June 26, 2012 8:19 PM   Subscribe

I think I need to file bankruptcy. Guilt and shame.

I think I will need to file bankruptcy and this is having a profound negative affect on me. Please help me to cope.

Brief background: I lived in a different country to my home country for a very long time. I was working at a job in an environment which was becoming increasingly toxic and was affecting my health. I was on antidepressants yet still suffering from bad anxiety and not sleeping, constant headaches etc. I know it wasn't just me as others had left this company with similar experiences. Believe me when I tell you I was powerless to change the situation apart from leaving. I looked for months for other work, could not find anything. Eventually made a decision that it would be best (for many reasons) for me to move back to my country of birth. I did research on the job market in my birth country, spoke to many people in my industry, networked, etc and felt confident that my skills and CV were very good and I would be able to find a job in a short amount of time, despite the terrible job market. I moved back with a bank loan still outstanding that I fully intended to pay off and felt I could pay off with my assumed earnings. I had several months expenses saved. I could not find a job. I could not even get minimum wage job in basic retail, restaurants, etc. Believe me I tried. I eventually had to live off credit cards (from former country, previously with balances of zero) and then had to get public assistance due to the horrible job market where I literally could not find anything. It was one of the darkest times of my life. After 9 months I found a job which paid just above minimum wage so that I could just barely pay rent and food. Five months later I found a decent job in my field.

By this time I was so far behind on payments they were in collections. I had previously tried to talk to creditors (several times) to set up some kind of arrangement, but I couldn't even make their minimum payments. Now it is at the point where with unfavorable exchange rates, international transfer costs and large amounts (five figures) owed to four different creditors (so four monthly international payments), I can't even start to pay this. I have no assets, no money saved for any lump settlements, not even a car. I've only just started to get back on my feet. I have spoke to an attorney in the country I moved from and explained my situation in detail. He has advised that bankruptcy would probably be best for me.

The thought of this is horrifying to me. It causes me a tremendous amount of fear, shame guilt and anxiety. I am honestly living in terror that people will find out. No one knows and I will not tell anyone. It will be a matter of public record but of course people will have to know to search for it. I am terrified someone will figure it out and search. I am afraid creditors might call my old job there (even though I changed my details with my creditors when I quit) and my old coworkers (some of whom I keep in touch with) will find out.

Even if no one finds out, I feel like a really, really horrible and bad person. Because I am in a different country, this will not affect my credit here and that's not fair. I feel like I should be punished or something. I am not saying that to garner sympathy, I really feel that way. But the shame of people finding out is almost too much for me to bear. I have no intention to ever return to the other country to live. My experience there was sometimes not great (for a number of reasons not relevant here) and I feel sad when reminded of the place I used to live or when I see pictures. I am happy to be back home. I love my job and I think they like me. I think my future is bright. I try to be a good person. I had every intention of paying this back but I honestly don't feel like I can unless the creditors would make generous arrangements with me (low payments over a very long time period), which they won't.

Please tell me how you have dealt with this if you or someone you know has been through it. Please tell me what I can do in the future to make retribution or amends. I am not in a position to pay the creditors now, I can't set up any kind of arrangement where I can defer payments until I am in a better there anything I can do to repay society when I am in a better situation?

I know I probably need therapy about this so no need to mention that. I will do so when I am able. Throwaway email: Thank you for your help.
posted by anonymous to Work & Money (17 answers total) 9 users marked this as a favorite
You are being so, so hard on yourself. I have been in a place where I hated myself and was very hard on myself. One of the mental techniques that was most helpful for me was imagining what I would say to a very close in friend in my situation. Usually, it turned out that I would have a lot of sympathy & empathy for a friend, and that woud help me realize (at least intellectually, if not emotionally), that I was an okay-ish person.

So: imagine that your friend worked very, very hard, but had really bad luck and needed to declare bankruptcy. What would you say to him? Be specific - write it out if you can. Do you think that you're different? Why?

