Nearly every time I conduct an initial consultation, the client asks if they are a bad person for considering a bankruptcy. The answer of course is a resounding, "no"! They also tell me they are embarrassed to be doing this and worry that their friends, neighbors or associates will think the worse of them for filing.
It is helpful to have a historical perspective on bankruptcy which demonstrates why I believe so definitely that there is no stigma and it is not a question of morality.
Bankruptcy has existed for two thousand years. In ancient Rome, the wealthy landowners would lend money to smaller landowners, knowing that the debt would not be repaid. They would then throw the debtor into bankruptcy as a sure method to obtain their land. It has evolved a great deal since then. It has been around this country as long as this country has been around.
I am a great admirer of Abraham Lincoln and I own a copy of his complete works. It contains such mundane items as receipts and invoices to clients. In about 1838, he sent an invoice to a client for a bankruptcy. That fact alone should demonstrate what a venerable institution bankruptcy is. But there is more.
At the turn of the century, the last one, Congress created the forerunner to the present bankruptcy code, the Bankruptcy Act of 1898. So, not only was bankruptcy an established institution as a means for dealing with bad debt, the people's representatives codified it. In fact, the bankruptcy Act predates the income tax code.
Although there were various amendments, in 1978, Congress then went on to overhaul the Bankruptcy Act in the Bankruptcy Reform Act. Now, nearly 30 years later, after 7 years of debating and fighting for changes to the Code, Congress amended it to its current form, the Bankruptcy Abuse and Prevention Act of 2005. It had many changes, but it essentially left intact fundamental bankruptcy relief. There can be no question that, as a country, the U.S. has unequivocally sanctioned the use of bankruptcy as a legitimate business tool for individuals and businesses to handle their debts.
Sometimes, people feel like they are alone in filing for bankruptcy and that adds to their doubt and concern. That feeling is completely unrelated to the reality of bankruptcy. Not only have millions of individuals and businesses utilized this well established tool, but many famous people and businesses have, also. Harry Truman filed bankruptcy and then went on to become president of the United States. Dorothy Hamill, Mickey Rooney, and many, many more people too numerous to name have filed. Businesses that have filed include the most recent example of GM, TH Properties, Inc., Bethlehem Steel, Philadelphia Newspapers and, once again, far too many others to name.
So, when you are having difficulty with your debts, the first thing you should do is speak to someone who has experience, is licensed to provide advise, and will treat you the way you want to be treated. Naturally, I favor attorneys for such a service, but you can speak to a credit counselor, too. The only drawback with credit counselors is that they may simply refer you to an attorney and then you'll have to speak with an attorney, anyway. Doing so from the outset might make things easier.
Remember Old Abe and keep your chin up. It's only money.