Bankruptcy is not failure. We cannot tell you how many times we have to say that to our clients – honest people who have hit rough waters and need better paddles to make their way across.
Bankruptcy is a fresh start. It is a cherished right that allows people to escape oppressive debt and start anew. It allows individuals to be more productive members of our society and continue to contribute to our economy. It allows businesses to become profitable again and provide us with the services and products we love. In essence, it keeps us all afloat.
Lack of information = a disappointing social stigma
There is a social stigma that tells us that people who file for bankruptcy are irresponsible. Bankruptcy is looked down upon as a crutch for the lazy. This stigma is wrong and we need to defeat it. The truth is that medical debt – not credit card debt – is the number one reason people file for bankruptcy (it accounts for more than 60 percent of all personal bankruptcies – read more here). Just as medical debt is unexpected, so are many of the other top reasons people file for bankruptcy, including:
- Job loss
- Divorce or separation
- Property loss due to theft or natural disaster
- Student loans and poor returns on investment
- The rising cost of utilities
- Mortgage inflation/foreclosure
Bankruptcy is one of those things that people tend to frown upon until they are in the situation themselves or have a loved one go through substantial unexpected debt. Consider what you would do if your financial situation suddenly plummeted. How would you manage?
Going back in time
Bankruptcy is not a new concept. In Judaism, Jewish citizens’ debts were to be erased every seven years. Islamic teaching also provides for a pause in debt payment during times of hardship. Of course, bankruptcy’s history is not clean across the board. Throughout the years, including in 16th Century England, bankruptcy was seen as a criminal action.
In the U.S., the idea of bankruptcy was protected in our Constitution, which gives Congress the right “to establish uniform laws on the subject of bankruptcies.” Acting on this power, Congress first allowed voluntary bankruptcy in the mid-1800s. Numerous acts in the 1900s increased debtor’s rights, making bankruptcy an option for many people struggling with debt.
Americans have a right to bankruptcy
Our nation was formed by people seeking a new life. Bankruptcy allows Americans the opportunity to start anew. It is a Constitutional right – a cherished right. Many bankruptcies, including Chapter 13 (for individuals) and Chapter 11 (for businesses), require people to pay back debts – they simply give them the time they need to do so and look to see which debts are the most vital to repay.
Isn’t it time we stopped the stigma and supported our fellow citizens through these rough waters?
