415.963.4004
Jeena and Jeff describe how ignoring your financial condition is like ignoring tooth decay: if you don’t act, it just leads to more painful experiences! They also discuss the Kubler-Ross model of the five stages of grief and how it applies to people’s acceptance of their financial reality — too much debt.
Transcript: Podcast #2.
This podcast is brought to you by attorneys Jeena Cho and Jeff Curl of JC Law Group, whose practice is dedicated to bankruptcy for individuals and small businesses.
This podcast is not legal advice. For more information please go to JCLawGroup.com.
This is podcast 2.
Mark: Hi. This is Mark Merenda. We’re back with our second podcast interview with Jeena Cho and Jeff Curl who are bankruptcy attorneys in San Francisco, California.
Hi guys.
Jeena: Hi Mark.
Jeff: Hi Mark.
Mark: I follow your blog and there are a couple of really interesting blog posts. By the way, to the listeners out there, if you don’t already follow Jeff and Jeena on their blog, you really should. It’s at www.JCLawGroup.com/Blog. You should definitely check that out.
You guys had a couple of really interesting ones in the past couple of weeks that I wanted to discuss. The first one that really tickled my fancy, Jeena, was your blog post about the dentist because I’m a person who just absolutely detests going to the dentist.
I don’t know what it is. It’s not always about pain. It’s just I don’t like somebody poking me and I don’t like people putting their fingers in my mouth and I don’t like sitting there in that chair. I just don’t like the whole thing.
Of course, I ended up paying the price for that because I’m now in the middle of about $50,000 worth or reconstructive and cosmetic dental work that I probably would not have had to do at all had I not been so afraid of the dentist.
You’ve got this really good post here in which you confess that you have the same phobia.
Jeena: Yes. I absolutely hate going to the dentist as well. Of course, I avoided going for years and finally I went. The pain was really getting to me and I’m thinking, “This might be really serious.” I go in. The dentist says, “Well, the good thing is you don’t need any root canal.” That was the good news.
The bad news is I had several cavities and she said, “Well, had you come in for a checkup earlier, you may have been able to avoid any of this pain and cost.” I just thought that’s similar.
Mark: That made you think about what your clients go through in terms of considering their financial situation. Because we’re afraid of confronting it, we avoid it. We avoid it. We avoid it and then next thing you know it’s root canal time.
Why don’t we expand on that a little bit? When you typically see clients, by the time they’re seeing you, they’ve already gone through and I’m sure they recount to you how they went through that whole process of neglecting to deal with it.
What do they typically tell you? Do they tell you, “Yeah, yeah. I knew this was going downhill for the last two years and I saw the bills mount up and mount up, but I couldn’t deal with it or I didn’t want to face the pain,” or what?
Jeff: I’m still stuck on the dentist analogy a little bit because I’m the odd man out here and the one no one would relate to because in my family the dentist was such a big deal that we went every six months. No exceptions. Every year of my life.
I haven’t had a cavity now, knock on wood, for maybe 15 years, but what was odd was even when I was younger, I don’t know why, I went through a period for about five years where I had a cavity every time.
I always did everything. I brushed right. Did the mouthwash. Went to the dentist. Got cleanings and the teeth wouldn’t handle it. It made me think of we do have the clients who come in who have been neglectful and they do eventually just bust at the seams all of a sudden.
Something bad does happen and the situation is way worse and then you have people who have actually been cautious and been careful and still something happens that’s beyond their control.
I always felt gypped because my best friend as a kid, he grew up on probably a 12-pack of Coke each day and he ate Ding-Dongs and Twinkees. He had Trix for dinner and I was always jealous because I was never allowed to have these things.
I was not allowed to have soda. I was not allowed to have sugar and I’m sitting there eating yogurt and wheat germ and my friends are eating all these great things. He didn’t brush his teeth either, which is disgusting.
He went to the dentist for the first time when he was 14 and his teeth were in perfect condition. We’re no longer friends.
Jeena: Because of that?
Jeff: No. Moving apart.
Mark: I think what we’re saying here is that when it comes to every life essential basic thing, that’s where you need to pay attention and finances are certainly one of those. I think also of a car and maintaining a car and the mechanics that are involved there.
