Fighting The Stigma of Filing Personal Bankruptcy
Although available research indicates otherwise, more and more Americans consider filing personal bankruptcy to be a sign of moral or personal weakness, instead of what it truly is. In reality, it is a much needed source of safety for those who are unable to pay their debts.
Despite the bad reputation filing personal bankruptcy has, it is estimated that only one to three percent of filings are fraudulent, meaning the majority of filers are actually in need of the financial protection bankruptcy offers.
Why Is Filing Personal Bankruptcy Surrounded By Misconception?
There are many misconceptions associated with filing personal bankruptcy, and, according to the Wall Street Journal, this stigma continues to remain strong. Many associate it with overspending, since many bankruptcy cases deal with the discharge of credit card debt. However, much of this credit card debt has nothing to do with buying that new high definition TV or fancy car.
Those who are interested in filing personal bankruptcy sometimes hesitate to do so because bankruptcy records are available to the public. Everything, except for the true reason a person has decided on filing personal bankruptcy, is available for public viewing. Anyone can look at your assets and see exactly how much value each one has.
The Society for Human Resource Management conducted a survey involving filing personal bankruptcy recently, to determine how future employers viewed employees who had filed personal bankruptcy in the past. Most said it would be unlikely for them to extend a job offer to these individuals.
So Why Are Individuals Filing Personal Bankruptcy?
Even with the stigma that comes with filing personal bankruptcy and the chance of future employers viewing public records of the bankruptcy and denying them employment, thousands still file each year.
So, the big question is: why are individuals filing personal bankruptcy? Contrary to common misconceptions, this is not due to over-spending and over-borrowing, but:
- Medical Debt- According to cnn.com, almost 60% of bankruptcies are caused by medical debt. If you have ever found yourself not being able to afford health insurance or have had difficulty finding a policy that would cover you, this should come as no shock. One trip to the hospital these days can result in thousands of dollars in medical bills, and for most individuals, this type of debt is simply too much to handle.
- Job Loss and Divorce- These two elements contribute to a large percentage of those who are filing personal bankruptcy. With the current economy, many individuals are finding themselves without employment. With divorce, even if both spouses are working the total income for the household is cut in half, leaving bills behind that can not be paid.
- Credit Card- Many individuals with medical bills, job loss, and divorce resort to paying for everyday household costs, like groceries, utilities, and rent with credit cards, leading to even more debt. And credit card companies are not your friends. They often increase the debt by adding in high interest rates, fees, and fines.
While there may always be a few misconceptions about filing personal bankruptcy, you don’t have to believe them. If you need the safety of bankruptcy in order to obtain a fresh start, don’t be afraid to speak to a lawyer and obtain the financial protection you deserve.
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