Quick Answer: Bankruptcy can heal finances by providing a fresh start, but the stigma often prevents people from seeking help when drowning in debt. The reality is that bankruptcy offers legitimate relief for those unable to make meaningful progress on debts, as illustrated by individuals spending grocery money on minimum payments they’ll never fully repay.
Let’s be upfront and open, many people harbor an emotional feeling about bankruptcy and a false belief that bankruptcy is a path chosen by ne’re do wells and reprobates.
Yea, that impression has nothing to do with the reality of the situation.
I understand the angst and fretting. I myself went bankrupt in 1990. I get it. But since I began helping people in 1994 with debt problems, my point of view has expanded and changed.
Each weekday I send one short email: one money story that caught my attention, why it might matter to you, and one manageable thing you can do with it. A couple of minutes, and a dad joke.
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Just last night I was looking at an old post on this site titled, Your God Loves Debtors and one of the comments on that post by Katie really stood out to me as a good example of the healing power of bankruptcy.
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Katie originally said:
“”Debt is debt, it is not the sum of your life and it certainly does not define you. Your actions define you. Your kindness and gratitude define you.”
Thank you for this site, and your thoughtful words.
You have brought me to tears, and not the stressd out, horrible kind that have woken me up in the night the past few months.
I made an appointment last week with an attorney for later this week. The breaking point for me has been the unbearable embarassment of my creditors calling my parents home trying to reach me. It was so much easier to bear when I kept it secret, but I realize now that I was just choosing to ignore it.
I cannot continue to suffer every month, spending only dollars on groceries so that I can scrounge minimum payments to pay credit cards that I WILL NEVER be able to pay off at this rate. I made many mistakes in college with credit, I worked hard to pay off half of my $30,000 in debt through a debt management plan, but recent cutbacks in salary and overtime have made it impossibel for me to make my payments. Do I have to suffer for my whole life for financial mistakes made when I was in my late teens and early twenties?
Your words are encouraging and caring, and I just wanted to say thank you.”
Katie came to the realization that simply moving along month-to-month, without ever really addressing her debt problem only left her in a bad place.
After meeting with a local bankruptcy attorney and deciding to file bankruptcy, Katie’s life changed for the better. She came back later and shared her experience.
HI ALL!
This is Katie again, I just wanted to touch base…its been over 6 months since my last post…and what a difference a little faith, time, and persistence can make.
I made the hard, but right, decision to declare bankruptcy. (Something I should have done years before, but instead of listening to my gut, I fell into the traps of a debt management program which was way over my head and totally unaffordable).
It was not a fun process, but it was not as difficult as I had imagined in all my late night episodes of stress and sleeplessness. My attorney was a good man. The phone calls stopped instantly, the rest of the process took a bit longer. The day in front of the trustee I was TERRIFIED…but surprised to see a room full of people who looked an awful lot like myself….ready to move on, ashamed of our mistakes, but not ashamed of who we are who or the right we have to a fresh start.
I can’t say I was celebrating following my meeting of the creditors, but I definitely felt a huge load of my back for the first time in years.
I have since been discharged…the attorney has been paid in full…My husband and I are living on cash and doing well, have some money (not much, but a little) saved…he has a great new job, and we have baby due in September….yikes!!!!!!
There is a light at the end….do not give up hope or be too hard on yourself.
Do yourself a favor…If you talk to a debt counseling agency about your options, I would suggest also meeting with a bankruptcy attorney to discuss them. Always best to get both sides ….and if you truly cannot afford the payment offered by a debt counseling agency, than DO NOT SIGN UP…you will spend to much time spinning your wheels and increasing your frustration.
Steve – I want to thank you again for your website…he really spoke to me on a day when I needed someone to understand. I cannot express to you enough how much it meant to me on that day in August last year to come across this page and read your words. They were a huge comfort to me on a horrible day during a difficult time in my life.
Thanks again.
Katie
While Katie said it was not a fun process the end result was the restoration of Katie’s life.
And I’d be willing to bet that the part of the process that was un-fun was those bits that she had never experienced before and was nervous about what to expect. That’s natural.
But a good bankruptcy attorney can help anyone through those doorways with communication, good cheer, and exceptional customer service.
If you are considering or even not considering bankruptcy but are struggling with debt, like Katie, you owe it to yourself to click here to find a local bankruptcy attorney and find out what bankruptcy would mean for you.
Imagine if Katie had not considered bankruptcy. Imagine where her life would still be, month-after-month. Is that where you want to be stuck as well?
Before You Sign Anything: Run any debt relief contract through the free Contract Decoder to spot hidden fees and unfair terms. Check the company’s complaint history with the Scam-O-Meter.
Compare Your Real Options: Most debt relief companies won’t tell you about all your options — especially the ones they can’t profit from. Credit counseling has a 21-27% completion rate. Settlement resolves about 1% of enrolled debts fully. Bankruptcy has a 95% discharge rate — and protects your retirement. Take the Find Your Path quiz for a recommendation based on your actual numbers.
Overwhelming debt is pernicious and scary. Bankruptcy is also scary for a 66 year-old with over $60K of debt who grew up in a different time, different values I’d say. But even working part-time, I’ll be well into my nineties trying to pay off this cumbersome load, and my Social Security is taking a hit as well. Thank you Steve for showing us how we might reboot our lives. Thank you! It gives us hope.