Something starts to go wrong with the car or you know the car needs to go in for service, but you don’t do it. You don’t do it. You don’t do it and then, of course, at some point you’re in need of major repairs for major bucks.
This leads in, I think, really nicely, Jeff, to your blog post, which I found just as interesting, although maybe not as personal because it didn’t involve the fear of the dentist that I share, but it involved the work of Dr. Kubler Ross, which I have read, in which she identify, in terms of terminal illness or end of life stage, five stages of grief that people go through.
A lot of people out there listening to us may have heard of those before. They are denial, anger, bargaining, depression, and acceptance finally.
In your blog post drew a very nice comparison here to how people face up to financial problems in much the same way. Maybe we can take those stage by stage, if that’s OK with you?
Jeff: Yeah, but Jeena must be jumping up and down right now in her chair.
Mark: Because she wrote it?
Jeff: She wrote it.
Mark: She wrote it. Jeena wrote it. I misunderstood because I knew Jeena and I shared the phobia with the dentist, so I thought maybe you wrote the other one. Jeena then I should be talking to.
What’s Jeff even doing on this call?
Jeff: I’ll just check back in half an hour.
Jeena: I was about to log in and just change the byline to Jeff. Give him credit for it.
Jeff: No, no, no. I’ll take credit for what I’ve done.
Mark: This is stupid on my part because right up top it says written by San Francisco bankruptcy lawyer Jeena Cho. I went right to the substance of the thing and ignored the byline.
Let’s talk about that first stage of denial. It does make a nice analogy with the dentist work because you give the example here of people not opening their mail or answering their phone when they get in financial trouble.
Jeena: One of the first things people seem to do is just say, “If I ignore it, if I pretend like the elephant isn’t in the room, it will just go away.” A lot of people come in and tell me that. They say, “I knew it was a problem, but I just couldn’t face it and it wasn’t until my wage was being garnished or I got that notice for foreclosure.”
I’m often amazed at the number of people that call me and say, “My home is going to be auctioned off tomorrow at 3. Can you help me?” I say, “Well, what have you been doing for the last two months when you knew this foreclosure date was coming?” They’ll say, “Well, I just couldn’t deal with it.”
Clearly a lot of people live in denial.
Mark: Right. I think it really cues into something. I end up teaching a lot in my practice about that life rewards action and ruthlessly punishes inaction. I think evasive thinking, thinking where you seek to evade a problem or something like that, almost always leads to trouble and inaction leads to trouble.
Action conquers fear. Action will fix the problem one way or another. I find that prodding people into action sometimes is a very difficult process until the wolf is at the door.
Jeff: I relate to it because I don’t like being pushed or prodded. That’s just not my nature. People will sometimes come in and just be defensive because they know they need to be there and they know they need to have this discussion.
But if you tell them something that they don’t want to hear or if you just tell them the consequences of not acting or of acting in a particular way, it can really hard to breakthrough sometimes.
But I find that usually be the end of the conversation, someone who comes in who’s tightly wound and just really upset about everything and feeling downtrodden, usually be the end most are relaxed and like, “OK. We have a plan of action.” I think it’s more to the fact that they have an advocate on their side at that point.
Mark: Of course, people don’t like the bearer of bad news and as you say, people don’t like to be pushed or bullied or something like that too. That probably contributes to their resistance and their denial.
Jeff: I have my daily denial, which is I’m a procrastinator on particular things. In law school, if I had an exam coming up, I had the most polished apartment you had ever seen because I would clean that thing up and down three times before I would sit down and read what I needed to read or take the practice exams.
I think that’s a very common way of feeling.
Mark: It’s probably so common you could almost call it part of human nature to avoid that kind of thing. I know I could bring up plenty of examples from my own experience too, except I don’t want anyone to know about them.
That brings us to stage two, which is anger in this process. Jeena, why don’t you explain a little bit about that stage?
Jeena: First they go through denial for a long time and they move into the anger stage. Sometimes I’ll say, “Here are some of the solutions,” and they’ll say, “I don’t understand why this is happening to me. Why did I have to be the one that was laid off? Why did my spouse have to die? Why did I get this illness?” whatever it is.
