Bouncing back after a bankruptcy may not be easy but it can be
done. The most prosperous of the rebounders analyze their past
shortcomings, chart a better route, then march full force into the
In 2013, more than
legally escaped their financial obligations by filing Chapter 7
bankruptcy. The sense of relief that comes with unloading debt
obligations is often tempered by feelings of failure. It doesn't
have to be the end of the line, though. For some, discharging debt
was not the final destination, but a launching pad to a greater and
more secure economic future.
Like Henry Ford and Donald Trump, the typical profile of those
who bounce high after a trip to bankruptcy court is a resilient
risk-taker who learns from the past. Here are just a few people who
transitioned from the depths of economic despair to a soaring net
worth. Everyone can learn a thing or two from their pre- and
post-Chapter 7 experiences, they say -- as do the experts who help
the insolvent rise and shine.
Richelle Shaw: author, "The Million Dollar
Before declaring bankruptcy in 2003, Richelle Shaw had built and
managed Colorado River Communications, a booming telephone
business. "I loved it," says Shaw. "It was a phenomenal
experience." She moved to Las Vegas, where she continued to expand
the company. Soon, Shaw had plenty of cash, but stopped paying
attention to the vital parts of the enterprise.
"I wanted to be the cool owner," says Shaw. "The 'let's party,
it will be great' owner. But, ultimately, you can't do that. We
didn't pay our bills; we went on vacation." Then the tragedy of
9/11 shook the country, as well as the company's customer base.
Payments stopped flowing, causing the business to fall further
behind. It wasn't long before it was over $3 million in the
To make ends -- and payroll -- meet, Shaw took out loans in her
name. Still, her once-thriving company of 52 employees folded in 90
Her lavish lifestyle also ended abruptly. She sold her spacious
house equipped with a Jacuzzi, deluxe outdoor kitchen and acres of
property, and moved into a rental home. "Talk about failure," says
Shaw. "Moving into that big house was my dream. I used to call it
'the palatial estates.' We had parties, barbecues, baby showers.
This new house was dark. Nasty. Nothing. A backyard that was
disgusting. There was no grass, just mud." She was heartbroken and
By the time Shaw sought bankruptcy protection, she had more
than $2.5 million in personal liabilities. "They allowed me to
," says Shaw. "I had nothing left, so there was nothing the
creditors could get."
Shaw, however, refused to give up: "I got back into the
telephone business, but this time I targeted people who were credit
challenged." She knew how hard it was to get a phone with low
credit scores, since she had just experienced it. To start the
business this time, she borrowed no money and instead negotiated
deals with vendors, asking for shared stakes. The strategy worked.
Shaw rebuilt a million-dollar company, FreshStart Telephone, which
was praised by the
for serving a needy population.
Her opinion about bankruptcy? "100 percent positive," says Shaw.
"It gave me a chance to breathe, it's a way to go from failure and
not worry. I could make money again and start over. I'm thankful
and grateful. It's not the end of the world. It's only the end of
the world if you keep those same habits."
Shaw closed the phone business in 2008, and today teaches
business owners to properly manage their cash flow, so they can
avoid making the same mistakes she did. She is also the "Money
Honey," a regular personal finance expert for Las Vegas' Fox 5 More
Show. Importantly, Shaw walks the talk by living far beneath her
means. Her car is 16 years old. "I will drive it until it stops,"
she says. "I rent. I'm a single mom, and I take care of my mother.
I just don't spend money on the things I did before. I'm the
classic millionaire next door."
Michael Mack: Attorney, founder of a bankruptcy
Lawyer Michael Mack of Milwaukee had been a key figure in a large
law firm, doing very well financially. Until, that is, "I invested
in a business I had no business investing in," he says. The company
went south and Mack lost everything.
"I tried to negotiate my way out of the situation, and I would
have succeeded but for one particular stubborn creditor," says
Mack. "As a last resort, I filed Chapter 7 bankruptcy in 1998. I
thought my world had ended, and I stopped practicing law. I dropped
out of life."
He and his wife divorced, and he moved into a one-bedroom
apartment. By day, Mack was a telemarketer; by night, he tended a
"I finally decided to turn my life around, although at the time
I was not exactly sure where to turn and how to do it," says Mack.
