Is Bankruptcy Even More Stressful Than Dealing with Creditors When You Can’t Pay Them?

If you are reading this article then you have been in the position of having bills due that you cannot cover or you know someone in that position.  You have suffered from feelings of embarrassment, shame, or anxiety.  You might have a feeling that there is a loss of control over your life.  These are very normal responses to dealing with overdue bills, decreased income, unexpected emergencies, and life changes.

Sometimes things work out – you get overtime at work, you get another job, a relative or friend helps you financially, and all of your creditors are just willing to wait – and you can manage to get back on track so to speak.  Yet other times things can quickly go wrong, especially if the creditors are not willing to work with you.  Your phone begins to ring non-stop, you get flooded with collection letters, your local sheriff shows up to serve you papers, you have to go in front of the judge and your employer is now asking questions.

Lack of sleep, not being able to open mail, not answering your phone or screening your calls, facing lawsuits, garnishments, repossessions, foreclosure, worrying over bills, not being able to save, feeling exhausted, out of control, and arguing with your spouse are some of the things people go through when dealing with unmanageable debt.

First off, you are not alone if you ever felt stressed about your financial life.  Chances are your family members, friends and neighbors are worrying about paying bills right now.  Look at these numbers from the American Psychological Association,

72 percent of Americans reported feeling stressed about money at least some of the time during the past month.

Twenty-two percent said that they experienced extreme stress about money during the past month (an 8, 9 or 10 on a 10-point scale, where 1 is “little or no stress” and 10 is “a great deal of stress”).

For the majority of Americans (64 percent), money is a somewhat or very significant source of stress, but especially for parents and younger adults (77 percent of parents, 75 percent of millennials [18 to 35 years old] and 76 percent of Gen Xers [36 to 49 years old]).” American Psychological Association Feb 4, 2015.  http://www.apa.org/news/ press/ releases/2015/02/money-stress.aspx

The stress comes from an inability to solve the problem.  It is not a lack of desire to pay creditors that causes the stress and anxiety, but the inability to fulfill that desire.  We are taught all our lives to try and live up to certain standards – we inherently want to fulfill the obligations we believe we have to other people and this includes our creditors.

A bankruptcy does not relieve all of the stress that we have from not paying debts.  It does take away a lot of the uncertainty that goes along with not being able to pay debts.  It takes away the loss of control.  In that sense it is an active response to an unbearable situation.  You get to take control over what is happening with the help of your attorney.

I cannot tell you that filing a bankruptcy is a stress-free event.  It can be difficult, labor intensive, and, believe me, nobody wants to do it.  You have to list everybody you owe money to, your entire financial life is disclosed – the money you make, the things you own; you will have to actually sit down and figure out a budget for moving forward.  It is intrusive and overwhelming.  However, most if not all of clients say “I just wish I have filed sooner.

Bankruptcy will give you almost immediate relief in terms of dealing with the creditors – those creditors that were calling you, your work, your family non-stop have to stop. No more collection letters, no more threats, no more appearing in front of  Judges, no more wage garnishments, no more doubting whether you can deposit that paycheck at the bank or are they going to take it.

You get to bring all of your creditors to one place to deal with things, and there is a judge to oversee the process.  This is completely different than trying to settle with creditors outside of bankruptcy where there is rarely any judicial oversight.  Your creditors have to go through a system to deal with you.  You can hire an attorney to represent you throughout the entire proceeding.  The fees charged by the attorney are supervised by the court.

Unlike dealing with creditors outside of bankruptcy, bankruptcy provides you with relatively definite timelines. After all, the bankruptcy process has a limited duration and usually does not last more than five years in a Chapter 13 or a few months in a Chapter 7.  Most importantly, you will have an idea and in many cases some input into how long it lasts.  Bankruptcy gives you more control over your financial situation and encourages financial planning. This in return gives you more security and power over your circumstances, so that you now have an opportunity to get back in track with your life.  You can get the fresh start you hear about.

You might ask, if bankruptcy is such a good option why don’t more people who are in financial distress file a case?   The reality is that more people file than you realize.  Because there is not a lot of publicity surrounding the filing of a bankruptcy most people don’t really know that their neighbors, friends or family members may have filed.

The other issue is that people will often “go to ground” rather than file a case.  They get rid of their bank accounts, quit their jobs, let vehicles and homes go back and change their phone numbers.  This gets them some relief, but at what cost?  Now they have set themselves back years  in terms of financial recovery and all they have done is put their heads in the sand.  Why do they make this choice rather than see an attorney about filing a bankruptcy?  If there are two things that lead to this more than anything else they are fear and a lack of knowledge.  People make uninformed decisions and end up doing more harm than good to themselves.

If you have gotten this far and you think you need to get more information then contact us at no cost.