There seems to be a stigma attached to filing for bankruptcy. Some people believe that bankruptcy is synonymous with poor money-management skills.
Unfortunately, that stigma can keep many people from taking the necessary steps to regain control of their finances.
Common reasons for bankruptcy
It’s true that some people file for bankruptcy due to poor financial management and overspending. However, that’s not the only cause. Life is unpredictable and even financially responsible people can experience hardships. There are several situations that may result in someone declaring bankruptcy, such as:
- Unexpected medical bills
- Job loss
- Excessive debt due to mortgages, car loans, student loans and other financial obligations
- Divorce or separation
- Unexpected expenses, such as home repairs or car breakdowns
- Business failure
A person may try to “tough it out”, by borrowing from friends and family or taking out predatory loans. Still, the insurmountable debt leads them into deeper financial struggles.
There is no reason to allow shame or embarrassment to hold you back from declaring bankruptcy. Instead, look upon it as a legal tool that will enable you to wipe the slate clean or reorganize your debts into more manageable payments. You will be able to get back on your feet and rebuild your life.
If you feel embarrassment holding you back, you may want to remember the following:
- You are not alone because millions of people file for bankruptcy each year. Parents, entrepreneurs, students and retirees can face financial hardship at any time.
- Don’t define yourself by your past mistakes. Instead, focus on your future and make a plan for a post-bankruptcy life.
- Think of bankruptcy as taking a proactive step toward solving a problem.
Declaring bankruptcy is not failure. Instead, it’s about taking back control of your finances. If you’re still unsure if it’s the right move for you, then you should speak with someone about the pros and cons. They can also guide you through the process when you’re ready to move towards a new financial start.