Why bankruptcy is not the stigma you might think it is

Many people think of bankruptcy as a weakness or as a moral failing, but this perception is far from accurate. Facts can help rebut criticism.

When families in Florida get together for birthdays, graduations, anniversaries, holidays and the like, they often catch up on the news. Cousin Jane is getting married, Uncle Pete bought a condo, Grandpa Dave is having fun golfing in retirement, and, in a whisper, oh yeah, Cousin Charlie had to file for bankruptcy.

The comments that follow the news about Charlie might not exactly be positive. That is unfortunate because there should be fewer stigmas attached to bankruptcy. In fact, there is no reason anyone should feel bad about needing to file. When people who are in bankruptcy discuss the event with family members, there are a few things they should keep in mind that may help the conversation go better.

No information is owed

First things first: Someone who has filed for bankruptcy has no obligation to indulge the curiosity of family members. There can be a few exceptions such as if the person is someone the filer owes money to. Even in that situation, though, no explanations are owed as to the rationale behind the filing and how the person came to find himself or herself in that position.

So, it helps to have a generic response ready for people who ask, “Did you really file for bankruptcy? Why were you in so much debt?”

Some filers answer with something like, “I am not comfortable discussing that with you, but I am doing fine,” or “Almost half of bankruptcies are related to medical debt. I had a hard time dealing with my surgery two years ago, and this is the best move for me. I am looking forward to getting a fresh start.”

It is important to not answer in ways that make it sound like the bankruptcy is something terrible or that it is a moral failing. Bankruptcy is an invaluable and necessary tool for many people.

It leads to personal growth

Those who go into bankruptcy often emerge as different people. For one thing, they have gone through education that helps them with managing their money and budgeting, and they hopefully emerge in a better position to make informed financial choices.

There is also the fact that bankruptcy halts creditor harassment and can be a great stress reliever. Some people who feel comfortable discussing their bankruptcies in greater depth like to tout these advantages and how the bankruptcy has helped them change for the better.

No one is immune

In the face of especially harsh criticism, it often helps to point out famous names who have had to file for bankruptcy. The fact is that practically no one is immune. Famous people may have received bad financial advice, the neighbor may have used too many credit cards in college, and the co-worker could have taken out loans to pay medical bills.

Of course, taking the first step to filing bankruptcy in Florida can be scary. Many lawyers offer free consultations.