The next chapter in the Edmund Andrews saga…
Yesterday, Megan McArdle of The Atlantic revealed key details that Andrews had left out of his subprime-mortgage-default story (as chronicled in the book “Busted” and in the Times Magazine)–namely that Andrews’ wife Patty had previously declared personal bankruptcy twice.
These details, in McArdle’s opinion (and ours), changed the tenor of the story considerably. Instead of a got-carried-away could-happen-to-anyone story of financial stress, denial, and default, the real story suddenly seemed to be about serial bankruptcy and a relationship that warped Andrews’ judgment.
Upon learning these details, many of those who read Andrews original story felt misled–ourselves among them.
Megan McArdle, a blogger for the Atlantic, accuses me of omitting crucial information: namely, that my wife, Patty, was involved in two bankruptcies, one in 1998 with her former husband; and one in 2007, while she was married to me. McArdle says this is “material information that changes the tenor of the story,” and then accuses Patty of “serial bankruptcy.”
These bankruptcies did occur, but they had nothing to do with our mortgage woes. They were both tied to old debts from before we were married or bought a house. They had nothing to do with my ability to get a mortgage; nor did they have anything to do with our subsequent financial problems.
Since Patty had been so brave in letting me tell our own story so candidly, I wanted to spare her the public exposure on these older woes. But that is now impossible, so here is the story:
The first bankruptcy in 1998, five years before Patty and I got together. It occurred because Patty’s former husband, a producer of TV commercials in Los Angeles, didn’t file income tax returns for five years. Patty, who was a stay-at-home mum and wasn’t earning money, was blindsided. She had been signing returns, but he hadn’t actually been filing them. Because her husband’s business income was reported on their personal tax returns, she had to join him in the bankruptcy filing.
All that happened in 1998, and it obviously had nothing to do with the story in Busted. It never even occurred to me to mention it.
Patty’s second bankruptcy stemmed from a loan she received from her sister, while Patty was still living in Los Angeles. At the time, she was caring for four children, working for very modest pay, and receiving almost no child support from her ex-husband. (Despite multiple court orders, he remains chronically delinquent on untold thousands of dollars.)
When Patty couldn’t repay, her sister followed her east and sued her. I offered to pay off the loan by withdrawing money out of my 401k, but I wasn’t allowed to because the purpose didn’t qualify as a “hardship.” Without an alternative, Patty had no choice but to seek bankruptcy protection.
That’s the explanation. After Andrews’ omission, unfortunately, it doesn’t quite wash. (No choice? Why? Wouldn’t the sister have preferred some sort of instalment payback plan? Couldn’t the couple have gone without some of the things they later bought to save to pay back the sister?)
And here’s Andrews’ interpretation:
None of this has any connection to our story. It had nothing to do with Patty being a spendthrift. It had no bearing on my ability to take out a mortgage, and it had nothing to do with our financial problems.
We have to disagree there. On the contrary, it seems an integral part of the financial problems. After enduring two bankruptcies, Patty wasn’t the least bit gun-shy? She hadn’t developed a deep-seated fear of owing people money? Based on Andrews’ original story, apparently not. On the contrary: She seemed annoyed that he was concerned about it.
The prospect of going bust again , in other words, was no longer scary. It was just what you did when you owed people money you couldn’t pay back. And given that she had done that twice and it had worked out, what was the harm in charging right down that same path again?