He began fixing his damaged credit and even self-published a book
called, "The Healthy Credit System." To promote it, "I ran ads in
the local PennySavers and I sent out press releases. I started
offering free credit workshops and then I would sell my system to
folks who attended the seminar."
Eventually, Mack restarted his law career and resumed life as an
attorney. While the compensation was excellent, his enthusiasm for
the job was gone. Then one day he shared his career dissatisfaction
with a well-to-do friend whose response was a firm, "Then
"He suggested I start my own law firm teaching people what I
know about credit, debt and recovery," says Mack. "So that's what I
did. The next morning I gave notice."
Since then, Mack has achieved wealth that he previously thought
impossible. "I have a beautiful home; I take care of my kids. Sent
my oldest daughter to Notre Dame."
More importantly, he understands the hurdles that financial
problems bring on. In response, he started
, an organization that helps people recover from bankruptcy, avoid
getting scammed and become financially literate. "My passion is
helping people who have declared bankruptcy," he says.
Slavica Bogdanov: Author, success coach
Serbia-born Slavica Bogdanov immigrated to the United States by way
of France as a baby, then to Canada at 9, then to Fort Lauderdale,
Fla., last year. While in Canada, she strived for financial
independence, and her big idea was investing in real estate.
"At first I was lucky, and my business grew very fast," says
Bogdanov. "But I made mistakes. I didn't attend to it as much as I
should have." Tenants destroyed some of the units she owned. "I
tried to have the building fixed up; I juggled to try to pull
everything together." The cost, however, was beyond her capability
and the bills piled up.
"I had to let go," says Bogdanov. "It was a very tough decision.
I put my heart and my soul into it and had to admit it was a
failure." In 2012, she filed for bankruptcy. Creditors claimed her
assets, including her car and house.
Bogdanov grieved for two months. She even considered taking her
But she chose to start fresh. "I said this time, do what you're
passionate about. There's nothing to lose, you've already lost
everything! It can't get worse!" Buying and selling property was
over, though. "Since I had no more credit, I couldn't borrow any
She decided at that moment to save a little of everything she
earned. "My mental focus was building wealth, not repaying debt,"
says Bogdanov. To achieve that, she created a detailed budget using
an Excel spreadsheet: "I looked at all my habits. I went on a
financial diet. I changed everything because I was disciplined and
Second, she set goals. "I planned for two weeks nonstop."
Bogdanov went full force into writing, penning more than 15
self-help books on subjects ranging from weight loss to time-saving
tips. She began a coaching business and now trains others to coach
Bogdanov says she is grateful for the bankruptcy. Without it,
she wouldn't have a lucrative and enjoyable career. With it, she
learned to stay out of debt. "I have a credit card now, and I use
it frequently, but only for very small amounts," she says. "I never
have any due payments because I pay in full. My credit line was
little, but they just offered me $5,000. I'm building my credit
"I'm doing really well," says Bogdanov. "I'm earning between
$15,000 and $20,000 per month, and it's going up all the time. I'm
saving and my net worth is great. Next year I'll be a
Common denominators: The post-bankruptcy success
There's a certain personality trait that the most successful
post-bankruptcy thrivers share and that's resiliency, says Keith
Klein a certified financial planner with Turning Pointe Wealth
management out of Phoenix.
"One of the key reasons people declare bankruptcy is they've
taken a path of risk with the possibility of reward," says Klein.
In such cases, losing the bet is always a possibility. But those
who turn such losses around get up and get creative. "They say,
'OK, what else can I do? What can I do differently?' They have
goals that they write down," says Klein. "Most also have
accountability, someone who offers guidance. A friend, a father or
some other figure they really trust. Many have coaches,
professional mentors or financial advisers."
Bankruptcy attorney Nick Best, of Detroit Lawyers in Huntington
Woods, Mich.., says he also sees the same reasons for a triumphant
rebound after a debt discharge.
"Entrepreneurial types, they tend to see the bigger picture,"
says Best. "As soon as they put all their creditors on hold, they
look a few years down the road. They were risk takers before and
they still are afterwards. It's amazing what these people can do.
It's really cool when you see it."
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