Dave Ramsey, Financial Peace University and Bankruptcy

by Dan Nunley

FPURecently my good friend and fellow Tulsa bankruptcy attorney Ben Callicoat wrote a glowing article on his blog about Dave Ramsey’s Financial Peace University. You see, Ben is a BIG fan of Dave Ramsey so much so that Ben has plunked down his hard-earned money and enrolled in Dave’s 13-week Financial Peace University course. Ben says that he will be blogging about his experiences and I look forward to following along from the outside.

I like Dave Ramsey too. I’ve read several of his books and I’ve listened to his radio show many times. Dave Ramsey has acquired a lot of knowledge and wisdom when it comes to financial matters. And I appreciate his no-nonsense approach in giving good, sound financial advice. Such as building an emergency fund and getting out of debt.

However, one thing bothers me about Dave’s advice and that is his total opposition to bankruptcy. In fact he admits that if given the chance, he’ll do his best to talk a person out of filing bankruptcy.

Dave Ramsey has a strong opinion about bankruptcy. He says that the mere mention of the word “bankruptcy” sends chills up his spine. He says that bankruptcy “is a living nightmare that can devastate your job, destroy your marriage and steal your peace of mind” and that “bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.”

Why does Dave have such strong negative feelings about bankruptcy? Well you see, Dave himself filed bankruptcy back in the 1980s and he doesn’t hide that fact. Instead, he says that he knows “from personal experience the pain of bankruptcy, foreclosure, and lawsuits. Been there, done that, got the t-shirt, and it is not worth it.” And based on his personal experience, Dave warns that bankruptcy “is not a place you want to visit.”

However, if you research Dave Ramsey’s financial problems that led to his bankruptcy filing, you’ll see that Dave was a hard-charging, high-flying, ultra-leveraged real estate investor whose real estate empire came crashing down when bankers called his loans. Dave struggled for a couple of years before he actually filed his bankruptcy case. And it was obviously the stress and strain of dealing with the lawsuits and foreclosures over this couple of years that caused Dave’s life to become a nightmare, not the filing for bankruptcy. I’m sure that Dave was embarrassed at having to file bankruptcy after having lived such a well-to-do lifestyle, but filing bankruptcy was not Dave’s problem. In reality, bankruptcy was a financial tool that helped Dave work out his real problem which was the crash of his real estate holdings. Filing bankruptcy allowed Dave Ramsey to get a fresh financial start. And with that fresh start and a lot of hard work, Dave has recovered quite nicely from his earlier financial setbacks and now is doing rather well for himself. Had he not filed bankruptcy in order to get out from under the mountain of debt that he could not pay back, I seriously doubt that Dave Ramsey would be the multimillionaire that he is today.

Now you may be thinking that I disagree with Dave’s hatred of bankruptcy simply because I’m a bankruptcy lawyer and am looking out for my own self-interest. If so, you are wrong.

You see as a bankruptcy lawyer,  I tell people all the time that bankruptcy is not the right option for them. I counsel many, many people who are struggling with debt problems and in reviewing each person’s specific situation, I always discuss all available options starting with the alternatives to filing bankruptcy. Many times there is a viable non-bankruptcy solution that would be a better fit for a person’s specific situation and I tell them so and send them on their way.

However, for many good people, by the time they come to see me, there simple are no other viable options besides bankruptcy. And that’s what Dave Ramsey seems to ignore. The vast majority of people filing bankruptcy are not hard-charging, high-flying real estate investors with other options. Instead, they are regular working class people living paycheck to paycheck who have suffered a major change in circumstances.

Like my client who was laid off with two weeks notice. He’s a hard worker and has found another job but is earning considerable less money now. Or like another client of mine who is self-employed, couldn’t afford health insurance, and then suffered a serious medical problem. Or like yet another client of mine who is a recently divorced mom working a low-paying job with several hungry mouths to feed. These people are doing the best they can but their creditors aren’t willing to work with them. The bill collectors are threatening lawsuits and wage garnishments if they don’t pay up now.

The financial advice Dave Ramsey gives on his radio show each and every day will be helpful advice for these clients of mine in a few months time. And I’ll encourage them to heed Dave’s advice as they rebuild their financial lives. Unfortunately, Dave’s advice can’t give them the help they need right now based on their current circumstances. But bankruptcy can and will.

