But with Howard Roofing not paying all of its bills, the local sheriff eventually came, changed the locks, and repossessed the company car that Howard had been driving. On June 3, 1999, Howard filed bankruptcy for the company and for himself and his wife. By the time of the corporate filing, in U.S. Bankruptcy Court for the Eastern District of North Carolina, Howard Roofing's listed assets of $1.4 million were dwarfed by liabilities of $2.6 million. His personal bankruptcy filing showed liabilities four times greater than assets. "I sat around and cried for a week or two," he says. "I couldn't function, couldn't eat, couldn't sleep."
One of the worst moments involved a $1,748 check to a Virginia hotel where some of his workers had stayed. The check bounced, and a warrant was issued for Howard's arrest for not showing up in court in Virginia. Two days before the bankruptcy filing, two cops approached him in the company parking lot. "They handcuffed me and put me in the back of the police car," he says. "They took me downtown, took my wallet, my belt, and my shoelaces. It was a horrible, awful, humiliating experience."
After declaring bankruptcy, Howard went to work for a friend with a siding business and tried to process what had happened. "People look at you differently," he says. "People treat you differently, and you're a leper to the banking community. The people that aren't your friends are like, 'Poor Chuck, he went"--he adopts a loud whisper--"bankrupt." Along with losing the business, Howard also lost the house that he had custom-designed and built in Cary just a few years earlier. In North Carolina, you can keep a maximum of $10,000 in equity per person in your residence in bankruptcy, so at the advice of his attorney, Howard and his wife and kids moved out of the house. With the help of his parents, they moved into a new house in nearby Apex. When he talks about how his wife, Penny, stood by him, Howard starts to cry. "She's an angel," he says.
As it happened, Howard was able to reclaim his dream house. He figures it was worth about $500,000 then, but there were multiple liens on it because he'd kept pulling money out to put into the business. According to bankruptcy documents, Bank United had a $272,000 claim on the house, while Centura Bank held multiple secured loans totaling $341,600--a grand total of $613,600 in debt on a house estimated to be worth much less. Based on those numbers, the banks could never be made whole.
Perhaps for that reason, the lenders never put the house up for sale. Ever the dealmaker, Howard approached the banks and asked what it would take for him to get the place back. "The guy at the bank said, 'Make me an offer.' I didn't have any money, so I said, 'If I can refinance, I'll give you $10,000," Howard says. The bank agreed. So one year after moving out, the Howard family moved back in--essentially by promising to pay the main mortgage he already held. "On Mother's Day 2000, I gave my wife the house back," Howard says. "I'm a stoic businessman, but I get real emotional talking about this."
While his friends stood by him and he remained a member of the church he'd been attending for years, the personal bankruptcy would mean continuing financial troubles. Even today, the car Howard drives is officially owned by his aged father, and he cannot even buy a television set on credit. "Here I am, 55 years old, and I can't get credit to buy a damn TV," he says, a day after attempting to do so and storming out of the store in disgust. "I've never paid anything late in my life except this one corporate thing."
As the bankruptcy wound its way through court, there remained a problem: the unpaid taxes. It is popularly understood that bankruptcy extinguishes all debts and allows a debtor a fresh start. But payroll-tax debts to the IRS don't go away in bankruptcy, and if you're found personally responsible for Social Security and Medicare delinquencies (as Howard was) those debts can dog you for years after the bankruptcy wraps up. In Howard's case, the personal bankruptcy was discharged quickly, in September 1999, but it took him nearly seven more years to come to terms with the lingering tax debt of more than $300,000. After failing to wiggle out of the obligation with his suit that claimed he shouldn't be held responsible, he did what so many people do when faced with tax trouble: He tried to ignore it. "It was like it was insurmountable," Howard says. "I didn't have that kind of money, and I didn't have any way to make that kind of money."
Finally, two years ago, he looked into the IRS's Offer in Compromise program for those who have tax debts too big to pay off. It's a complex program, one that's been a perennial issue partly because of how few offers are accepted. But in Howard's case, it was a godsend. He filed the paperwork in September 2004, offering $16,000, which he could cover from his meager retirement funds. The IRS rejected it. He offered a higher number. Last January, Howard and the IRS reached an agreement. He would pay $34,470 and the tax debt would be wiped out. And that $34,470? It came, he says, from refinancing his custom-built house--yet again. He pulls out a copy of the check that he sent to the IRS this April, final proof that the saga is over. "It's done," he says, "and I'm still here."
Because Howard is such an entrepreneurial type, you might think he would just start another business. But he surprised everyone, including himself, by deciding that he prefers consulting to being a chief executive. Consulting lets him leave the nitty-gritty of operations to someone else and have a hand in lots of different projects, such as marketing metal roofs and consulting with the Kennedy Center and the Raleigh-Durham International Airport on major roofing projects. He likes doing his lectures so much that he does them for free. At Wake Tech, that rainy evening, he passed out his card to every person there and urged all 30 of them to call him. As he tells the audience, "I've made a lot and I've lost a lot, but I love the ride and that's why I will always do this. As Vince Lombardi said, 'It doesn't matter if you get knocked down. It only matters if you get back up."
