Personal Bankruptcy, the Easy Way Out?

Maybe nothing or maybe everything depending on whom you are, what you do and how old you are. A 30 year old may hinder her career objectives for decades by suffering a “character mark” when a bankruptcy surfaces in a background check. A 70 year old crushed with medical debt may welcome the peace that bankruptcy brings in his last years.

Suite 101 has a very good article called How To File For Bankruptcy by Richard Cleary that details the facts about and procedures for filing a Chapter 7. Start your deliberation with a clear understanding of the sheer mechanics of filing. You will immediately sense that in most cases it is very serious business and a really big deal.

Millions Seek Bankruptcy Protection

Combined Chapter 7 and Chapter 13 bankruptcies eclipsed 800,000 in 2007 and are certain to return in 2008 to levels not seen since bankruptcy reform in 2005. In the first quarter of 2008 Chapter 7 filings were up more than 25% over the first quarter of 2007. If you are feeling like you are the only one in the world with a financial problem, read a newspaper. You may be the only one in your family or in your circle of friends, but since banking was de-regulated in 1999 one million Americans a year have paid a visit to bankruptcy court.

Is Bankruptcy Really a Money Issue?

Most commentators view the cost of bankruptcy through the lens of dollars and debt and years of credit damage. Increasingly, the popularity of “debt relief” solutions suggests that money is really a secondary issue to many filers. Those people typically view bankruptcy through the lens of personal failure, not financial failure. Their collective desire to restore their self-respect and self-esteem is equal to their desire to stop collection calls and begin the process of rebuilding their finances. If money was the only deciding factor, bankruptcy would be a no-brainer, but it’s not. Talk to any bankruptcy lawyer and they will tell you that nearly every one of their clients asks for another way out. They will pay whatever they can to avoid the stigma of bankruptcy.

You Haven’t Done Anything Wrong

One price you should not have to pay in your bankruptcy is shame. The loss of dignity and guilt that comes with not honoring your obligations is a dominant issue for all but the most hardened credit abusers. Many people judge themselves harshly as they walk away from their debts and mistakes of the past. The Supreme Court, in formulating the bankruptcy laws, set the perfect frame on the discussion. They established the tenet of the “honest but unfortunate debtor” as the foundation for regulations regarding a financial “fresh start”. Everyone who is considering bankruptcy as their only alternative may take comfort in the fact they are neither deadbeat nor abuser. They are simply the honest, but unfortunate who need compassion in their time of need.

What about Those Credit Card Offers?

The meaning of financial failure should not be measured by what has happened in the past. Put those events behind you. The measure of your character is found not in what you did in the past, but in what do now and in the future. Do you take those credit card offers waiting for you outside the door of the courtroom? Do you repeat the errors of the past – or not? A “fresh start” is the first step in a very personal and renewing journey. Walking past those credit card vendors waiting at the courtroom door is indeed a very big deal.