The stigma of bankruptcy is overwhelming for some people. It is an enduring consequence of bankruptcy for debtors who experience a negative societal perception of bankruptcy filings. The stigma was certainly reinforced by the BAPCPA amendments which aimed at resurrecting the stigmatic effect of filing for bankruptcy. For debtors who face unforeseen and unmanageable financial circumstances, the stigma is burdensome and fails to provide any benefit, especially when bankruptcy could provide a means for debtors to get a “fresh start.”
The filing of a bankruptcy case has a common stigma that debtors do not intend to pay their debts, are trying to defraud creditors, or are otherwise failing to take responsibility for their actions. However, the stigma of a former bankruptcy filing should have no effect on a person’s character for truthfulness and any ensuing stigma only causes undue prejudice.
Stigma affects debtors by unduly pressuring them to repay their debts through stress on their moral conscience. The effect of societal disapproval and shame after filing is daunting to many debtors. However, the stigma is a product of conflicting norms. While society expects people to meet their obligations and repay their debts, society also promotes consumption and makes credit easy to obtain for some who may borrow beyond their means.
While there is no constitutional right to file bankruptcy, filing for bankruptcy is a legal and statutory right that stems from the United States Constitution. This is insignificant as most of the legal rights that Americans regularly enjoy are statutory rights rather than Constitutional rights.
Recently, the Federal Reserve Bank of New York came out with a report Opens a New Window.on BAPCPA, the legislation that “reformed” bankruptcy in 2005 (the last time bankruptcy law was significantly revised). This report demonstrated two significant findings:
- Individuals who filed bankruptcy had access to more new lines of credit than those who did not file but still had financial difficulties; and
- Individuals who filed bankruptcy saw an over time, when compared to those who did not file but still had financial difficulties.
Don’t let the stigma of bankruptcy keep you from solving your financial problems! The experienced South Florida defense attorneys at Loan Lawyers are here to help you if your financial position necessitates the consideration of a bankruptcy case filing under Chapter 7, 11, or 13. To schedule a free consultation at any of our three conveniently located offices, contact Loan Lawyers today by calling 954-523-HELP (4357).