Why Shame is Keeping You from Filing Bankruptcy (and Why It Shouldn’t)

So you’re in debt. Creditors are calling. You’re losing sleep and wondering how you can afford the minimum payments. Maybe bankruptcy has crossed your mind but you can’t escape that nagging thought:

If I declare bankruptcy, I’m a failure.

There is a reason you think this. And it’s not because you are a failure.


The Truth About Bankruptcy and Creditors


Bankruptcy is a legal solution to take charge of your overwhelming debts. With the right bankruptcy attorney on your side, the whole process can go smoothly. There are different types of bankruptcy. While Chapter 7 will discharge a certain portion of your debt, Chapter 13 will allow you to restructure your debts.

The bankruptcy system is designed to provide a fresh start to people who need it the most. And while ordinary people may feel embarrassed about admitting that they need debt relief bankruptcy provides, the wealthiest and most powerful use it every day.

Our founding fathers were quite sympathetic to well-meaning people who faced economic misfortune or made unfortunate financial choices. A person’s right to debt relief is a time-honored and uniquely American value that was enshrined in the Bankruptcy Act of 1898.

So what changed? Who wouldn’t support debt forgiveness for honest people?

Creditors, of course. Creditors with deep pockets and large marketing budgets and armies of high-paid lobbyists.

The credit industry likes to paint people who declare bankruptcy as irresponsible. But the facts tell a different story.


Common Causes Behind Bankruptcy Filings


People from all segments of society file for bankruptcy. Single parents and dentists. College students and retirees. A major reason that people find themselves in financial crisis is due to unexpected medical expenses that weren’t covered by their insurance.

We see these people in our office every day. They feel extreme shame about their financial situations and they have tried very hard to pay their debts before finally resorting to bankruptcy. They are also often terrified that their credit score will plummet. Sadly, this is not the only bankruptcy myth.

The credit industry, in its efforts to disparage those who declare bankruptcy, also conveniently overlooks its own reckless behavior. In the past, credit card companies were known to stake out space on college campuses and approve applications even when students didn’t meet the criteria. No job? No verifiable income? No problem.

Thankfully, Congress put some restrictions on this aggressive marketing in 2009, but students remain an a profitable target for credit card companies. While these young adults are likely to get in over their heads and declare bankruptcy down the road, that long-term risk is worth it to creditors who rake in billions with sky-high interest rates—even as they play the victim to push for legislation like the controversial Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which restricted consumers’ access to bankruptcy.


Should You Be Ashamed for Filing Bankruptcy?


Absolutely not! Creditors will find out about your bankruptcy filing, but it isn’t very likely that other people will find out as well. Although there will be a public record of a bankruptcy case, most people don’t bother looking to see who has filed for bankruptcy.

Bottom line: If you have no way to pay your bills while maintaining a reasonable standard of living, don’t allow shame to prevent you from changing your life for the better.

In fact, bankruptcy was specifically designed to help people get a fresh start after financial hardship. No one shouldn’t be ashamed about filing for bankruptcy because it shows they are determined to take action and get back on track.

This is not to be intended as legal advice for your situation. If you would like to schedule a free consultation with our attorney to discuss your personal circumstances, please contact us.