Managing Debt

How I Went From a Six-Figure Salary to Bankruptcy & Back

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The idea that someone who plays by the rules — works hard, pays their bills on time and saves for the future — can go bankrupt seems a bit absurd, until you talk with someone like Mark Quesenberry. None of those things kept him from winding up in bankruptcy court, a place he never thought he’d find himself.

Until 2010, Quesenberry earned a healthy six-figure income. His career included nearly 20 years in business development and consulting, and involved traveling across the U.S. and working with large financial institutions and Fortune 1000 companies. Closing a seven-figure deal with a client wasn’t an unusual event.

But in 2009, the firm he was working for was acquired by a competitor, and it didn’t take him long to realize his new employer was not a good fit. He had no problem finding a new job, landing with another firm within the competitive financial services field where he worked.

And that’s when all hell broke loose.

About two months into his new job, his former employer threatened his new employer — and him — with a lawsuit over a noncompete agreement. The new employer’s attorneys assured him he had nothing to worry about, since California — the state where he lives –  doesn’t recognize such agreements, and they had fully vetted the agreements signed with his former company. But his old employer decided to play hardball and filed suit anyway.

At first his new employers defended him vigorously, but eventually they decided the mounting legal bills were not worth it and let him go, leaving Quesenberry with no job, a pending lawsuit and no immediate prospects of other employment. “When you get fired from a job three months into (it)” it’s hard to find other employment, he points out. “Plus no one wants to hire someone with an active lawsuit.”

A Quick Downward Slide

As things dragged on, he began to see his financial life crumble.

Prior to this, he says, he was a “relatively secure white-collar executive used to making a healthy six-figure salary.” He had the house, cars, 401(k) plan, and 529 plan for his children’s educations to prove it.

As his unemployment dragged on, however, a large portion of this savings went to pay living expenses. When he learned he was at risk of losing his home, and wanting to protect his children’s assets from any negative outcome of the lawsuit, he decided to file for bankruptcy. After he paid some of his bills ahead, his bank accounts were down to nothing.

“That’s a very odd feeling when you are used to seeing a healthy balance in your bank account,” he says.

Finally, in 2011, he got a solid lead on a new job with a firm in the financial services sector. One hitch: They were going to run a background check, including a review of his credit reports.

Quesenberry decided to be proactive and tell his prospective employer exactly what they would see. “It’s a very embarrassing and humbling experience,” he says. In addition to explaining the situation, he provided them with the documentation to back up his story. To his surprise, they were understanding, and the bankruptcy did not derail his chances. He got the job.

Lessons Learned

Throughout this ordeal, he and his wife were open as they could be with their children, who were ages 13, 10, 6 and 1 when it all started. They have learned something in the process, he says. “My kids have recognized that you can have all these things and they can be gone in an instant. The most important thing they can learn is adaptability,” he says.

As for his credit scores, watching them drop was painful. During his pre-bankruptcy credit counseling session, he was was getting weekly, then daily, credit score updates and he saw them plummet from an initial high of 810-830 down to the 570-610 range where they hover today.

“In those first days and weeks it was like watching the stock market crash,” he observes.

These days, he finds himself frustrated by a credit system that doesn’t seem to have a place for him anymore. When he bought a car recently, for example, he considered getting a loan for half of the cost of the vehicle in order to rebuild credit. He was shocked when he couldn’t get a loan, despite the fact that his income could be verified and he had enough money in the bank to pay cash for the car — which he eventually did.

For the most part, he now operates with a debit card and cash. And in some ways, he doesn’t mind. “It’s been a very liberating experience,” he says. “I am three years out (of bankruptcy) now and I would say if someone came up to me and said, ‘Here’s your $35,000 limit back at Amex or Chase, etc., I don’t know if I would take it’.”

If you’re working on rebuilding your credit like Mark, it’s important to know where you stand so you can track your progress. You can pull your credit reports for free once a year from each of the major credit bureaus, and the free Credit Report Card will show you two of your credit scores for free and help you understand how your credit profile is impacting your scores.

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