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At work with Tom C. Smith, Chapter 7 Bankruptcy Trustee

Tom C. Smith, Chapter 7 Bankruptcy Trustee

Tom C. Smith, Chapter 7 Trustee

I was born in Norfolk at DePaul Hospital in 1946. I grew up in Washington, D.C., and lived in the city about a couple of miles from the White House. I got out of college in June 1968. I didn’t have a job, so I said I’m gonna go have a good time and work at the beach.

I met my wife, Kay, that summer in Virginia Beach. I used to walk up and down the beach and ask people if I could take their picture. You had one of those little viewfinders with a key chain on it that said Virginia Beach. You take their picture and look in there and hold it up to the light. That was their souvenir from Virginia Beach. I don’t think I did that to her. It was people that I met doing that job. They knew her and they introduced us.

In December of ‘68, I got drafted in the Army. I did stay in the States. I was in Georgia, Alabama and Fort Eustis. I got married while I was in the Army in ‘69. And we had two children. Tommy is an attorney who works for me. Kristen was my daughter. She passed away not quite three years ago.

When I got out, I went to law school at William and Mary. I got out of there in 1974, passed the bar exam and started practicing as an attorney. I went out on my own in 1977. I started doing bankruptcies. I was fortunate enough to be appointed a trustee in 1979. I’ve been serving since then.

Sometimes people are in a situation they can’t get out of, so they have to file bankruptcy to discharge their debts. Under the law, you’re allowed to keep certain things that are paid for. They’re called exemptions. For example, you can keep up to $5,000 of household goods that are paid for. My job is to see if they have anything beyond what they can exempt, like a tax refund or cash value in life insurance. Then I can pay that toward the debts that they discharge in bankruptcy.

Usually the creditors don’t recover very much when somebody files for bankruptcy. They’ll never be able to pay all their debts back because of the situation they’re in. Because of their income, because of the amount of their debt and the interest on the debt, they could keep paying on it for the rest of their lives. They’ll never get it paid back, so the system lets them get out of that debt, extract themselves and start over.

For a lot of people who appear to be living on the edge, it doesn’t take too much. They may be living paycheck to paycheck, so if they have a catastrophe that happens in their lives, then that puts them over the edge economically and they can’t recover from it. Like if they lose their jobs and they’re out of work a few months, or if they have a medical problem and they don’t have enough insurance to pay for it or if they have a car accident and can’t pay for it, or if they have family members who need help or are ill. It’s just one little disaster they never can recover from.

The older people, that’s the one. You have the people who are on walkers, they have oxygen tanks, and they worked all their lives and here they are, they’re just hopelessly in debt. They can’t pay it. They can’t go to work. Some of them are on Social Security. You think, my gosh, you work all those years and you get to an elderly age – you think you wouldn’t have to go through this.

Now, with younger people, they file, OK, something happened and they file – they can recover from that. But I think it’s kind of sad when you see older people who can’t get around, worked a long time and something happened, and they file for bankruptcy.

I think the bankruptcy system has helped a lot of people who are in a situation where they’re never going to be able to get themselves out of. I think, in that respect, it’s good.

I know the creditors would say, “We’ve lost money,” but I think a lot of people would never be able to pay the money back, would never be able to pay back 100 percent. These people have been able to extract themselves to make a fresh start.You do feel like you’re a part of the whole process, you’re kind of an important part of the process. The trustee has to make a lot of judgment decisions when he reviews a case and when he asks questions of the debtor. So a lot goes into it. So after you’ve done maybe 10,000 of them, you think maybe you have contributed to this process over the years.

This article originally appeared in The Virginian-Pilot on October 15, 2012 – As told to Pilot writer Tim McGlone

© The Virginian-Pilot, Photo credit: L.Todd Spencer, The Virginian-Pilot