If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

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{ 38 comments… read them below or add one }

Stephen May 4, 2009 at 12:10 pm


Actually, Dave Ramsey should be a poster child for the benefits of bankruptcy and how it can help a person.

Bankruptcy allowed Dave Ramsey to get a fresh start. He was allowed to get back on his feet and live a productive life. As a result of bankruptcy, Dave now pays more taxes and has more influence on society. Dave is the honest debtor who got a fresh start and now benefits society.

Strange he can’t see this.

Stephen Brittain

Dan Nunley May 4, 2009 at 12:54 pm


Ain’t that the truth. I couldn’t agree more.

Ben Callicoat May 4, 2009 at 12:57 pm

Thanks, Dan! Good post. (Love the new blog makeover, by the way.)

You and I don’t disagree about much, here, but the differences are important. As you’ve pointed out to me, you used to recommend the bankruptcy as a last resort position, but have pulled back from that.

I still do counsel bankruptcy as a last resort — or as I’ve recently referred to it, “Plan B(ankruptcy)”. I think Ramsey’s debt-snowball technique, which regularly counsels clients to get a second job to pay down debt, can be a way for people to dump their unsecured debt (by paying it off). But I leave it up to my clients to decide which course of action makes the most sense.

Of course, as bankruptcy professionals we have to be quick to advise our clients of all of their options, which include bankruptcy. And you and I have both seen clients who have limped along for years trying to avoid bankruptcy and in the process continued to destroy their financial ratings.

But I submit that this is not what Ramsey advocates. He doesn’t advise clients to simply “keep on keepin’ on”, but instead to get “gazelle intense” about destroying debt.

Keep up the excellent work!

Ben Callicoat May 4, 2009 at 1:03 pm

Stephen and Dan:

Obviously, I’m not Dave Ramsey and can’t speak for him. But I think that you’re jumping to the conclusion that it was his fresh start from the bankruptcy discharge that cleared the way for him to become wealthy.

I’m not sure that’s the case.

In any case, someone who follows Ramsey’s advice about selling off unnecessary toys, eliminating car debt, and getting a second job to fund a debt snowball, will end up with something that our bankruptcy clients won’t: a track record of success and good habits and a new-found sense that they are in control of their money and they CAN succeed.

As Ramsey often says, personal finance is more than just the math – it’s about changing behavior.

Dan Nunley May 4, 2009 at 1:23 pm


Thanks for your comment. And you’re absolutely right in that I no longer advise that bankruptcy should always be an option of last resort. This is mainly because I’ve witnessed too many people who really need to file bankruptcy but they delay in order to try other options that are long shots at best for their situation. Then as a result of the delay they end up in worse shape, i.e. getting sued, having their wages garnished, etc.

I certainly talk about non-bankruptcy alternatives with each of my clients, and if even one of those alternatives seems doable, then I suggest that they seriously consider giving that alternative a try. But I make them aware of the possible detriments that could come from pursuing a remedy that is slow in coming.

I think that Dave Ramsey’s advice to attack debt through the snowball method and with gazelle intensity is great advice for people who have both the resources and the time to make it work. However, for many of the people I counsel, even if they had the resources to use the snowball method, the time required even at gazelle speed is more time than they have available. More often than not, there’s a “creditor’s axe” hanging over their heads and about to swiftly descend. They need something powerful and immediate that can help them avoid the chopping block. They need bankruptcy’s automatic stay to stop that axe in it’s tracks!

Carl H. Starrett II May 4, 2009 at 2:05 pm

The reality for my practice is that most of the people who come to see me have already done away with the toys and the frivolous spending. I’ve seen too many clients suffering heart problems and other stress related health issue by trying to avoid the inevitable for too long.

Sure, you can get a second job if you are $40,000 in the hole and you might have that paid off in a few years. But what do you have? You filled a $40,000 hole and several years of time spent at a second job that could have been spent with family.

Or you might consider a Chapter 7, which would be over in about 4 months in most cases, learn to live without credit cards and get the fresh start now. For every Dave Ramsey who had a bad experience in bankruptcy, I can point you to dozens of satisfied clients who have benefitted greatly from the fresh start provide by a bankruptcy discharge.

And for the purposes of disclosure, Dan and I are both consumer bankruptcy attorneys and members of the National Association of Consumer Bankruptcy Attorneys. Mr. Ramsey may be opposed to bankruptcy, but he isn’t opposed to being a vendor at our conventions.

