I recently had a woman visit my office who was in her 50′s. Her husband had just lost his job, and he was having difficulty finding another job. They were in financial distress. She was really struggling, wondering if she should get a second job to pay her bills or if there was another solution.
Bankruptcy was mentioned as a possible option for her, but she had difficulty pursuing it, primarily because of the moral or social dilemma it posed. She and her husband had always paid their bills on time before he lost his job. They were a responsible, well-intentioned couple who just fell into a tough spot.
She came to me with many fears and concerns about bankruptcy. Would her bankruptcy go on a public record that could easily be accessed? Could a future employer find out and not hire her because of it? How much of a social stigma would be present?
I patiently answered all of her questions and provided the information she needed to make more of an informed decision. I told her that most employers do not even seek out that information ever from their employee prospects. I calmed her fears about the social stigma that she perceived by reminding her of many public figures, including Thomas Jefferson, Harry Truman, Henry Ford, Walt Disney, Larry King, Burt Reynolds, and Donald Trump who have all filed for bankruptcy.
She decided to go home and think about things more fully.
After three days, she called back. She had talked it over with her husband, and they decided to file. They now had the right mindset – free from fear or worry – to move forward with bankruptcy.
I have several people contact me regularly who struggle similarly with the issue of whether or not to file bankruptcy. Their concerns are common. Many feel that it is not morally “right.” They had been adverse to debt beforehand and do not like to carry the guilt of not repaying their debtors. They have been told by friends and neighbors, and even the media that because the laws have changed, a Chapter 7 bankruptcy is no longer available to them. Some come to me and wonder whether credit counseling is better than bankruptcy. Basically, because bankruptcy can be a very emotional decision, they have a hard time holding onto the fundamental information that would bring clarity to their situation.
With each client, I have found that once I am able to sit down and talk to them, addressing each issue and offering more information, they are able to move forward with a new, educated perspective.
I tell them that bankruptcy has been set up as a tool for people who are stuck between a rock and a hard place. It offers protection from further financial demise and an opportunity for a fresh start and new slate, in a sense. We live in a unique country that encourages risk, and so have these measures like bankruptcy to cushion losses when they get to a point that are uncontrollable. I share that yes, laws have changed. Now there is a “means test,” and if they pass, they can still qualify for a Chapter 7. And laws might continue to change, due to a new presidency, and offer a climate that is even more acceptable towards bankruptcy.
I also let them know that it is more damaging to their credit to pursue credit counseling. Filing for bankruptcy discharges their debts and allows individuals to start over within four months. Every month that they do not make payments, it reflects negatively on their credit score. I also share that many credit counseling agencies have been indicted, serving time in prison because they did not distribute collected money to creditors.
Basically, from my experience, if a person falls within the right requirements, once they become educated about bankruptcy, it becomes a clear and even hopeful option for people who are feeling overwhelmed by debt. The “right mindset” about bankruptcy is essentially one that is fully informed, free from social stigmas, and prepared for a fresh start.