They sort of look to outside sources for the cause and they want to be angry. They want to blame somebody else or some other circumstance for the situation they’re in and I say, “Look. It happened. It sucks that you’re here, but let’s try and find a solution out of your situation.”
Mark: It’s a matter of coming to grips with what he is rather than what you would like it to be or even what you think it should be.
Jeena: Right.
Mark: I’m sure you probably had the same experience. I remember being a little boy and complaining to my father, “It’s not fair,” and my father saying, “Life is unfair.”
Jeena: Yes.
Mark: It was unfair that you got sick and had these medical bills. It was unfair that you lost your job and that kind of thing. The fact that you’re a good person doesn’t mean that these things can’t happen to you. It doesn’t have to do with what you deserve or what’s fair or what’s right. It’s just what is.
Jeena: Exactly. In this economy, a lot of people have been dealt bad cards. Tons of people lost their job, lost money in the stock market, lost money in the housing market. It sucks.
Mark: And I guess you’ve got to give some room to that stage a little bit, right? I worked for this company for 15 years. I gave my all, blah, blah, blah and then they laid me off. I’d be angry about that too.
Jeena: Absolutely and I’m not saying they shouldn’t be angry, but the longer they dwell in their anger or denial, they’re not taking action that they need to and they’re quickly running out of time. They’re moving into that root canal stage.
Mark: Right and that’s true, again, of most things in life. Lose your job and go home and sit in your apartment and grieve over it for six months is not as good as getting up the next Monday with your resume and trying to find a new job, right?
Jeena: Right.
Mark: How do you handle it with your clients? Do you allow them to vent a little bit about how bad it feels and then try to refocus them on what are we going to do about it?
Jeff: Sure. A lot of them want to come in and tell their story. I think, one, just sharing the story makes them feel better because sometimes they don’t have people to tell because your debts and if you feel like you failed or you feel like something unfair has happened to you, sometimes people just don’t want to share it with other people in their life.
They’re just embarrassed or getting to us as someone who’s in a field of profession that could possibly help them and sometimes we’re the first person that they’ve ever unloaded this on.
Mark: That’s got to feel better just right there without anything else. I’m sure that feels great.
Jeff: I think that’s the catharsis of describing it and then it’s getting someone who can give you some feedback and a direction to articulate that anger.
Mark: I know both of you are good listeners, but I have had attorney clients in the past who were not. I had one client, in particular, who had a client storm out of the office and tell the secretary on the way out how rude he was.
When I investigated a little further, what I found was the attorney is real smart. So this woman had half her problem out of her mouth and had described it. He was like those guys on Jeopardy that are pushing the button before Alex has asked the question.
I already know the answer to your problem. This is what you do. You’ve got to file for bankruptcy. You’ve got to do this. You’ve got to do that and the woman felt like nobody listened to me.
I would think that that stage of actually listening to their story is an important stage, but not one that you want to go on forever either.
Jeena: Right. I think clients want to feel validated. That their story is being heard. That someone is acknowledging their story and telling them, “It sucks. I’m sorry that that happened to you, but I’ve had hundreds of other clients that have had the exact same thing that happened to you.”
A lot of times they say, “Really? You’ve had someone that failed business. They took out a home equity line of credit to try and stay afloat.” I’ll say, “Yeah. I meet people like you every single day.” I think that in itself is comforting because they think, “I’m not the only one going through this and there are other people just like me.”
Mark: I’m not uniquely a loser. That’s the feeling of shame, of failure. If it’s seen as part of a broader phenomenon that happens to lots and lots of people, then they can view it as a setback, not as a confession of what they are or something like that.
That leads us to our third stage, which is bargaining. Tell me about that stage, whoever wants to take that.
Jeff: I think we see bargaining in lots of different ways, but it’s a lot of times when they start robbing Peter to pay Paul. Where they’ll start transferring balances or taking payday loans and they’re just delaying, delaying because they’re stuck really in a panic.
I don’t know if bargaining under the classic Kubler Ross model actually fits perfectly into the concept.
Mark: But it corresponds loosely to this.
Jeff: Yeah, definitely. That’s where you see people swimming. Sometimes it’s when they decide to do a call to action, but their call to action is often just a form of procrastination or an extension of denial almost is what it feels like to me, if we’re going to operate under this model.
