8 bankruptcy myths debunked
There are many myths surrounding bankruptcy and a lot of these are...
There’s no stigma to being in debt
As a debt advisor I recall speaking to a retired man who through no real fault of his own had ended up with a large amount of debt that he couldn’t deal with.
He was living in rented accommodation on a small pension, and without any assets the best advice for this gentleman was personal bankruptcy.
The mere mention of the word sent the elderly man into a panic; he was terrified that his friends, family and neighbours would find out that he’d got himself into such a drastic situation. To this gentleman bankruptcy meant he would be ostracised or publically shamed.
This gentlemen was crestfallen that a sudden change of events in his life which led to him developing a debt problem would also mean that he was now to be marked as man ‘who had failed’ or was ‘dodgy’ or a ‘crook’. He felt that curtains would twitch every time he left the house.
I ran through how a modern bankruptcy worked for this gentleman and tried to explain that he wouldn’t be stigmatised. He wanted to repay his creditors, but he wasn’t able to and his situation wasn’t going to change. The gentleman struggled with accepting what was the best solution for him.
Afraid to admit to debt
We often get calls or emails where someone is asking about debt solutions on behalf of a friend or relative who’s too ashamed or embarrassed to speak to us directly.
On our system we record cases where the client has a partner who is not aware of the debt problems they don’t want them to find out. The numbers of people who are in this situation are truly staggering.
Fear, shame and even some of the famous debt myths all contribute to make people with genuine debt issues feel scared to come forward and seek help, either from a charity like us or even from friends, family and loved ones.
This stigma often makes the situation worse and can lead some people bottling the problem up; this can add to anxiety or even create stress and depression.
We know from our own research that clients have often been in touch with us a number of times over a period of sometimes years before they finally take the plunge and enter into a debt solution. They knew the problem was there but they tried to find other ways out rather than admit that their situation could not go on.
The perception and reality of debt
Despite the perception of debt being caused by frivolous overspending our findings show that most debt problems are more often caused by an ‘unexpected change in circumstances’, such as redundancy, a relationship break up or the loss of loved one. There are no stigmas around these unexpected events and the debt issues are often just a by-product of a larger life event.
Twitching curtains aside, nearly every one of us will at some point in our lives need some form of monetary assistance, whether this is debt advice or debt consolidation or just borrowing money from family to help ease a financial mistake.
We all will at sometime need to learn to live within our means and budget correctly. There should be no stigma; interacting with money is a fact of life and there are already campaigns to introduce financial literacy into schools to prevent issues in the future.
The final proof is in the pudding.
We don’t judge people with problem debt and neither should your friends and family. In this day and age most people can understand and empathise with how financial problems arise. Any stigma there once was is rapidly disappearing and this will help people seek debt help sooner (need debt help? Use Debt Remedy). That can make all the difference to their future.
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