There are a lot of reasons why people do not use bankruptcy, even when it is clearly the best option for them. Some of them think that it’s too complicated. Others worry about losing what they own. Still others are not sure they qualify.
But one big reason is the stigma surrounding bankruptcy, which can cause people to feel guilty and/or feel as if they have failed. They think they’re morally obligated not to use bankruptcy and that they should be responsible for their own debts. They refuse bankruptcy on these grounds, despite the fact that they do qualify and would clearly benefit if they did use it.
Why you shouldn’t feel this way
First and foremost, bankruptcy is a legal and financial tool. Nothing more. It’s just an option for people who have debt they can’t pay off. There are no moral questions involved. If it would help, it is legally an option that you have. Your creditors were well aware of that when they gave you the loan, so there’s no shame in using it when it makes sense.
Secondly, businesses use bankruptcy all the time, either to start over, close down or restructure. A company owner isn’t thinking about whether or not it’s a moral decision. They’re just thinking about what is best for the company. You should take this same outlook. Consider everything through the lens of deciding what’s best for you and your family.
Furthermore, if you have a family, bankruptcy could positively impact them. There’s no reason to be drowning in debt that likely isn’t your fault anyway. If filing for bankruptcy will ease this financial strain and improve your lives, there’s no reason to avoid it — thereby making your lives much more difficult. One could argue that the better choice is certainly to declare bankruptcy and prioritize creating the best life that you can for the people you love the most.
What do you need to do?
Have you been thinking about bankruptcy and trying to determine if it’s the right option for you? If so, it’s important to understand exactly what steps you’ll need to take.