Anyone who has struggled financially knows the unfortunate potential of feeling ashamed. While the stigma against poverty and debt isn’t unique to the U.S., it certainly is made worse by our social standards and consumer society. The negative assumptions around debt are a centuries-old standard that will take a change in mindset to reverse. If you have assumptions about debtors and bankruptcy, you’re one of many, but those ideas are not necessarily based on any facts.
Rather than being a last-gasp chance for “destitute people” or something that throws your credit into the trash forever, bankruptcy is a highly effective process that provides long-term debt relief, financial stability, and a second chance to thousands of individuals every year. At Behm Law Group, Ltd., we provide advice and protection to our clients, guiding them through the bankruptcy process and helping them receive much needed debt relief in Worthington, MN and the surrounding area.
A large part of the stigma against bankruptcy is based on an old idea of tying morality to money and social status. This is an unfortunate mark of the classist history that has saturated the western world for centuries. The idea of “poor” people having low morals is an outdated, problematic one that needs to be left behind along with stigmas against race, gender, and other marks of oppression.
The problems of social stigma aside, bankruptcy itself is often seen as the wrong choice because of the impact it has on the filer’s credit. While it’s true bankruptcy will lower your credit score and make you ineligible for certain things like taking out a mortgage, those effects are temporary, and the permanent positive impacts of bankruptcy greatly outweigh the temporary negatives. The assumption that bankruptcy is a bad choice because of any impact it might have on your financial standing is a flawed idea. To see how beneficial bankruptcy is for anyone in the right situation, you only have to look at the number of people who went on to improve their quality of life and maintain a balanced income-to-debt ratio after filing.
Those who are in the position to file for bankruptcy are often not able to take out a mortgage in the first place, and it’s likely that their credit score has already been lowered to some degree because of their current income-to-debt ratio, late payments, defaults on loans, and other conditions that lead them to qualify for bankruptcy.
Finally, filing for bankruptcy is almost always the better option for debtors than other debt management practices. Debt consolidation, payday loans, debt settlement, and other non-bankruptcy options for debt relief are frequently used to take advantage of people and end up costing them much more in the long run. Bankruptcy is a law-based process that is designed to serve an honest filer’s best interests.