Bankruptcy Stigma?
In my experience, most of my clients find it a difficult decision to file for bankruptcy. I find that their concerns and fears are not related to the economics of the situation. That part is usually painfully clear. The fears and anxiety about bankruptcy most of the time arise because of personal guilt, fears about the future, or morality struggles.
As a lawyer, I can provide information and offer my experience to address guilt and fears about the future, but it is very difficult to address someone’s moral dilemma. The fact is, most of us were raised in a culture that preaches that we should all be “responsible” and should “pay your bills.” I, as a Christian, have heard sermons from well-meaning church leaders about how filing bankruptcy is not a “responsible, Christian” thing to do and that a good Christian should struggle to “honor” our obligations, even to the point of adopting a pauper’s existence.
The point of this blog is not to offer an opposing view on these attitudes (believe me, I have one!). But, recently I read an article reporting about studies that were completed by “The Insolvency Service.” The report was titled “Attitudes to Bankruptcy Revisited.” The report looks at the results of surveys carried out in 2006 and 2007 which were carried out to obtain a cross section of views regarding attitudes to bankruptcy. In particular, the surveys wanted to establish whether there was a stigma attached to bankruptcy and if so, why.
The results of the surveys from 2006 and 2007 were compared to the results of surveys taken in 2004. The report found that while opinions of bankrupts and businesses have not changed significantly since the previous surveys, the opinions of individuals have changed. In the latest surveys, only 43% of individuals interviewed thought there was a stigma associated with bankruptcy. This was down from 53% in the previous survey.
It is interesting how attitudes have changed so significantly in just 2-3 years. The full report can be found at http://www.insolvency.gov.uk under “Insolvency Profession & Legislation.” The report didn’t really explore why the attitudes have changed, but it is interesting to me to see how they obviously have changed.
September 9th, 2007 at 8:34 pm
I have to agree with your statements. I should have filed a l ot earlier, I lost my wife two years ago to cancer. The doctor bills are paid but my credit cards are up. I started to work to keep busy and to pay these bills. But I am so tired I dont know what else to do. I have no life just work and pay bills. I live in my motor home which takes up half my income.
October 12th, 2007 at 4:01 am
Bankruptcy definately has a stigma to it, but more than anything there is the fear of the unknown and the simple fact that by the time you get the point where bankruptcy is an option one already feels violated. And the entire process if so foreign to most people. And of course (hopefully) your friends and family have no frame of reference as to what you are going through. Bankruptcy does go back to biblical times and certainly is nothing to be ashamed of. Unfortuately life hands us circumstances out of our control. Everyone has the right to live without being afraid of answering the phone, opening the mail and going to the door. As for credit after bankruptcy, I am sure it depends on what else is on your report, but I can’t even get a store credit card at this point. Which is both a blessing and a curse. However, my BK won’t fall off the report until 2012. Could be a long ride.
November 1st, 2007 at 7:24 am
I am needing some advice. I have been divorced for over two years now. My ex husband wanted to keep the home. The home has both of our names on it still however, the divorce papers say that he was assuming the home.
Recently, I have been getting phone calls and mail stating that payment has not been made on utilities, etc. I have done futher research and he has not paid the house payment for October.
Furthermore, I am moving out of state in December. I really want my name of off the home. He does not want to refinance the home with just his name on it, since there will be fees involved. I suggested that he put the home up for sale. We both know this is not the best time to sell a home. But what other options do we have?
I have really good credit and I am in fear that he is going to take me down with him. Do you have any suggestions on what the best solution would be?
Thank you!
November 28th, 2007 at 9:23 am
I was a mortgage loan officer for 12 years and what we believed is that people that filed bankruptcy vs. letting their debt go to charge off and simply ignoring it were taking control of their situation. Mortgage bankers such as us liked to see that with the attempt to re-establish their credit. After two years you can obtain an “A” paper mortgage with most lenders.
December 12th, 2007 at 11:57 am
Joanna - short answer: there aren’t many other options besides refinancing or selling. You are contractually a party to the mortgage transaction, despite the divorce case.
