People go through many different emotions – sometimes over many years – before they ever experience the relief a Bankruptcy Discharge provides by releasing them from liability for their debts. Usually the trigger is a loss of income or increase in living expenses or both. They may spend months feeling positive that they can turn things around, waiting for a certain event or series of events that will enable them to repay their debts, such as a new job, lawsuit settlement, or even winning the lottery. Because they are hopeful that luck will eventually find them, the thought of filing bankruptcy may be the furthest thing from their mind for a long time. While they still have available credit, it is easy to have hope.
They may transfer balances from one credit card to another to stay current and by doing so they may have excellent credit. Over time, however, if income doesn't increase, credit runs out and at some point they struggle just to make the monthly minimum payments. Gradually, over time, that hope fades and fear and desperation set in. They may begin to borrow from friends and family, with tearful promises to repay, feeling so ashamed and hating themselves for having to ask. The phone begins ringing off the hook; when they answer it, it's an angry bill collector demanding to know when payment will be received. Earnest explanations and promises to repay fall on deaf ears and are met with harsh threats.
At some point, reality sets in, and with it, the thought of bankruptcy. They remember a friend somewhere, sometime ago, who said they had filed. At the time, it seemed so far from something they themselves would ever consider, let alone be in a position to have to consider. But now, things have changed. The shoe is on the other foot. And they are frightened. And ashamed. What to do? The following is a guide to understanding these emotions and suggestions for how to keep them in check.
UNDERSTAND THE EMOTIONS
It is normal to feel embarrassed and ashamed about not being able to repay your debts. I regularly hear from my clients that they wish they could repay their debts and would not be filing bankruptcy, had they any other options. It is also normal to be fearful of the process. The process itself is very detailed and tedious, requiring the accumulation of substantial amounts of personal information, which can be difficult for folks already experiencing depression and anxiety about their debts.
Simply gathering all of ones debt information can be overwhelming and requires focus on areas of one's life that they might not want to face. It also feels invasive – your personal financial picture is going to be examined with a magnifying glass. This, compounded with the fear of what others will think, including future landlords, employers and even your friends and family, can cause fearful feelings to proliferate.
Most fears can be resolved simply by learning more about the process. It goes without saying that persons who are the least informed about the bankruptcy process are often the most fearful about filing and suffer for years in silence, feeling there is no alternative. Some may have come from countries where bankruptcy is an extremely difficult, frightening, debtor-unfriendly process, and/or are known for having corrupted judicial systems where legal authority are feared and mistrusted. Many folks fear bankruptcy because they think it would mean the loss of valuable assets to their creditors, believing rumors they may have heard that have little or no basis in fact.
The key to resolving these fears is information, and the first step to becoming more informed is to meet with a qualified bankruptcy attorney. Your bankruptcy attorney will review your specific situation, answer your questions and discuss with you your bankruptcy options, including the type of bankruptcy you may be eligible to file, whether all of your assets will be protected, and whether the types of debts you have can be discharged in bankruptcy. Once you are armed with this information, and knowing what you know, have decided to go ahead and file bankruptcy, you can begin the next step toward balancing the flood of emotions you may be feeling.
TAKE A DEEP BREATH AND REMIND YOURSELF: A) IT IS YOUR RIGHT TO FILE BANKRUPTCY, B) YOU DID NOT CHOOSE YOUR PRESENT CIRCUMSTANCES, C) YOU'VE DONE THE BEST YOU CAN DO AND D) IT'S TIME TO CUT YOUR LOSSES AND MOVE FORWARD
The days of debtors prisons are long over and filing for bankruptcy is now a protected right under Article 1, Section 8 of the United States Constitution. Bankruptcy is considered to be good for the economy because the relief from debt gives people the ability to spend money again on things they may have put off buying, such as cars, furniture, homes, etc., which, in turn, stimulates the economy. Corporations file bankruptcy every day. So do cities and municipalities. It's a right we all have to enable us to start fresh.
Without this right, people would be very fearful of taking chances, and would be less inclined to start their own businesses for fear of what would happen if the business failed. Innovation would be stifled. Society would not be where it is today. Lastly, bear in mind that you have most likely already paid a significant amount of your debt back, and what you owe now is probably a lot of interest. You've tried your best. Look at this as you would any other business decision. It's time to cut your losses, move forward and don't look back. In a few years, when you remember this difficult time, you will think to yourself: “wow, I didn't think things would ever get better, but they did!" And they will.
SURROUND YOURSELF WITH SUPPORTIVE PEOPLE
The bankruptcy process can be much easier if you surround yourself with people you feel comfortable sharing your feelings with. Many isolate themselves during this time out of shame. Do not go through this alone. If you do not feel comfortable sharing your feelings with friends or family, look into local support groups in your area, where you can meet with people in your same situation who know and feel exactly what you are going through. You will see that you are not alone, that many others are in your same situation, or in even worse situations, and that they are getting through it, just like you will.
FOCUS ON THE BIG PICTURE
Imagine what it will feel like to be completely out of debt years earlier than scheduled. Regardless of whether you accomplish this in a Chapter 7 bankruptcy, or a Chapter 13, bankruptcy brings order to chaos. It's a means to both an end and a new beginning. It is a learning experience. You will learn things from this process that will shape the decisions you make for the rest of your life, and you will hopefully never find yourself in this situation again. You will be years ahead of all those poor folks who still think they need to buy the latest Ipod, or XBox, or take out a new car loan.
You will never again fall into that trap. You will be immune. Do not worry about your credit – you will rebuild it if you choose to do so, and for your information, bankruptcy does not destroy your credit. Yes, it will appear on your credit report 10 years from the date of filing, and yes, your credit score will go down a certain number of points, but it does not go down all the way to the bottom, unless you are almost there anyway. If you want to rebuild your credit after bankruptcy, you will have opportunities to do so, and all of the good information that is presently on your credit report – your years of timely payments, will still be there. You will get through this, and you will come out better. You'll see.