Dan Nunley May 4, 2009 at 2:28 pm


Thanks for your comment. I didn’t address the issue in my post, but it sure seems possible, maybe even likely, that some of Dave Ramsey’s opposition to bankruptcy could be because the good folks who are considering bankruptcy are also potential customers of Mr. Ramsey. Sound reasonable? Or am I just too cynical?

Ben Callicoat May 4, 2009 at 2:34 pm

Dan wrote: “it sure seems possible, maybe even likely, that some of Dave Ramsey’s opposition to bankruptcy could be because the good folks who are considering bankruptcy are also potential customers of Mr. Ramsey. Sound reasonable? Or am I just too cynical?”

Way too cynical, in my opinion. Ramsey doesn’t need another client and if you’ve listened to him for any length of time, it’s obvious that he’s out there to help people.

Along the way, he’s made a nice profit. Mostly by being incredibly good at what he does. Which used to be considered okay or even laudable in the good ol’ days of the formerly free USA.

Ben Callicoat May 4, 2009 at 2:36 pm

PS: Carl – I think your point about the time loss for family is extremely important.

(Of course, I’m a bankruptcy attorney like you and often find myself in my office when I wish I could be home with my children.)

Ben Callicoat

Jonathan Ginsberg May 4, 2009 at 2:39 pm

My impression is that many of the “financial guru” types on the radio have a knee-jerk opposition to bankruptcy because it is easier to make a blanket statement opposing bankruptcy than to delve into the subtleties of when a bankruptcy might truly be appropriate.
Just this morning I was listening to a local financial expert who made reference to “those bankruptcy lawyers who run cheap ads on late night TV.” Again, it is easier to talk about “bankruptcy lawyers,” or “trial lawyers,” or “malpractice lawyers” as a group, instead of presenting a more reasoned analysis.
I, too, admire the work that Dave Ramsey does, but even he paints with an unnecessarily broad brush.

Dan Nunley May 4, 2009 at 2:47 pm


Thanks for joining in the conversation and sharing your opinion.

Russ DeMott May 4, 2009 at 3:00 pm

Great article as usual, Dan. I’m big on giving credit where credit is due, pardon the pun. I’ve taken Dave’s 13-week course. It’s a very good, solid course. I echo your sentiments. I’ve seen bankruptcy help people restart their lives. I don’t recommend they all file. I don’t “sell” bankruptcy. But when it’s appropriate, why would someone not use it?

Something you did not mention was Dave’s legal advice. Bless his heart (as we say in the south) but it’s horrible. Again, overall, he’s a good guy with a good program. But he frequently makes statements about the law which are flat out wrong. Example: “you can’t bankrupt taxes.” He means so say that taxes are non-dischargeable. He’s wrong. They are dischargeable if the 2/3/240 rule is met. This is just one example. I wish that he, with all the money he makes, would hire a few good attorneys to do a bit research before he makes proclaimations like this. Dave, I say this in Christian love. :)

But his courses are solid, and 90% of his advice is sound. Just needs to clean up some of the inaccurate legal advice he gives. (Though he says in disclaimers that it’s not legal advice; it’s legal advice).

Dan Nunley May 4, 2009 at 3:21 pm


Appreciate your comments Russ especially since you are both an alumnus of Financial Peace University and a bankruptcy lawyer.

Del May 4, 2009 at 6:27 pm


Since I’m not a bankruptcy attorney, but a follower of Dave Ramsey’s program, I have an interest in learning more.

I’ve heard and read that Dave was forced into bankruptcy. What exactly does that mean? What would have happened had he not filed?

I agree with someones note above that the hurt that Dave discusses has more to do with the process of losing control of his empire rather than the actual bankruptcy filing. The only way I see the actual process being hurtful is that Dave lives for a “fight” and the bankruptcy filing meant he was cornered.

I really wish someone could do a more than surface interview with him and he honestly answer the questions to get more than just the surface story that he presents.

Dan Nunley May 4, 2009 at 8:18 pm


Glad you found this post and the comments discussing it interesting. You say that you have heard and read that Dave Ramsey was forced into bankruptcy. While there is such a thing as an involuntary bankruptcy where creditors force a debtor into bankruptcy, in Dave’s case he himself voluntarily filed a Chapter 7 bankruptcy. If Dave was “forced” into bankruptcy, the pressure to file bankruptcy came from the certainty that he would be personally liable for the deficiencies that were guaranteed to exist on each piece of property that he had to surrender when his lender called their notes.