Mark: I know a lot of the steps that people take at this stage are really dumb. Why don’t we rundown some of them? One would be taking a home equity loan, taking equity out of your house, right?
Jeena: Yes.
Mark: Another might be borrowing money from your relatives.
Jeena: Right or liquidating your retirement account. Another one that I’ve been seeing more and more, which is very dangerous, is stop paying the IRS. They’ll think, “I’ll just increase my withholdings, pay less to the IRS, so that’s more money in my pocket and then I’ll pay my credit cards.”
Obviously you don’t want to owe the IRS money. You’d be much better to pay the IRS than your credit cards.
Mark: A friend of mine calls that ignoring the big mafia to pay the little mafia. It’s not a good long range strategy, right? The government’s interest rates are even worse than the credit cards.
Jeff: Yeah. They have ways of coming after you for things.
Mark: That are not available to the credit card people.
Jeff: Yeah. I would much rather owe Chase than the franchise tax board.
Mark: Exactly. Not paying the IRS is a dumb strategy. Obviously if you borrow from relatives to pay the credit card people and all that and you still are in financial trouble or you’re continuing in financial trouble, now you not only have the financial problems, but you’ve hurt your family.
Maybe you’ve caused anger because you couldn’t pay them back. Maybe you’ve ruined relationships that are far more important than money and that kind of thing.
Jeff: That’s exactly right. With the family, it’s just really important if you do borrow from them, don’t pay them back before you talk to us. I know that sounds counterintuitive not to pay mom and dad, but that’s actually probably the number one or very close to the number one problem we have with bankruptcy is this whole concept of paying back family.
It’s called an insider preference and we don’t need to get into all the details of what that means, but talk to an attorney right away.
Mark: The simple version of that is if you go into a bankruptcy hearing and you paid back mom and dad, but you didn’t pay back the credit card companies and you’re other creditors, the bankruptcy court would view that as you gave preference to this creditor over that creditor and it’s not right. It’s not fair, right?
Jeff: Yeah. The worst part of that is they can go after the receiver of the money and extract it out of them. There’s ways we can actually defend against that, so I don’t want people to think that’s the end of the world. We have had people who’ve paid family, but we’ve been able to prevent the court from doing anything.
Mark: But in general it’s not a good idea.
Jeff: Definitely not.
Jeena: Also, if you don’t pay them back, then we would have to list them on your bankruptcy petition as a creditor. So if you don’t want mom and dad to know you’re filing for bankruptcy, then don’t borrow money from them.
Mark: Right. Good advice there. Let’s talk about the retirement funds, since we’ve talked about the others. People who raid their 401K or their retirement fund or something that they absolutely should be leaving alone, right?
Jeena: Yeah. Particularly people who are close to retirement age. I think it’s one thing if you’re in your 30’s and if you could just liquidate your 401K and get completely out of debt. I wouldn’t necessarily be opposed to that. I think at that point you just have to weigh the pros and cons and say, “What does that retirement fund mean to me?”
But people seem to liquidate all of their assets without actually having an exit strategy. This is where the whole bargaining comes in. They’ll say, “Well, I’ll just pay this month’s bill and worry about next month when it comes around to it.”
There’s no strategy for actually getting out of debt. They’re just surviving day-to-day.
Mark: A classic military error. Tactics without a strategy.
Jeena: Right.
Jeff: This is our theme of last time, the slow bleed. Where people are floundering and because they feel so overwhelmed, they’ll just take a little bit out of the 401K this month and it’ll last them for a few months and then they’re back at square one.
Mark: Right. They would have been better off to have considered bankruptcy at a much earlier stage.
Jeff: That or, in rare cases, there are times when liquidating your retirement to get out is OK. I think you definitely want to talk to a few professionals about that, whether a bankruptcy attorney or your financial advisor or other people.
Mark: Do you think there’s a false idea out there of I have to have spent my last dime of resources paying back before I can consider bankruptcy? I have to be flat broke.
Jeff: Yes. Some of our clients have very strong feelings about their relationships with their banks and lenders and they will say things such as, “Wells Fargo has been so good to me or this bank has been so good to me and I just want to make sure I pay them back.”
