STIGMAS
Addressing Common Stigmas About Bankruptcy
- Personal Stigma: “I’m not a good person; I’m a failure.”
Your worth as a person is not tied to your ability to pay bills. Your financial situation may be beyond your control (e.g., job loss, medical bills). Feeling guilty about not paying bills is normal, but it shows responsibility. You can always pay it forward when you’re in a better financial position if you choose.
- Social Stigma: “What will people think?”
Who cares? People will only know if you tell them. How many times have you checked if someone you knew filed for bankruptcy? Likely never. Your name isn’t published in the newspaper or on the internet. In fact, if you don’t go through bankruptcy, someone close to you may notice changes in your demeanor or lifestyle. Surprisingly, if you mention your bankruptcy, many people will respond with understanding and compassion, especially in today’s economy!
- Financial Stigma: “What about my credit?”
If you can’t pay your student loans, your credit is already in trouble. Bankruptcy will affect your credit rating but won’t drop it to zero. The benefit of being free from debt far outweighs this temporary setback. You might be able to buy a car the day after bankruptcy and get a credit card within weeks. Creditors are often willing to take a chance on you because you can’t file again for another eight years. While you may pay a slightly higher interest rate for a mortgage or refinance for a few years, your credit rating will improve quickly as you rebuild.
A Historical Perspective
Congress created the bankruptcy system as a safety net for those who fall into deep debt. The concept dates to the Old Testament (Deuteronomy 15:2), where debt release was mandated every seven years. Today, the U.S. economy benefits greatly from bankruptcy laws, which allow citizens to pursue the American dream without facing lifelong punishment if things don’t work out. Keeping people in perpetual debt isn’t productive or beneficial for society. Most agree that the benefits of bankruptcy outweigh the negatives.
An all to familiar scenario…
Meet Jake.
Jake wanted to go to college. “It’ll be worth it,” they said. “You’ll get a great job and pay off those student loans in no time!” So, like many bright-eyed dreamers before him, Jake signed up for a degree in something vague and impressive-sounding, like “Modern Business Synergies” or “Philosophy of Digital Cultures.” Naturally, he needed loans. Big ones.
Fast-forward four years: Jake’s diploma was hanging on the wall, but his paycheck barely covered his Netflix subscription. “No worries,” they said. “It just takes time. Hang in there!”
Jake hung. And hung. And then his loan servicer sent him a letter with lots of numbers in it that made him feel like his soul was being slowly repossessed. So, what’s Jake’s brilliant solution? Grad school!
“If I get a Master’s degree, THEN I’ll land a job where I can pay off these loans in no time!”
Now Jake’s got not one, but two shiny degrees—plus a heap of new loans to go with them. His job prospects? Still somewhere between “unpaid intern” and “part-time barista.”
Jake’s loan payments are now so high, he might need a third degree just to understand the math. “I’ll pay them off one day,” Jake mutters to himself, sipping his coffee and considering a PhD in “Advanced Procrastination Studies.”
You should not live in a prison of perpetual debt!
Still Unsure if bankruptcy is right for you? Let Ben Franklin Help!
When faced with a major decision, Benjamin Franklin suggested a method to help find the answer:
- At the top of a sheet of paper, write your dilemma as a question: “Should I file for bankruptcy to eliminate my student loans?”
- Draw a line down the middle of the page, dividing it into two columns.
- Label one column “PRO” and the other “CON.”
- Over the next 3-4 days, list your reasons for and against filing in their respective columns.
- After completing the list, assign a weighted number (1-10 based on importance) to each reason.
- Cross out equal numbers (e.g., a 2 in the PRO column cancels out a 2 in the CON column).
- Evaluate which side has more reasons.
- After thinking about it for another day or so, make your decision and don’t look back!
Franklin called this “moral algebra.” Hopefully, it helps you decide… I bet it will!
