Should you Feel Guilty About Filing for Bankruptcy?
Bankruptcy has Nothing to do With Morality
We are taught from the get go that handling money comes with our deepest personal guarantees. That is to say, that obtaining a loan from someone and not paying it back means that the defaulter is an evil person. In addition, to a degree, that is accurate, but only on a personal level. A transaction with a corporate entity is made at a business level.
For example, if someone loans a friend some money, and the friend does not pay it back, his or her immediate associates can call that friend a jerk. Not only does it show that the borrower is untrustworthy, it is also theft at its simplest level. Chances are good that the not-so-good friend is going to be shunned by their acquaintances for a long time if not forever. They will have to go elsewhere to find someone to rip off.
Large Banks Do Not Help Their Customers
Now change this scenario to the mega-banks that provide money in the form of credit cards and loans. Their policies have driven many people to the brink of bankruptcy. Not only did these banks take taxpayer money in the form of TARP, they refused to lend out their own funds to even those with excellent credit. Yes, TARP funds were repaid, but what good did it do the individual consumer? Not much. Large corporations are constantly defaulting on loans and declaring bankruptcy while simply reforming into a new corporation. Same players, different name, new ways to raise money. How ethical is that?
It is time for the consumer to take the same attitude. The debtor took on debt in good faith. They felt they could repay their obligations within the stated amount of time. However, job loss or poor health comes along and keeps them from servicing their debt. Trying to negotiate with the bank is pointless as loan officers have had all leeway stripped away from them. It is one way, and one way only: Stick it to the customer even when they cannot pay their debt for legitimate reasons.
Don't Worry About your Credit Rating
To be sure, there is one overriding concern for the debtor: The credit rating. However, one needs to ask this question: What is better, having money or having a credit rating? Declaring bankruptcy restores all of the income that debt was draining. It also helps that in a majority of transactions, cash is king. Homes are not necessarily lost due to filing, nor are vehicles and personal property. The only items that stand a chance of being lost are items with equity in them, such as a piece of land that was going to be the site of a retirement home.
In short, opening up a credit card or getting a mortgage is doing business with a business entity. Yes, the personal guarantee comes into play when the name is signed on the dotted line. Nevertheless, that personal guarantee can be legally set aside in the form of bankruptcy. Large banks do not learn that their policies cost them money. They are of the opinion that their customers are suckers and will stay in thrall to them for years. Why give them any consideration when they will not give any to the customer?
File for bankruptcy and move on with life. Never look back and never regret the move. Personal survival should take priority over any guilt felt about not repaying bills.