If you have exhausted all of your alternatives to bankruptcy, but still find yourself shying away from the process, ask yourself why. One of the many reasons people choose not to file bankruptcy, even if it would benefit them, is the stigma associated with it. If it’s shame or guilt holding you back, or fear of your financial future, you’re not alone. These are common feelings associated with common thoughts that you need to let go of. Although the stigma of bankruptcy varies greatly from person to person, you need to consider the actual benefit of filing before you decide against it.
Emotional and Social Stigma
It’s common to equate success with financial status and stability. The more money you have, the better you must be at your job. The better you are at your job, the smarter and more talented you must be. With ingrained beliefs like these in today’s society, it’s no wonder people feel so much shame associated with filing for bankruptcy.
The fact is, authentic success is not defined by the jobs we hold or the money we make. Our success is defined by how we live our lives, evolve, and learn from our mistakes.
If you determine bankruptcy is the best option for you, it’s because you recognize it as the smartest way for you to move forward to create the kind of successful living you want for yourself and your family.
It’s common to equate debt with financial intelligence or responsibility. The more quickly you pay down your debt, the better you must be at managing your money. On the flip side, the more you let debt balloon out of control, the worse you must be at keeping your spending in check.
The fact is, the financial problem that compels most people to file for bankruptcy stems from a reason beyond their control — medical debt. Even those with health insurance often find themselves in thousands of dollars in debt they cannot afford to pay due to high deductibles. Bankruptcies stemming from credit cards are closely tied to the struggle to make ends meet in the wake of the recession. And while student loans cannot be discharged in bankruptcy, they are an indirect contributor for those living off credit cards just so they can make the monthly loan payments.
If you determine bankruptcy is the best option for you, it’s because you’re smart enough about money to know it’s the only way to improve your financial situation.
Personal Failure Stigma
It’s common to equate the fulfillment of financial responsibility with character and integrity. If you pay your bills on time, you’re good. If you’re late, you’re bad. If you don’t pay them at all, you’re worse.
The fact is, who you are as a person has nothing to do with the money you pay, owe, or make. Your financial situation reflects just one aspect of your life yesterday, not who you are today or who you are going to be in the future. And that past aspect is often one that represents a situation beyond your control, such as a job loss or medical expense.
If you determine bankruptcy is the best option for you, it’s because you’re the kind of person who’s big enough to admit you need and deserve a second chance.
Credit Failure Stigma
It’s common to equate bankruptcy with bad credit — not just in the immediate aftermath, but for the 10 years, it can stay on your credit reports.
The fact is, while bankruptcy certainly lowers a credit score considerably, most people are able to rebuild credit within a year or two. Why are lenders open to extending credit to those with a bankruptcy? Certainly, it’s not out of the goodness of their hearts, but because you have to wait 8 years before you can file for bankruptcy again (i.e., borrowers who have recently filed for bankruptcy are likely to make good on their debts).
If you determine bankruptcy is the best option for you, it’s because you know it’s the best thing for your credit down the (not too distant) road.