When Mr. Tulliver first learns that he has lost the lawsuit and will have to sell everything, he feels oddly calm and thinks he will find a solution. Still, his finances are in exceedingly poor shape. His friend Mr. Riley died a few years ago without repaying him the two hundred and fifty pounds he owed him, leaving Mr. Tulliver in the lurch. Worse, Wakem urged the creditor from whom Mr. Tulliver borrowed five hundred pounds to call in his loan, so Mr. Tulliver was forced to put a bill of sale on all his furniture as security. Although Mr. Tulliver once scorned the idea of asking the Dodsons for anything, he now thinks Mrs. Tulliver should go to her wealthy sister Mrs. Pullet to ask for a loan. The narrator reflects that poor people can just as proud and tragic as the rich and great.
Mr. Tulliver's tragic flaw is his lack of flexibility and inability to admit when he is wrong. His stubbornness in the case of his conflict with Mrs. Gregg, for example, caused him to unnecessarily take out a large loan and mortgage his family’s furniture. His grudge-holding and pride results in ongoing lawsuits, which have similarly tied up the family finances in endless disputes with the lawyer Wakem, who in turn has taken revenge on Tulliver by calling in his creditors. Even before the bankruptcy, then, Mr. Tulliver’s inability to forgive people whom he perceives have wronged him has caught the family in a cycle of debt and legal trouble.
Mr. Tulliver writes a letter to Maggie at boarding school asking her to come home. He then goes to see his lawyer, Mr. Gore. The clerk hands him a letter which contains disastrous news: the owner of Mr. Tulliver’s mortgage has sold everything to Wakem—making Wakem by default the creditor of everything Mr. Tulliver owns. At this news, Mr. Tulliver falls off his horse and gravely injures himself.
When Mr. Tulliver writes to Maggie and asks her to come home, her childhood literally and symbolically comes to an end. Maggie and her father are very close, so it is natural that he should turn to her in a time of need. At the same time, however, it is precisely his reliance on Maggie that ends her school days and makes her prematurely responsible for caring for her family.
Mr. Tulliver is only able to recognize Maggie out of all his family members. Mrs. Tulliver’s sisters take this misfortune as a judgment on the family, since they have always disliked Mr. Tulliver. Maggie, meanwhile, goes to fetch Tom from school and tells him that Wakem now has a mortgage on Dorlcote Mill. Tom is furious at this news and tells Maggie to never speak to Philip again.
The family’s reaction to this news demonstrates their characteristic intolerance. The Dodsons take the bankruptcy as a confirmation of their existing prejudices against Mr. Tulliver, which recalls the way they perceived Maggie’s unruly behavior as support for their existing belief that she will come to a bad end. Mr. Tulliver, for his part, becomes even more stubborn and prejudiced against Wakem—a hatred that now even extends to Wakem’s son.