You see, Dave’s real estate investments were highly leveraged meaning he had not put large amounts of his own money down when he bought the properties. On the one hand, Dave’s real estate holdings were worth a lot of money on paper, but on the other hand, he owed a ton of money on those same properties. And when the Tax Reform Act of 1986 began to have a negative impact on the real estate industry, one of Dave’s largest lenders became concerned and demanded that he repay $1.2 million worth of short-term notes within 90 days. Dave couldn’t do it. There was simply no way humanly possible. So Dave eventually came to the realization that he had no other viable option than to file bankruptcy.

If Dave had not filed bankruptcy, the lender would have been able to pursue him until he paid back every penny he owed. And that was a lot of pennies. Bankruptcy allowed Dave to surrender the properties to the lender in full and final satisfaction for the debt he owed. In other words, bankruptcy allowed Dave to give the real estate back and walk away not owing another penny. Bankruptcy allowed Dave to get a fresh start. Bankruptcy allowed Dave to not have to worry about any future collection activity so that he could concentrate on rebuilding.

Yes, an interview where Dave talked intimately and specifically about his bankruptcy filing would be a ratings bonanza. But I don’t think Dave is interested in going there.

Ben Callicoat May 4, 2009 at 9:28 pm

Dan and Carl and Russ (and anyone else for that matter):

I’d be interested in knowing if anyone has ever tracked their bankruptcy clients’ situations post-bankruptcy. I have not, but I get the impression that most of them limp along in about the same condition they started bankruptcy in – i.e., unable to make ends meet and struggling to handled the basics.

It’s always dangerous to generalize, but anecdotally it seems most of my clients are not paying unsecured debt payments by the time they come see me anyway. They’re just barely making ends meet, and for the most part don’t seek bankruptcy until they are forced to by a garnishment or threat of lawsuit.

That being the case, I worry that my clients are not being served by a bankruptcy discharge (except of course insofar as it stops collection activity — not an entirely inconsequential benefit.) But post bankruptcy, they still muddle along with not enough income to quite get ahead.

Anyone else have a thought about how well their bankruptcy clients are getting along a year after bankruptcy?

Del May 5, 2009 at 8:06 am

I can’t remember whether I heard or saw the “forced into bankruptcy” comment from Dave or another Dave follower.

My guess was that he volunteered.

Since Dave has been on get the government out of the business of business, does this mean that Dave used the government (bankruptcy court) as a personal “bailout” mechanism? From a Dave perspective.

Not a bailout in the sense that the government paid him money, but bailout in the sense the government kept him from paying money he was obligated to pay?e. (Note: I’ve read various reports that he did eventually pay back the amounts owed.)

Ben Callicoat May 5, 2009 at 9:06 am

Del -

I’ve probably already gone FAR over the line into Dave Ramsey fan-boy status, but I don’t think Ramsey makes any bones about his bankruptcy filing. Sure, he “volunteered”. That’s not the point, though so many people want to try to twist this into a hypocrisy thing.

Hypocrisy is doing something that you advocate not doing. It does not include someone changing their mind about something and frankly acknowledging their former action was a mistake. As Ramsey says, he’s “been there, done that, and got the t-shirt” but it wasn’t worth it.

Dan Nunley thinks Ramsey’s bankruptcy experience is a good example of how bankruptcy can help people. That’s a reasonable position, though it may or may not be the whole story. I suspect that it is not, based on what I’ve seen from years of representing bankruptcy clients and even more years of working for the U.S. Bankruptcy Court prior to practicing law.

My practice and my vocation is about helping people. I’m not so sure that bankruptcy actually helps some of them over the long-term. I’m a consumer bankruptcy lawyer. And yes, I still file bankruptcy cases all the time and intend to keep filing bankruptcy cases for clients who need bankruptcy.

But I’m questioning whether that is actually in their long-term best interest or not.

Good comments, all. I appreciate the dialogue, gentlemen.

sc May 5, 2009 at 10:39 am

Seems like a bankruptcy attorney would have better things to do with his time than keep a blog….unless he has an ulterior motive. Dave Ramsey helps people who WANT out of debt and DON’T want to be a loser with a bankruptcy on their heads. Some of us feel we should actually pay what we owe instead of using some shyster lawyer help us become a deadbeat on our debts.