December 22nd, 2007 at 2:50 am
forclosure verses bankruptcy..which one first…i need advice
January 7th, 2008 at 11:07 pm
Hello,
I need some advise for an old friend that is not computer savy. He lost his house to a live in girlfriend. He had good credit and the girlfriend took advantage of it.. running up credit cards. When she had him evicted from his own home because she had convinced him to quit claim it over, he had to live in a motel. He tried to seek counsel for this to no advail. The credit card companys have jacked up his payments and he has had medical issues and bills to go along with it. A financial counselor has told him to declare bankruptcy. He does not have the money to do so…he has recently received a letter of garnishment at his employment. His child support has him still homeless. He has tried to explain this to the credit card companies but to no avail they want their money plus a very large amount of interest and added fees now!!!! Please tll me what should I tell my friend I have tried to help him with his budget and even contacted the counselor for him. This poor man is truly poor. Should he file bankruptcy, if so are there any programs available to folks like this. He is worried they may throw him in jail.
Thank you,
Tony
January 18th, 2008 at 5:46 pm
Iam going to begin bankrupcy and I am sooooo confused. I wish there was a pill to take, I could swallow that alot eaiser.Iam on social security, so ya know Im poor. And I have gobs of medical bills.. back to 2000. all my money goes to doctors,, and the funny thing is that I still feel the same. But I think that filing for bankrupcy is the only thing I have left. If ANYBODY had any advice for me I would be very grateful I have to start from the beginning and I am clueless.. I did make an appointment with a credit company,, so right now, I am just full of anxiety, and walking into walls.
Help me please..
February 11th, 2008 at 4:57 pm
Donaldo : My husband and I just filed for bankruptcy last week, it is a very hard, heart wrenching decision to have to make. I just could not take the harassments, threats, and nasty mail outs any longer. We thought long and hard about this. My husband and I both have had cancer, and our medical bills alone kept us in the poor house. One thing that our lawyer told us was that we were making a step in the right direction and filing now before we lost our house, car, and sanity would be the best thing for us. It is a very hard decision to make, but we are glad we made it. I can now sleep at night not having to worry about who was going to call next or knock on our door to take something. We have not had our meeting with the trustee and creditors as of yet, but I am not worried about it. The IRS also wants a piece of me, but that will all be taken care of with my new payment plan under bankruptcy. I can’t tell you to do it, I can only tell you I am glad I did, everyday.
February 12th, 2008 at 2:13 pm
Of course there is a stigma – it’s your moral compass reminding you that you are shirking your responsibilities.
New survey shows that only 43% of individuals interviewed thought there was a stigma associated with bankruptcy vs 53% in the previous survey. Of course less people feel guilty about it - it reflects our society’s attitude of wanting to blame others for one’s problems and not being accountable.
There are legitimate situations when some must file and unfortunate circumstances that justify it. What I don’t understand is why the debt is wiped clear forever. If you get back on your feet, pay your debts back – to society, creditors, whatever – find a way to help others that got in your predicament. You’ll never have to deal with any stigma feelings then . . . .
February 18th, 2008 at 4:45 pm
Donald: When you have medical bills and credit card debt that you cannot handle, there really is no alternative. I know my mother was very sick and had to file and the Court was very understanding, because they realized that she she didn’t just run up her credit cards on junk. She was unable to pay her debt because of being unable to work.
February 27th, 2008 at 8:42 pm
J.P. - One reason the laws don’t require people to go back and repay debts if their situation improves in the future is because enforcement would be administratively difficult and it would increase the costs to the taxpayers to enforce such provisions.
May 8th, 2008 at 10:38 am
What impact does bankruptcy has on a divorce. I am going thru a divorce and my husband had filed for BR without me knowing. The house is solely on my name. We have a disabled child and I am looking at a temporary allimony. I would appreciate any piece of advice or do’s or dont’s involved.
Thank you
June 14th, 2008 at 7:07 am
I am drowning in credit card debt and have been living off them for a number of months now. I can no longer juggle accounts and pay the monthly payments. My husband has become disabled. I am 69 years old and in poor health but work part time. I owe$70,000 on my house which would appraise for approximately $100,000. I have contacted a local attorney who is unsure as to whether the bankruptcy court would take my house. Is there some way I can get an answer to this?
Thank you.
June 29th, 2008 at 5:12 pm
We are being sued by two credirtors and have three more ready to serve me notice. I have no equity in anything. I figured my net worth a-$90,000. My problem is I have a good job, very stressful and I have dailey Nigraines, but I have to keep my job just to survive and hope I have a future in my retirement age. which is 9 years away. I have two kids, 15 and 12 that are going to need us to help in their future.
We are meeting with a legal helper Monday to discuss filing a chapter 13. I am afraid the lawsuits will be more harmful thay the BKR. Any thoughts?
June 30th, 2008 at 11:13 am
I agree that the lawsuits certainly do more harm to your credit report than bankruptcy. Keep in mind, bankruptcy is the first step toward rebuilding credit.