesson Number Three of Chapter 7 Bankruptcy: When You Fail, Fail Hard

There is nothing pretty about seeing our true realities and taking accountability for them. Like the alcoholic that finally sees the destruction left behind his cloud of fury and for the first time realizes the definition of humility, we must begin to clean up after ourselves.

When I chose to file Chapter 7, I knew I had hit the bottom of my reality distortion. I could not pull off what I had dreamed of and it was time to collect myself and begin rebuilding.

When you fail, fail hard. What I mean by this is own every piece of your failure and express this to everyone you need to. It is with other people that we rebuild and we are rebuilding trust. The quickest way to rebuild trust is to use humility.

I used humility with my wife, my boss, my family, and my friends. I came to people and told them what I had done and where I was now. My wife said she was leaving with the kids (our baby was due any day now). I was devastated at first and then I got it. I had to accept this in order to find true humility. I had to accept that I was not anything I thought I was. I had to let go of my attachments to my life.

Letting go of attachments is powerful in life. It gives us true humility, a word rooted in “humus,” or dirt. We must remember we were all born once and we will all die to this physical realm of life. When we realize this, we are already naked and we have nothing to lose.

My wife never left. And, in fact, our relationship is closer and tighter than ever before. Because I failed hard, and found humility, I rebuilt my relationships with everyone that my tornado had touched. Most importantly, I rebuilt trust with myself-this is the first and most important relationship to rebuild. We rebuild all trust by upholding commitments-big and small.

Lesson Number Four of Chapter 7 Bankruptcy: Live Again

Chapter 7 bankruptcy is a process. It took me five months to have my case closed even though I was quick to deliver anything that was requested of me. Throughout this time I was rebuilding my financial house, along with my relationships. I did not wait.

Failure is only failure if we do not learn from the experience. We cannot beat ourselves up for making mistakes-this is a form of self-hate. We must look forward, re-gauge our goals, and live again.

There is no experience too harsh and painful to not live again when we find true humility.

The lessons I learned from filing Chapter 7 I now use daily in my life. I spend time getting clear on my true problems, whether at work or home, by asking the hard questions. I then set out to find help and I am always offering to help others. I have reminders in my life to remain humble. For example, I wrote my own eulogy as if it was from my first born child’s perspective. This is a powerful exercise as it uses your imagination to create the vision of your excellence. I read this weekly if not daily. Every day, most importantly, I remember to live.

Surprise! It is all new again.

Matthew Scott K is a father, husband, entrepreneur, author, speaker, and coach, who is based out of Gunnison, Colorado. He is heavily invested in mentoring and the education of today’s youth while focusing on working with people who are seeking life mastery.

Matthew currently coaches people in a boxing class he calls Fight 4 Your Life and through Ollin Academy. Ollin Academy offers multiple lessons on various facets of life. Currently, membership to the site is free.

Readers can learn more about Matthew’s efforts by visiting

Ollin is an Aztec word that is rooted in two words meaning “bring” and “heart.” Through Ollin Academy, Matthew and his trainers help people go “ollin” (all-in) on their life.

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