Don’t worry, there are plenty of losers who want to renig on their debts and will still come knocking on your door. DR only works for people who actually WANT a better life, but since there are still people in the welfare lines and buying beer on foodstamps, I am sure you job is safe. There just aren’t that many moral people in the world.

Dan Nunley May 5, 2009 at 1:03 pm


Even your comments, as uniformed as they are, are welcome here.

You’re right in that I don’t have a lot of spare time. Between family, friends, church, work, etc., I tend to keep very busy. However, I have chosen to provide this blog as a free educational resource for both the legal community and the general public. Additionally, this blog serves as my main method of marketing my legal services.

Your less than charitable terms of “losers”, “deadbeats”, “people in welfare lines and buying beer on food stamps” do not even remotely describe the people whom I represent in bankruptcy. Remember, even Dave Ramsey filed bankruptcy, Is Dave Ramsey a loser or a deadbeat? Do you really think he ever stood in a welfare line and bought beer with food stamps?

I have the privilege of working with good, hard-working Oklahomans across the financial spectrum, from those with meager incomes to professionals with high incomes. All of them have been raised to pay what they owe. However, sometimes circumstances prevent a person from being able to pay their debts. All of my clients feel embarrassed, ashamed and guilty for having to file bankruptcy. Usually they have been putting off filing bankruptcy for a very long time as they tried to resolve their financial problems through every other possible option.

Your pride, arrogance and mean-spiritedness come through loud and clear. But for the grace of God, you could find yourself at the end of your own financial rope one of these days.

Shannon McDuffie May 5, 2009 at 5:01 pm

Greetings from Atlanta blogmates,
Greetings to SC especially.

May I remind SC of our Constitution and the laws of our country?

Bankruptcy is a right under our laws (and one that corporate America feels no shame about using).

How many debts will be erased by the reorganization of Chrysler?

Is discharging debt a privilege you would only grant to corporate America?

Check out this article from a recent New Yorker magazine that explains the history of bankruptcy. http://www.newyorker.com/reporting/2009/04/13/090413fa_fact_lepore (registration required to read the whole article, but the abstract will remind you of our former practice of debtors prisons).

There is a short list of companies I’d like to see in debtor’s prison—how ’bout you?

Attorney Shannon McDuffie
Decatur, GA

Dan Nunley May 5, 2009 at 5:29 pm


Thanks for joining in on the conversation and sharing some valid points with us all, especially ‘ole SC.

Ben Callicoat May 5, 2009 at 9:57 pm

Shannon and Dan: I often marvel at the fact that my bankruptcy clients — good, honest people who never set out to cheat or defraud anyone — find themselves unable to pay their debts (usually due to medical bills or loss of income) and are filled with shame and embarrassment.

All the while, the insurance company and bank executives who have business plans purposely built on lying, cheating and stealing, sleep blissfully in their palatial mansions in exclusive neighborhoods.

Kinda weird when you stop and think about it, isn’t it?

SC doesn’t speak for me or Dave Ramsey.

Richard Green May 6, 2009 at 9:32 am


Thank you for your blog piece on Dave Ramsey. As a dyed in the wool Dave Ramsey fan, FPU graduate, and bankruptcy attorney in Massachusetts, I have spent a fair amount of time reconciling Dave’s message of financial peace with the forgiveness of debt the bankruptcy code brings.

Dave spends 15 hours a week on the radio preaching the message that we should live a pauper’s existence for a brief (but feels like eternal) time, work like a dog, and pay off our debts. Once the debt is gone, we should live within our means and save money for both unexpected but foreseeable financial problems and the good things in life.

I spend 60+ hours a week in my office, in the US Trustee’s meeting room, and occasionally, the courtroom assisting individuals file and obtain a discharge of their debts in bankruptcy. Bankruptcy eliminates the borrowers personal obligation to repay a debt. Debt is forgiven and not repaid.

How do I reconcile the way I make my living with the tenants of financial management I believe? Its simple. Dave says that 80% of financial management is psychological and 20% is knowledge based. Dave also says that his bankruptcy was so painful to him personally, that it changed him. Just like a child touches a hot stove only once, Dave’s bankruptcy brought him such personal pain that it drove Dave to find the truths about money in the Bible and conventional wisdom. Dave’s pain, drive to succeed, and selling skills have caused him to rise from the financial ashheap like a phoenix.

