Monday, February 20, 2023 is Presidents' Day. And it is a good time to think about bankruptcy. In honor of the holiday, let's look at three presidents who filed for bankruptcy protection. If it was good enough for war hero Ulysses S. Grant, personal bankruptcy is good enough for you!
As Smithsonian Magazine tells it, two-term President Grant enjoyed his titles and achievements but he struggled financially. He may have been a triumphant Civil War general for the Union. He may have been a popular president, but he hungered to move in elite financial circles.
So he plunged a $100,000 fortune into the investment firm of Grant & Ward. Grant's 1894 stake was equal to more than $3 million in today's dollars. Grant did not suspect his partner, Ferdinand Ward, was a con artist running a Ponzi scheme. Despite infusing another $150,000 lent to him by the world's richest man, William H. Vanderbilt, Grant and his investment firm went bankrupt.
Mark Twain lent his expertise to help Grant put together his memoirs in hopes of leaving his wife with some money from the book's sale. He finished his manuscript three days before dying of throat cancer.
What can a 21st century Texan learn from Grant's misery? Several lessons:
- Expertise in one area — winning a Civil War, running a country — does not make you an expert in personal finance
- Pouring good money after bad (the Sunk Cost Fallacy) only gets you deeper in debt
- Do your due diligence — business partners may be trustworthy, or they may be criminals (Ward, eventually caught, spent six years in Sing Sing)
- Recognize blind ambition and its power to overwhelm sensible investing — Grant so desperately wanted to rub shoulders with Vanderbilt and J. P. Morgan that he ignored warning signs
William McKinley, before becoming America's 25th president, had to file a bankruptcy stemming from an investment made with a friend, Robert Walker.
While serving as governor of Ohio, McKinley co-signed loans for Walker, failed to keep track of what he was co-signing, and joined Walker in investing in a tin plate company. They fell victims to the depression of 1893. McKinley and Walker declared bankruptcy. McKinley asked friends to help him sell off his assets to meet his obligations.
Instead, his friends raised the $130,000 McKinley owed and rescued him.
What is instructive in McKinley's bankruptcy? Consider:
- McKinley trusted his friend Walker and Walker took advantage of McKinley's inattention
- Forces beyond McKinley's control — even as governor — brought financial ruin to him
- Bankruptcy laws today can shield your home and many personal assets from creditors, something not afforded to McKinley in 1893
If forces beyond your control (job loss, COVID-19 issues, medical problems) have tightened your budget to the breaking point, you can benefit from a bankruptcy attorney's help.
Before his presidency, Honest Abe was a merchant. But the retail business did not go well for him and he filed for bankruptcy in 1833. He had a 17 year repayment plan! Yikes!! A Chapter 13 bankruptcy filing requires a repayment plan, but that plan cannot exceed 5 years. And Abe didn't have the benefit of exemptions to protect his assets so he lost his horse and some surveying equipment.
What About Jefferson?
Bankruptcy as a way out of a financial morass of Thomas Jefferson's own making was not an option for the Founding Father, according to researchers at Colonial Williamsburg.
We have talked about Jefferson's money problems in this blog before, but more important than the many presidents who suffered from dicey dealings with their dollars — Jefferson, Truman, Harrison, others — is you.
Would bankruptcy help you? Only a competent, experienced bankruptcy attorney can show you if you qualify for bankruptcy protection under federal and Texas laws. Not everyone owing money to creditors is eligible to file Chapter 7 bankruptcy or Chapter 13 bankruptcy.
If you think you might need the help of a compassionate, experienced bankruptcy attorney. Contact The Page Law Firm today or telephone our Frisco offices at 214-618-2101. You can learn a lot in your complimentary strategy session.