They just can’t shake that notion. Whoever their lender is has made a fortune off of them already. They’ve charged them interest and fees for 20 years, yet they still feel some type of obligation. Jeena, what portion of clients do you think have that feeling toward their lenders and banks?
Mark: In a way it’s kind of charming, isn’t it, that people do have really come into it with a moral attitude of these people have been good to me. I want to pay them back. This and that. It’s not like people come in and say, “Oh boy. I want to declare bankruptcy and screw all my creditors.”
Jeena: I think there’s sort of this general public perception out there that people that are filing for bankruptcy are trying to pull one over on the system or something like that. Our clients, they really struggle with the decision and they’ll literally go through their entire life savings and liquidate everything before making that decision.
At that point it’s only because they really have no other option.
Mark: That leads us to stage four, which is depression. I think when people reach the end of the rope where they feel they have no other option, before they have discovered any other options, that’s probably a very significant stage and it probably contributes to some of the earlier stages that we were talking about, right?
You go home. You turn out the lights. You pull the covers over your head and feel bad.
Jeff: Sure. The depression part, it comes in different forms. For example, when you’re talking about how people feel toward their bank and their lender, if they actually feel a very strong moral obligation, I think part of the depression sometimes is they feel like they’ve failed that entity or that person or however you view that lender.
They feel like they let them down. They feel like they let themselves down. A lot of times people feel like they’ve let down their family, if they have kids or I think mostly they feel like they let themselves down.
We identify in our society so much with our income and our credit score. When you meet someone for the first time at a party, a lot of times the first question is what do you do and what you say you do has to do with social status and income and education.
All of these things tie together. By filing bankruptcy, I think a lot of people feel like they have failed in a lot of social norms that we consider important.
Mark: Right. What’s the first thing people ask you at a party? I don’t know about you, but the first thing that’s asked of me is what do you do? I’m going to be judged on my answer to that question and if I seem to be successful or not successful or whatever it is. I can understand that that’s a tremendous amount of social pressure.
When people come in to see you and they’re in this state of depression, how do you deal with that? I guess I’m saying how much handholding and therapy do you have to do along with your financial advice and legal advocacy?
Jeena: A lot of times I just lay it out there and I’ll say, “Look. You can sit here and feel sorry for yourself and dwindle on this for the next six months while you’re going through your savings or you can make the decision today to do something about it. The decision is up to you.”
I’m not going to try and force someone into bankruptcy or talk them into it. I met with a lady the other day. She has three wage garnishments against her. When the first one ends, there are two in line. I’ll say, “What are you doing here? What strategy do you have?” She looked at me kind of seriously and she says, “Well, I’m hoping to find another job or win the lottery.”
I’m thinking, “That’s not a great exit strategy.” When I say exit strategy, winning the lotto is not an exit strategy, but I think people kind of think something will change and they just believe that until the hope is completely evaporated.
Jeff: Is that stage four depression or is that stage one denial?
Mark: I’m sure there’s a lot of denial involved in being depressed, but it also harkens back to the little motto that I said earlier, which is action conquers fear. The only thing that’s really going to get them out of that depression is some action.
Jeena, what you’re saying is you’re giving her a little tough love there.
Jeena: Yeah. I think some of our clients need it and there are others that just want to tell their story and they just need to cry and go through that. Sometimes you just have to say, “These are your options.”
When you have debt, there’s only three ways to get out of it. You can either pay it off in full. You can pay in part or you can file bankruptcy. Those are really your only options.
Mark: Right. It’s a very nice segway into our stage five, which is acceptance, which is, as you say in your blog post, it’s going to be OK and there is a solution. At this stage the individual comes to terms with the reality of their situation and decides to take action.
I would imagine that one of the more gratifying aspects of your job is seeing how people act and how they feel once that weight is off their shoulders and they have decided to do something and there is a plan of action.
Jeena: Yes. I think the hardest part is actually coming in and meeting with us because so many people at the end of our consultation will say, “You know? I feel so much better knowing that there is a solution.”
Mark: I know when confronting whatever those tasks are that Jeff is procrastinating about or that I’m trying to avoid or whatever, the very act of taking some action makes you feel better right away even though you haven’t solved it yet, even though you haven’t finished. The very fact that you’re acting on it, it really lifts a lot of pressure right there.