If my clients do not understand why they are sitting in my office; If they do not feel the pain that bankruptcy is; if they do not understand what the did to get to this place; if they are so numb to the pain that they do not recognize and change the behavior that put them in my office, bankruptcy is useless to them. They will not learn anything by filing for bankruptcy. Voluntarily declaring bankruptcy is publicly declaring “I am a failure.” It is the sting of failure that transforms lives. Most of my clients get this message. For some it takes a little longer. A small minority never get this message.

You see, Dan I help people deal with the financial and psychological pain of bankruptcy. I help people get the forgiveness of debt that they need. I help people transform their lives so that, just like Dave, they do not repeat the mistakes of the past. I do this so I can live a pauper’s existence, live within my means, and save for unexpected but reasonably foreseeable financial troubles and save for the good things in life.


Dan Nunley May 6, 2009 at 10:32 am


Thank you for sharing your insight and thoughts on this topic. I appreciate the work you are doing in helping consumers in Massachusetts.

I strongly agree with you and others who have posted their comments that people who file bankruptcy because of poor financial decisions need to learn and begin to practice sound personal financial management techniques. Yet I strongly oppose the notion suggested by some that the majority of bankruptcy filers are deadbeats who could care less about financial responsibility but are mainly looking for an easy way out. I counsel many people who are in financial distress primarily because of situations beyond their control and not due to blatant financial irresponsibility.

Lastly, I must disagree with your statement that filing bankruptcy is a public admission of personal failure. While some who know nothing of the specific circumstances of an individual debtor may pass such judgment, I think it’s rather presumptuous to do so. And if the intention is to assert that the filing of bankruptcy is a direct indicator of poor character, that is simply untrue.

Timothy G. Cook May 6, 2009 at 5:43 pm

I have said this before on NACBA forums, the big factor that Dave Ramsey provides is help for the totlally clueless in financial budgeting. There are always the clients that I get the final dicharge for in their bankruptcy case and I wonder if they are going to survive or not in the next 5 years. Dave’s financial peace university class provides them with the information they need. I have been through his course and get the message. How many of us have seen people who filed bankruptcy 10 years ago back doing the same now? The problem is that people and business do not understand that the days of easy credit card debt are over. You have got to live on a cash basis. The credit card companies are relentless. I have people coming in with interest rates of 36 percent they are being charged on credit cards for simply being late on one payment.

Timothy G. Cook
Bankruptcy Attorney in Atlanta
1820 The Exchange, #150
Atlanta, GA 30339


Dan Nunley May 6, 2009 at 11:06 pm


Thank you for joining in on the conversation about Dave Ramsey and bankruptcy. As you pointed out, I’m hearing from a good number of people who have had their credit card interest rates jacked up sky high while many have had their credit limits decreased. Some of these people were late with a payment and the credit card companies jumped on that for justification of their unconscionable behavior. Others have a perfect payment history and have been given the option of choosing between the rate increase or closing their credit card account. And the credit card companies wonder why they are so despised!

Ben Callicoat May 12, 2009 at 11:34 am

Excellent comments from our fellow bankruptcy attorneys Tim Cook and Rick Green! Thanks for chiming in, brothers.

Again, I don’t there really is much disagreement here. Our clients are by and large good people who have found themselves unable to meet their obligations.

Sometimes this is due to forces completely out of their control — like the young mother I spoke to this morning, who is having back surgery and unable to work. Other times there are elements of personal irresponsibility that go into the mix. But I have rarely seen people file bankruptcy just because they wanted to get out of paying debts. That situation just does not exist in my experience.

In thinking about this discussion and some of the reactions to Ramsey over the past few weeks, I almost get the sense that his detractors dislike a message that really isn’t there. As Blessed Cdl. John Henry Newman (a famous 19th century convert from Anglicanism to Catholicism) once said, “there are not a handful of men who hate the Catholic Church, but there are millions who hate what they mistakenly believe it to be.”

I think the same thing happens with Dave Ramsey.

JK May 15, 2009 at 11:37 am

First, I’d like to say that I enjoyed reading this blog post and want to give my side of the story as someone who has filed for bankruptcy. My situation was caused from a divorce, filed exactly one year ago next week, which resulted in less household income. So I decided to get a second job as a waiter, first job work in corporate America.

