The “Stigma” of Bankruptcy?

Very often, regular, everyday people run into financial difficulties.  They come in all shapes and sizes (both the people and the difficulties), the reasons for those situations vary – be it a loss of a job, medical bills, bad investments or just plain old bad luck.  The reasons shouldn’t really matter and the solution may well be filing for bankruptcy relief. However, a bankruptcy solution seems to hold a stigma that scares people away.  In this post, I want to explore why a legal means of gaining a “fresh start” could have such a negative connotation in society.

The General Social Survey is non-biased scholarly survey with has a widely distributed population that measures various societal factors every two years and has been executed every two years since 1972.  The data from this survey is used by the government to make policy decisions and in the private sector for marketing research. One of its questions paraphrased asks:

Do you think a person has the right to take their own life if –

  1.  They are dying of an incurable disease
  2.  They have somehow shamed their family
  3.   They have lost their will to live
  4.  They have filed for bankruptcy.

My interest in the question is less about the result of the survey than the implication that filing bankruptcy is somehow so shameful that one would have given up or don’t care whether they lived as a result of insurmountable debt.   The notion that someone’s life is less valuable than their ability to pay for their credit cards is absurd and that notion must be dispelled.

In 1898, Congress enacted the first Bankruptcy law in the US, that law created the framework for the system that replaced debtor prisons.  During the time since, the code has been updated and modified a number of times, most recently in 2005.   Bankruptcy is an integral part of the economy and it’s effective use by businesses is almost a daily occurrence. Yet, when an individual uses the same process, they are expected to wear some sort of scarlet letter.  Inside Secret:  THEY DON’T.

Filing of bankruptcy is public record because anyone can go the court and get a list of the names of those who filed but it is not likely they will.   Sure, your creditors will be notified of the filing too, but you are just a number to them anyway. Literally, no one else in your life has to know you filed unless you tell them.

So, the bottom line is that the real stigma to filing bankruptcy lies with you. Yes, most of us will find a failing in not being able to pay debts that we agreed to repay, your word has value.
You should, however, evaluate the cause for the need to file and weigh the impact on you and your family if you do not file. The law is on your side and the decision to file bankruptcy should not be taken lightly but shame should not be part of that calculation. Your creditors will write your debts off and move on their merry way.

Bankruptcy is scary but it shouldn’t scare you and it won’t scare you if you understand the process.  Understanding is through education is the answer to gaining your “fresh start”. At LoBue Law, an attorney will work one-on-one with you to educate you on why bankruptcy is right for you (and advise against it, if it is not right for you). We are not a high-volume law firm where you are faceless, we work with you to understand YOUR story and help you with solutions that work for YOU. Contact us today for a free, no-obligation consultation.