Regarding making amends - it sounds like you owe money to credit card companies. I personally have little sympathy for them (I believe debts should be paid, but some unpaid debts are part of their business model). So, if you wish to "repay society" in some way, I would (once you are in a place of financial stability), donate money to whatever you consider a good, worthy, cause.
posted by insectosaurus at 8:31 PM on June 26, 2012 [3 favorites]

the following is based on a rough understanding, and not necessarily specific to the US if that's the country in question- the bankruptcy process is there for a reason. everyone is better off by you going through the process than by you not going through the process, theoretically, if you cannot manage to pay off your debtors. the process's main objective, i believe, is not to punish you, but to make the best out of a bad situation for all those involved. Yes, you will have very bad marks on that country's record, and it's enough 'punishment' for you that you cannot take credit in that country. receive it as a blessing if your credit is still good in your country of birth and make this a fresh start.

Of course you can repay society in many ways- volunteer, donate money, etc. but move away from seeing this as a sin as long as you never stole money or engaged in fraudulent activity. Forgive yourself.
posted by saraindc at 8:34 PM on June 26, 2012

Our collective economy is kind of broken, and many of its weaknesses are hidden by people like you bearing the weight of the imperfectly distributed employment opportunities and lenders' fears that discourage investment and related hiring.

My sense is that you will reduce the likelihood of creditors calling your former offices and friends if you declare bankruptcy. Otherwise, they will keep trying to find you at any number they have ever had.

I am sorry you are being do hard on yourself, I doubt it is appropriate.

Congratulations on finding a new job, be kind to yourself and forgive yourself for the decisions you now regret. You did the best you could, that is all anyone should ask of you.
posted by Heart_on_Sleeve at 8:42 PM on June 26, 2012

Bankruptcy is a legal status, not a moral failing.
posted by xingcat at 8:53 PM on June 26, 2012 [28 favorites]

No shame....none. You do what needs to be done to care for yourself. Deal with the here and now.....get yourself healthy and in a good place.. Pay it forward later if you need to.
posted by pearlybob at 8:55 PM on June 26, 2012

Novel time, sorry.

I have not declared bankruptcy, but that is only because the debts I have are not dischargable in bankruptcy. If I could, I would do it in a moment and smile all the way. About 20% of my practice is helping people and businesses through the bankruptcy process. I run into, on average, about two people a week who are in a similar situation to you, by what I mean are people that the bankruptcy process can help but who refuse to do it out of a sense of moral responsibility for the debts. I would like to tell you what I tell them.

Bankruptcy is moral. Bankruptcy is good for the economy. You are often hurting the economy by not going bankrupt. You are often hurting yourself by not going bankrupt.

1) Bankruptcy is moral.

All bankruptcy is is an organized process for the forgiveness of debts. Forgiveness of debts on a regular basis is found in many religions. From a utilitarian point of view a debt that cannot be repaid is not helping anyone, since the creditor is not getting their money in any case, and the debtor is caused pain by the debts presence. Many other rationals for the morality of it can be found in other philosophical traditions, and I can't possibly list them all.

But I would like to point out that we, as a nation, have have bankruptcy listed in our founding document (my apologies if you're not in the USA) in Article 1, Section 8, Clause 4. Congress shall have the power too pass..."uniform Laws on the subject of Bankruptcies throughout the United States."

2) Bankruptcy is good for the economy.

Money needs to be circulated in our economy. In a large way circulation of money is what economic growth is. We also want the money to go where people think it's going to do the most good. Each persons decisions about where the money is going to do the most good is what the so called "invisible hand of the market". But, people being people, we make mistakes. We spend money on things that we think are going to be good for us and turn out not to be. We make investments that we think are going to thrive and they don't. These debts can stop us from using money in the future in ways that can help the whole market by efficiently allocating funds. Not getting rid of these debts, or thinking that paying off these debts (and thereby encouraging the existance bad products, businesses, or investments) is thesunk cost fallacy.

By not declaring bankruptcy there's a good chance that you're hurting everyone else in society by keeping bad things in existence and not encouraging good ones.