I was working 50-60 hours a week at my first job Monday through Friday. For my second job, the only days I could work were the weekends. During the week, I would go in at 8 and leave at 7 sometime later so no time during the week to pick up shifts as a server. I reduced my expenses by moving into a 400 sf studio apartment. I spend $300 a month on gas and food, my car is paid off, my living expenses are under $1k, but I still needed to work a second job to pay off my debt so I can start over. Then I decided to go with Consumer Credit Counseling Services (CCCS) as they told me they could reduce the high interest rates on my credit card balances.

Now I was working this second job but the restaurant’s business was slow so I wasn’t making enough money to even cover the CCCS payment. So I cut down on food and started eating canned food, noodles, pasta, rice, etc. like I did in college. I fell behind with my CCCS payments and they kicked me out of the program. Then the credit cards started sending me letters and calling me every hour, even at work. I was scared to pick up the phone.

It got to where I couldn’t deal with it anymore so I decided to file bankruptcy. At first I thought bankruptcy would hurt my credit. And I was hoping my boss wouldn’t find out and let me go because we do background checks when we first hire people. Bankruptcy is something we look at. This was on my mind at that time.

Anyway, to make a long story short, bankruptcy was the best option for me after trying so many other paths. I did not have anytime for my family & friends, let alone for myself. I wasn’t’ happy, stressing too much, not worth it. Plus now, the money that I would been paying the credit cards goes into a savings account so I can start over and upgrade from canned foods to a more healthy diet. I’m feeling better about myself and I’m starting to enjoy life again. I’m only 34 years old so I am still young enough to start my life over.

So SC, people who file for bankruptcy are not losers. Before you open your mouth, get to know the situation better. You sound very ignorant or just immature for your age.

I enjoyed reading this blog. I actually came cross it after searching Google for the article that came out recently on CNN.Money about bankruptcy=financial tool. So I started to read this blog. It had great comments from lawyers but I thought maybe it would be a nice touch to hear from someone who has actually filed bankruptcy. Maybe I will report back later, hopefully with a few more zero’s in my bank account. Although I do need a car, my Toyota Camry has 150k miles on it and is on it’s last tire. But my lawyer told me I wouldn’t be able to buy a car or at that I should at least wait a year then try. I am hoping my car will last at least 2 more years. I’m trying to save up for a home. I’m thinking that with this on my credit, I might need to put down more on a house than 20%. My goal is 40-50% but that could take 2 yearss of savings.

If I didn’t file for bankruptcy, I wouldn’t even be talking about savings. I’d just be wondering how I’m going to dodge the next collection call. Anyway, enough of my rambling. Just wanted to give my two cents.

JK May 15, 2009 at 11:46 am

One last thing. Maybe Dave Ramsey should do a seminar for individuals who have filed bankruptcy. How to recover, when you can buy a home or a car, how much you need to put down, etc. Bankruptcy is something that everyone thinks is a bad thing. No one wants to talk about it. That’s why I was trying to find the video from CNN.Money. I would like to know what I can buy with a Chapter 7 on my record. Will this be a roadblock when I meet my next wife??? I don’t know but would love for Dave to discuss how he got out of the quicksand and become wealthy. I’d like to know how he got his hands dirty to get where he is at now. But maybe that is a past he does not want to talk about because of the bad memories. But sometimes it’s good to talk through bad things rather than holding them inside. Maybe that’s why I’m posting again. lol. Thank you. Take care.

Dan Nunley May 15, 2009 at 3:25 pm


Thank you for sharing your story with us. I enjoy hearing from people who are willing to share their personal experiences. Keep working hard and living frugally and you’ll have a bright future.

Ben Callicoat May 23, 2009 at 3:03 pm

JK: Congrats on getting your life back on track.

Ramsey talks about his bankruptcy experience and what led him there in his books, seminars and frequently on his radio program as well. (Essentially, he was over-mortgaged on his real estate investments when a change in the tax laws caused the banks to call his notes. He lost everything in the subsequent real estate crash.)

For my part, I’d recommend that you keep your used Toyota and save up whatever you can to get $4k – $5, and buy another solid used car. Then, you can keep putting the same money you’d pay for a car payment ($150 to $400) into the bank and trade up in 18 mo’s. or so, if you’re dissatisfied with what you’re driving. If you keep doing that, you could be driving a $20k vehicle payment free in just a few years.

If you keep doing it this way, you’ll never have to worry about “qualifying” for a car loan because you’ll never have to borrow money to buy a car again.

Debt is slavery, and the debtor is servant to the lender. Don’t get yourself back into the trap now that you’re free.

