When considering the pros and cons of filing for bankruptcy, many people are concerned about the social stigma of filing for bankruptcy. They worry that their names will be published in the newspaper or that they will loose their jobs if their employers find out about their bankruptcy. They also struggle with their own feelings of failure or self-doubt.
When potential clients ask me these types of questions, I will remind them that bankruptcy is a right provided for in the United States Constitution. Article 1, Section 8, Clause 4 states: “The Congress shall have the power to… establish a uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States.” By filing for bankruptcy, you are simply exercising your Constitutional Rights, just like your right to assembly and right to bear arms. I recognize that it takes courage to admit you are drowning in debt, but a bankruptcy filing should be considered to protect yourself, your wages and bank account and your creditors.
Bankruptcy used to be a rare occurrence. Today that is not the case. Due to the stagnant economy, filings have increased dramatically over the last 10 years. There were more than 30,000 cases filed in Maryland alone in 2013 and more than 1 million cases were filed nationwide last year. As a result, the social stigma that attached to bankruptcy has greatly decreased. The bottom line is that you are not alone. Many people are going through financial struggles now and seeking relief in bankruptcy.
Bankruptcy is also fair to your creditors. Rather than leaving your creditors to fend for themselves in state court (a so-called “race” to the courthouse), the bankruptcy laws see to it that there is a fair and equitable distribution of your assets, if any, among your creditors. If you have assets beyond those that the law allows you to retain after bankruptcy, they will be distributed fairly among your creditors. If you file a Chapter 13 case, a portion of your monthly income will be distributed fairly among your creditors. And, if you simply have no assets beyond what the law allows you to keep, then the creditors will get nothing except perhaps a tax write off of your debt.
We have not had any clients lose their jobs due to a bankruptcy filing. This is because under Title 11, Section 525 of the United States Code, you are protected from discriminatory treatment in employment based upon filing for bankruptcy. If an employer would terminate an employee based on a bankruptcy filing this would be a violation of the law and subject the employer to suit based on employment discrimination.
Also, personal bankruptcies are generally not reported in local newspapers, unless you are a very famous person of national interest. Bankruptcies are a public record, however, and will be listed on your credit report for up to 10 years. But no one will be gathered around the water cooler talking about your bankruptcy filing, unless you tell them first.
In a recent law review article, “Bankruptcy Stigma: A Socio-Legal Study,” by Michael D. Sousa, University of Denver Sturm College of Law (January 23, 2014), he concludes that: “For a significant segment of the population who file bankruptcy each year, this study suggests that the stigma exists and likely may never go away completely. Yet despite these strong feelings, these debtors’ need for financial relief outweighs their reluctance to file.”
If you are seeking relief from your debts through bankruptcy, please call us today for a consultation. We have helped thousands of people through the bankruptcy process and can help you address all of your concerns about the pros and cons of filing for bankruptcy. To learn more about our firm visit our web site at www.law-margulies.com.