Fear of bankruptcy is both common and necessary.
Those who aren’t living the American dream of upward mobility and financial security seem to think that’s a matter for shame.
Perhaps the second most frequent question would-be clients ask me is whether the fact that they filed bankruptcy will be
- in the paper,
- disclosed to their employer, or
- discovered by their family or friends.
[The answer is that it’s unlikely.]
They are paralyzed by what they perceive as shame in not being a financial success in a world that too often confuses money with virtue.
The bankrupt are better off
A couple of objective observations are in order.
- A university study of some years ago found that one in seven American families would be better off if they would file bankruptcy.
- Second, millions American families have filed bankruptcy.
Chances are very good that several of the families around my petrified client have filed bankruptcy, unbeknownst to the client.
The study about being “better off” resonates particularly with me, as I see individuals struggling to pay credit card debt, where the interest has tripled when a payment was late, while at the same time, they have no emergency cash reserves, no retirement savings, and no health insurance.
While their choices are noble, they aren’t wise.
The real cost of fear of bankruptcy
Too many live on the financial edge so that the credit card companies get their minimum payment. They go without health care, an emergency fund, and even without food to honor their commitments.
I tell my questioner that bankruptcy is a matter of public record, so anyone who wants to find out who has filed can do so.
But, I ask, have you recently read the news of individual bankruptcy filings?
Such is not the fare of papers where I practice. With some thought, they begin to realize how insignificant the fear of exposure is next to the financial realities of their situation.
Being debt-free is possible
The human creature is pretty amazing that it will live with the constant stress of overwhelming indebtedness rather than risk that others learn of its pain.
It doesn’t have to be that way. Read up on how bankruptcy actually works and you’ll find that most of your fears are unfounded.