Most religious folks are familiar with Proverbs 22:6: “Raise up a child in the way he should go and when he is old, he will not depart from it.” But very few people are aware of the very next verse (Prov. 22:7): “The rich rules over the poor and the borrower is servant to the lender.”

Interesting how those two passages are back-to-back, isn’t it? Whether you’re religious or not, I’m convinced that God does not want us to be enslaved to anything, and debt is slavery.

Very interesting to get the perspective of someone who’s been through the process. Keep up the good work, and let us know how you’re doing!

Jennifer June 17, 2009 at 7:38 pm

I thought I was going to get control of my debt issues by joining a debt managment company. I was wrong!!!! 5 years later I have out of control debtsI cannot pay and I was just served to pay on a 1,000 debt that now has gone to 5,700. I am considering bankruptcy and don’t know what to do. I now have 15 days to file a motion . Talked to a lawyer and he gave me options but seemed to push for bankruptcy. WHAT DO WE DO?

Dan Nunley June 17, 2009 at 9:21 pm


I would suggest that you find a knowledgeable and skilled bankruptcy attorney near you and listen to his or her advice. Go to the National Association of Consumer Bankruptcy Attorneys web site (www.nacba.org) and use the Attorney Finder. I wish you well.

Steve Rhode June 24, 2009 at 10:34 am

As someone that has lived through bankruptcy, the trials of debt, and spent every moment since 1994 helping people find a way to overcome their debt situation I’d like to chime in.

Several commenters have noted that living through financial problems is a mentally taxing event. And in my humble opinion I don’t think that we best assist someone to live through a well intentioned path of what they would consider punishment at a time they may be lowest in their life.

The process of bankruptcy can result in the teachable moment for those that will hear the message, which is most. The emotional pain of loss and the process can result in a lifelong desire to avoid such pain again.

I do object to declaring that those that choose to embark on the path promoted by Dave are somehow better because they avoided bankruptcy and lived in deprivation to make amends and meet goals.

I spent many years telling people to avoid bankruptcy as well but upon introspection that was more about my internal voice than what was the best technical tool for that person at that moment in their life.

If Dave wanted to promote a path that worked best for the individual, he would promote the investigation of all methods to allow the individual to make a fully informed decision about what is best for them.

One point that is often missed is that someone can go bankrupt, receive the protections available under the law, and still repay their creditors because they have a moral belief to honor that obligation.

Forcing people to live a path certified by Dave because of his experience is a disservice to many who are suffering with depression, pain, emotional trauma and difficult life situations as a result of their current financial misfortune.

I look at it like this. In the medical world I would not leave a javelin through the thigh of someone as a lesson on where not to stand at a track meet. I would use the best available tools and treatments at my disposable to render compassionate aid and not take any off the table because of my prejudice.


Jared Hall June 25, 2009 at 12:52 pm

Ah, Dave Ramsey. Told a lady here in Texas who was being sued by AmEx for some $20k to take an agreed judgment then try to save up $10k to settle it or work out a payout plan. How’s that going to help? She’s out $10k and she has a negative hit on her credit report. And he repeated the advice even after she told him she had over $75k in unsecured debt. As Davy Crockett said to his creditors, “You all can go to hell, I’m going to Texas.” So, if she listens to Dave, she’ll be out $10k, probably behind on all the other debt, take a hit on her credit report for having a judgment and not paying in full and might still have to file bankruptcy. I dont’ see how that’s good advice. Putting off what has to be done doesn’t make it any easier.

Tim Evans July 9, 2009 at 11:52 am

Hi, Dan (and everyone else).

First, a bit of disclosure. I am a graduate of FPU, and, hopefuly soon, will be adding bankruptcy to my practice.

You mentioned that Dave file Chapter 7, which I think is true. However, according to Dave, he eventually repaid all the debts that were discharged. (I have to say I certainly wouldn’t have done that if I were in his shoes).

Marvin December 5, 2009 at 2:13 pm

Dan you have a great blog. The bottom line for all the expert on paper is a person needs to do what is best for their family. Dave feels very powerful since God has allowed him to recover from bankruptcy and gain a large following. At the very point when he had to turn over all his belongings to his creditors is the feelings he needs to use when he telling people not to file for bankruptcy. At that particular point the only thing Dave was thinking is how and what can he do to get him and his family out of that bad situation. God works with each person based on their needs and how much faith they have in HIM. God Bless…..


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