Under Chapter 7 (of the Federal Bankruptcy Code) -- a trustee is appointed to take over your property. Any property of value will be sold or turned into money to pay your creditors. You may be able to keep some personal property items and possibly real estate depending on the law of the State where you live and applicable federal laws.
The Mercantile Trust Bank building in Providence, Rhode Island is comprised of two towers, the North and the South. The North tower, which was built over a century ago, is a stately structure, its interior walls clad in rich mahogany, its tenants clad in pearls and tweed. Until fairly recently, all of my financial dealings had been in this impressive tower, and I was no stranger to its truly excellent, penthouse dining room.
Vice-presidents in the North tower became vice-presidents simply by placing their sizable trust accounts on deposit with the bank. These were the bankers who were empowered to ‘give you lunch’ and to make you a loan provided that you were able to demonstrate incontrovertibly that you did not need the money, and could guarantee personally that you would pay it back.
The bankers of the South tower were cut from a different cloth. These were the Armani men: men with gold chains and Rolex watches, reeking of fragrance and of garlic. They lived in a tower made of glass, the better for to see and be seen. It is said that the Rhode Island mafia had weakened considerably by the mid-1980s. It seemed pretty obvious where many of its displaced members had secured new employment.
On a dreary day in November of 1987, I found myself in the parking garage of the Mercantile Trust. Pausing briefly to study the directional signs, I made my way to the bank of elevators that served the South tower. Boarding an upward bound elevator, I pressed twenty-seven and began the gradual ascent to my financial ruin.
Vincent A. Razzo, Jr. had remarkably white teeth -- unnaturally white. Rays of sunlight streaming in through the enormous plate glass windows of the conference room bounced off these teeth, momentarily blinding me.
“Al!” he said, greeting me like a long lost friend. “Come on in.”
No one calls me Al. I am not a used car salesman. Al is a syllable, not a name. It’s not as though Alan were so God-awfully long a name that someone would exhaust himself getting the whole thing out. But maybe I was just in a bad mood.
“Al, I’d like you to meet Phil Gould. We’ve asked Phil to get involved.”
Phil, I already knew, was a receiver. Not for the New England Patriots – for the bank. It was Phil’s job to strip me of what little I had left in the world. He was the bank’s hired gun, and worked for a percentage of what he was able to recover on bad loans. I was a bad loan.
“Phil,” I said, extending my hand politely.
“Mr. Handwerger. I’m sorry we have to meet under these circumstances.” Had Phil not been a receiver, he might have been a mortician. His was a genuinely doleful expression.
“Thanks,” I answered.
“Al,” Vince intruded. “Phil here and I have gone over this thing again and again; and look, there’s no way to put a positive spin on it. I mean, you do owe us a million dollars. We’re going to have to make you file…”
Make me file. I felt like the guy who they make do the dishes when he can’t pay for his meal. Except in my case, they were going to make me file. For the rest of my born days I would be made to do all the filing for all of the hoodlums in all of the offices on all of the floors of the South tower of the Mercantile Trust Bank.
“...So I’m going to leave you two to hammer out the details. I feel real bad about this, Al; but what are you going to do?”
Vince, I was pretty sure, was going to do lunch over in the North tower, where execs of his stripe went each day to learn table manners, while Phil and I got out our hammers. Phil, as things worked out, appeared to know a good deal more about my assets than I did. By the time he was done, he had recovered for his bank tens of thousands of dollars worth of things that I didn’t even know I’d owned. I really should work on that.
At long last we completed the final page of the Chapter VII filing form. Now I could move on with my life.
co-signer n. an idiot with a fountain pen in his hand.
If anyone ever tells you that ignorance is bliss, don’t believe him. The day that I invested $10,000 in a piece of real estate downtown, I thought I was helping out a friend. Not to mention that the investment gave me a two percent interest in what stood to be a pretty lucrative project. That $10,000 promised to double, the day the project was completed, in about three years. Not a bad return.
The problem was that that day never came. A slowing economy, a glut of this, a shortage of that. Oh well, next time I’ll be more careful. Meanwhile, $10,000 was a lot of money; but I never missed a meal. Not yet.
What I know now, but, frankly, I didn’t know then, is that that when you become a general partner in a real estate deal, you take on the obligations not only of yourself, but also of all the other partners as well. Bad piece of information to be running around without.
You might only own two percent of the deal, but you own 100% of the debt, in the event that all of the other partners happen to go belly up.
Which they did
You learn something every day.