3) You are often hurting yourself by not going bankrupt.

The stress from debts can injure your health. Additionally, in the same way that your hurting the overall economy by not declaring bankruptcy (when appropriate), you are hurting your own economic health. This gets back into point number two. If you have to retire without savings, it's the government and society who's going to have to pick up the bill at that point. And you'll be less happy, and we'll be less happy.

On a practical level, creditors rarely call up businesses or people once they enter the bankruptcy process. In part because it's generally illegal and is often, as I mentioned in a previous comment of mine, actionable harassment.

95 times out of a 100 you'll never hear from a creditor again once they get the bankruptcy stay. Four of the other times you only hear from them because they have an outdated customer contact computer systems.

So, in closing, if you can go bankrupt. Do it with a smile knowing that you're helping yourself and you're helping the economy. Do it with a smile knowing that some of the wisest politicians have made it legal, some of the smartest economists think it's essential to the economy, and some of the greatest religious and philisophical thinkers think it's the moral thing to do.

If I could, I would. So do it for me too. If nothing else I'll feel better.
posted by bswinburn at 8:58 PM on June 26, 2012 [228 favorites]

YOU DO NOT NEED TO MAKE AMENDS. No, no, no. The interest rates that they charge already take into account that some people are going to default. The defaults are paid for. The risk is distributed. The company is not going to be harmed by your bankruptcy; they're only harmed by large numbers of bankruptcies, which evidence not individual moral failings but a problem on the lender's fault in who they were issuing debt to.

The only time I might see someone's point of wanting to make amends is if the debt was acquired due to, say, spending lots of money on drugs or prostitutes or something.

File, and if you want to make amends, make amends to yourself by learning good financial habits for the future, and to society by helping to teach those skills to others.
posted by gracedissolved at 12:26 AM on June 27, 2012 [2 favorites]

First, it bears repeating: you tried to do everything right, you made reasonable and responsible choices, and you got hosed by economic forces much greater than you. You owe money to a bank and to credit card companies.

Just a thought: my bank's savings accounts (which are essentially a loan from the consumer to the bank) currently yield less than three-tenths of a percent APR, but their 30-year home loans charge over 4% APR and their credit cards charge 11 to 24% APR. Not only their business model but *their own solvency* is founded on lending money at high rates and borrowing it at low ones, and they do not apologize for that, much less let ideas like shame, guilt, or fairness enter the discussion.

You have become insolvent through circumstances you could not have reasonably predicted. You haven't done anything unethical. Declaring bankruptcy just provides a legal status to move forward.
posted by gingerest at 12:43 AM on June 27, 2012 [1 favorite]

Claiming bankruptcy was the one of the best things I've ever done. I had huge amounts of medical bills and I was being sued left and right. I felt zero shame and even brought it up to co-workers. A few of them had claimed as well.
I'm not sure why you are being so hard on yourself and agree perhaps you should speak with a therapist or financial counselor.
posted by KogeLiz at 1:31 AM on June 27, 2012 [1 favorite]

Sometimes, for whatever reason, you have to hit the reset button. That's why bankruptcy exists.
posted by lalala1234 at 5:29 AM on June 27, 2012

People and corporations file for bankruptcy all the time. They do this to avoid creditors. If we lived in societies with equitable distributions of wealth, you'd be right to feel guilty. But we don't. We live in societies with giant disparities in economic resources. Most people are debtors. Increasingly, creditors are a small, privileged class. It's the 1%. In that context, bankruptcy isn't wrong. It's a natural, rational response in an unfair system.
posted by smorange at 5:34 AM on June 27, 2012 [5 favorites]

Look around, the world is in an economic mess. If an entire country can't manage its finances, why should we mere humans be any different?

No shame. Bankruptcy isn't a moral failing, it's a legal status, nothing more. Going bankrupt is sometimes the result of a catastrophic, economic event in one's life, or it's a decision one makes after weighing the options.

