Both businesses and individuals can file for bankruptcy. Companies are often very pragmatic about bankruptcy. Leadership at organizations may not hesitate to file for bankruptcy to reduce financial obligations, prevent litigation and balance the company’s budget.
Individuals are often more reticent to make use of the systems in place for their financial protection. They may worry about damaging their reputations or may feel a profound sense of guilt for their perceived failure to fulfill their financial responsibilities.
Many people who might benefit from bankruptcy look for alternative solutions or delay bankruptcy until they have no other choice. What those people may not realize is that bankruptcy may be necessary due to circumstances beyond their control.
Bankruptcy stigma has significantly decreased
Years ago, an individual filing for bankruptcy could very well end up the subject of gossip at their church or office. Everyone read the local newspaper and may have noticed the legal publication about their pending case.
However, attitudes about bankruptcy have changed, and many people don’t receive news about local court filings anymore. Career instability and the reliance of even successful professionals on revolving lines of credit have helped reduce negative attitudes about personal bankruptcy filings.
Most people now understand that successful professionals might only be a few weeks away from needing the relief of personal bankruptcy. Many of the most common causes of bankruptcy are outside of an individual’s control.
Medical issues are a leading cause of bankruptcy. The combination of major expenses and lost wages can leave people unable to catch up financially. Job loss is another major risk factor for bankruptcy. Those who suddenly lose their jobs may be unable to make payments to their creditors. When they face vehicle repossession, foreclosure or lawsuits, bankruptcy may be the best option available.
Divorce and even an attempt to help a friend or family member financially could also leave people at risk of bankruptcy. While some bankruptcies do occur because of overspending, most people pursuing bankruptcy have a history of being financially responsible. There is no reason to feel like a failure for struggling due to factors outside of one’s personal control.
While bankruptcy records are technically still public information, few people typically track court reports about bankruptcy filings. Many people can complete the bankruptcy process without their co-workers, neighbors or other social acquaintances even learning about their filing.
Individuals have less reason to fear social stigma now than in years past. Those who file for bankruptcy can often do so relatively privately and may be able to expect compassion rather than judgment from others who learn about their financial struggles.