Jeff: We have a lot of different clients with a lot of different attitudes. Not everyone comes in feeling downtrodden. There are actually a lot of people who come in who are just more logical or calculating and they say, “Look. I’ve run my numbers. I see I am going to hit the wall or I have hit the wall and I just need a solution to take care of this. Can you help me?”
There are lots of people. Everyone comes in at various stages of this stage five and I am often surprised, even today I guess, by how many people come in at stage five of acceptance. They’ve just figured it out and said, “OK. I need to move on and I’m going to be held back for the next five years of my life or whatever if I just start draining my 401K and spinning my wheels.”
Mark: Those are people that don’t go through those stages, those first four stages with you. Maybe they’ve already gone through those by themselves at home or something like that and have reached stage five and know that they need to do something.
When they come in to see you, that angst is already resolved. They know they need to take action and now it’s just let’s do this.
Jeff: Absolutely. I’m not sure what portion of the five stages, how many we get per. If it breaks down 20% each or what it is.
Mark: Jeena, can you tell that Jeff wants you to assign a percentage to each of these? You’re going to have to start tracking your clients by this method. In a future podcast you will tell us how many come in at the bargaining stage and how many come in at the anger stage and so on.
But let’s end our podcast on a happy note here, which is once you have done this action for somebody, somebody who was stressed, who had been in denial and had been in anger and had been in depression and something like that and you have in fact fixed that problem for them.
That must feel pretty good for them and for you.
Jeena: Yeah. That’s why I love doing my job. At the end of the bankruptcy, a lot of them will hug me. They’ll send me thank you cards and they’re just so grateful to not have the harassing calls anymore and just be debt free so they can actually planning for a future and having money leftover at the end of the month.
I just received a letter from a client that was just done with her bankruptcy a year ago and she just sent me a little note. She said, “I’m sending you a one year update. I can’t believe it’s been a year already. I was able to get a new credit card, which I’m using very responsibly,” but she said, “It just feels so good to have cash and not have all of my money go towards paying off Chase.”
I just love stories like that.
Mark: That’s great.
Jeff: There are clients who do send us gifts, but I really like getting the notes on occasion from people who just tell me what’s going on and how happy they are where they’re at in life now.
Mark: Let’s talk for a minute. There are people out there who are listening to this podcast who are somewhere in stages one thru four. They’re having a terrible time and they’re under tremendous stress. They’re getting harassing phone calls and they’re denying it or they’re angry about it or they’re draining their resources or they’re just completely depressed about it.
What should they do? They should call your office, right?
Jeena: Yes. They should pick up the phone and call. Take action.
Jeff: It’s 415-963-4004 and ask our receptionist to schedule an appointment and she’ll figure out our schedule or they can go to JCLawGroup.com and there’s a contact form on the front page that they can fill out too.
Mark: They’ll get to meet with one of you two.
Jeena: Yes.
Mark: They’re not going to be fobbed off on somebody else. They’ll get to meet with you and you will help them figure out the best strategy for their financial situation.
Jeena: Absolutely.
Jeff: There won’t be any legal assistant who’s not allowed to give legal advice.
Mark: Great. If they want to take a step before calling your office, Jeff you were just saying they could go to your website JCLawGroup.com and what will they find there that will help them?
Jeff: There’s lots of information that we’ve put on there for people. We find that a lot of people like to research and figure out what’s going on, what’s involved with the process. We have explanations about bankruptcy and about debt settlement and about us and our firm and who Jeena is and who I am.
They’re welcome to go around and gather some information about us, if they’d like to do that first.
Mark: That’s great. I think that’s a great place to end. I just want to tell everybody out there that’s listening to this podcast that if you’re having these kinds of problems, obviously they’re incredibly stressful. They’re very, very difficult.
The way out is pretty simple, which is you pick up the phone. You call JC Law Group and you make an appointment to talk with Jeena or Jeff and they’re going to get you on the road to a fresh start and a new life.
Until next time, that’s all for today.
Thank you Jeena. Thank you Jeff.
Jeff: Thanks Mark.
Jeena: Thank you.
JC Law Group is a debt relief agency under the United States Bankruptcy Code.