I'm seriously contemplating it right now. Dump the house that's underwater, get out from credit card debt, mmmm. That would feel good.

There's a reason it's erased from your record after 7 years. Because the economy forgives you.

Also, remember all that taxpayer money we gave to the banks, who were horrible about managing money? What about JP Morgan Chase? They lost a metric ton of cash and their CEO is shrugging his shoulders. None of them feels shame. They go home every night to a beautiful spouse, huge house and large cocktail.

So file now. Sleep better. Forgive yourself.
posted by Ruthless Bunny at 6:11 AM on June 27, 2012 [2 favorites]

This is what bankruptcy is FOR. It is for when you try your best but you get into a situation that you can't handle.

This system would not exist if everyone didn't agree there is a need for it.

IAAL, I took bankruptcy law in law school, I have helped others file for personal bankruptcy. Read anything Elizabeth Warren has written about bankruptcy. While like anything else, it can be abused, most people who declare bankruptcy do so for a very good reason, often some unforeseen situation like a catastrophic illness, death, or divorce that shakes up their lives. We HAVE bankruptcy so that you can move past this and still be a functioning part of society.
posted by chickenmagazine at 8:49 AM on June 27, 2012

Suppose you're playing a board game with friends and there was something in the game's official rules along the lines of, "A player may, at any time choose to [blah blah blah some special move] at the cost of [blah blah blah considerations]." And if you found yourself in a situation where that special move was a net win for you, you would take it. The other players would not be surprised or angry -- they all read the same rules that you did before starting the game. They would not look down on you, for you're doing the best thing possible for your situation.

Bankruptcy is no different. It is a perfectly valid option that's written right into the rules of the game. All the companies that lent you money knew there was a chance that you might declare bankruptcy and that they would never get their money back. They know this because they read the rules, and they factored it into their fee and interest structure. It's a natural part of their business, no different than a car owner recognizing that they'll need to factor in the cost of new tires and brakes every few years, and a major repair every so often. You are just doing what's best for you, given the rules of the game. Anyone that faults you for that is simply small-minded.
posted by Rhomboid at 2:34 AM on June 28, 2012 [1 favorite]

Came here via bswinburn's comment being sidebarred, and agree with everything he/she said. I filed for Chapter 7 eight years ago. I'd recently gotten divorced and had previously assumed a big chunk of the common household debt out of compassion for my estranged wife (who didn't return it), and depression from the failure of the marriage combined with stress from the debt burden helped my drinking spiral out of control, and I got a DUI on top of everything else. I'd assumed that I could surf my credit card debt from one low-interest-rate account to another until it was paid off, but that plan failed pretty quickly, and trying to figure out how to make those payments plus alimony plus various legal costs related to my DUI wasn't helping my newfound sobriety. I was working full time at the highest salary I'd ever had, but still not making it.

Filing for bankruptcy was the best thing I could have possibly done. The credit card companies didn't file a protest or claim or whatever it's called--I may have actually paid off what I originally borrowed from them, anyway, and was simply jettisoning the accumulated interest by then. I had several years of buying only what I could afford to pay cash for, including driving some pretty shitty used cars, but that was useful in helping me learn to live within my means. The reduction in stress will be more than worth it.

Much of the objections to filing Chapter 7 comes from the assumption that some people have that corporations are people. Please don't fall into this trap. You've already tried to make a deal with them and they wouldn't budge, so fuck 'em. They'll just write off the account as a loss and try to find someone else to reel in. The sooner you do this, the better.
posted by Deja Stu at 9:20 AM on June 29, 2012

Read this. If it's good enough for American Airlines, it's good enough for you.
posted by DarlingBri at 11:50 AM on June 29, 2012

Suppose you're playing a board game with friends and there was something in the game's official rules along the lines of, "A player may, at any time choose to [blah blah blah some special move] at the cost of [blah blah blah considerations]."

So it's sort of like in Scrabble, when you put all of your letters back in the bag, get new letters, and lose your turn.
posted by goethean at 2:43 PM on June 29, 2012 [1 favorite]

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