The Emotional Impact of Bankruptcy: Coping Strategies and Support Resources
It’s not surprising that dealing with financial difficulties can be stressful. Whether you are considering filing for bankruptcy or already have, there is more to consider than just the legal aspects of the process. One of the biggest concerns people have is how bankruptcy will impact them emotionally. Here is what you need to know about how financial troubles can affect your emotional well-being and some strategies for dealing with those issues when going through bankruptcy.
What is Bankruptcy?
Filing for bankruptcy is a major decision that can significantly affect your life. If you are drowning in debt and unable to make your monthly bill payments, you may wish to consider bankruptcy. This is a legal process in which an individual or business asks the U.S. bankruptcy court to eliminate, reduce, or restructure debt according to state and federal law.
Individuals have the option of filing for Chapter 7 or Chapter 13 bankruptcy. Most businesses will file for Chapter 11 bankruptcy, with a few qualifying for Chapter 12. The one you choose will depend on your particular circumstances and goals. One common benefit that applies to all of these bankruptcies is that you get immediate relief from debt collector harassment, which can be stressful.
How Bankruptcy Impacts Your Emotional Well-Being
As you can probably appreciate, filing for bankruptcy involves more than re-shaping your finances, although that aspect is important. There is an emotional aspect to the process that is critical to acknowledge. Specifically, many people experience a wide range of feelings, including:
- Relief — The first emotion many people feel is relief that aggressive creditors can no longer pursue or harass them thanks to the automatic stay provided by bankruptcy protection.
- Guilt — A person might experience some sense of guilt at not being able to fulfill their financial obligations, particularly if someone was counting on them.
- Shame — This is linked closely with guilt, and is another emotion that can arise when a person doesn’t live up to their own or other’s expectations.
- Isolation — There is still the perception among many that bankruptcy is “bad,” which may lead a person going through it to feel isolated.
- Anxiety — It’s not uncommon to feel anxiety about the future when going through major life changes that involve finances.
- Depression — The stress of potentially losing assets or being judged by others could also lead to feelings of sadness and depression.
Coping Strategies and Support Resources When Going Through Bankruptcy
If you feel any of the above emotions when facing bankruptcy, know that you are not alone. Many people experience these common feelings, and there are several strategies and resources you can tap into to deal with them, including:
1. Acknowledge Your Situation
If you’re anxious or afraid, it’s okay to admit it. Denying or neglecting your feelings surrounding bankruptcy won’t make them go away. Simply acknowledge the situation before figuring out some steps you can take to reduce your stress.
2. Change Your Perspective
Bankruptcy provides a fresh financial start for millions of people each year. When you change your perspective to view the positive things you can achieve after bankruptcy, this can help ease many of your worries.
3. Create a Financial Plan
Getting into action might ease some of these common concerns and anxiety. One thing you can do is sit down and create a financial plan that outlines how bankruptcy will help solve your issues and the ways you will do things differently post-bankruptcy so you have better financial security.
4. Talk to Someone
Everyone has financial or other difficulties at some point, so there’s nothing to be embarrassed about. When you speak honestly with another person about your feelings and fears, it can help put everything into a better perspective. This may be the clarity you need to decide if bankruptcy is right for you or not.
5. Seek Professional Support
Sometimes, it’s not enough to rely on a family member or friend as an understanding ear. If you are having serious emotional issues due to your financial situation or bankruptcy filing, it’s critical that you tap into the many support services available. For example, you can contact The Substance Abuse and Mental Health Services Administration (SAMHSA), which can help you find a qualified mental health professional in your area.
The bottom line is that financial struggles can be emotionally overwhelming. Fortunately, there are strategies and resources that can help you cope with these issues. At the same time, it’s important to understand your rights when filing for bankruptcy so you make the appropriate choices.
Our Gulf Coast Bankruptcy Attorney is dedicated to providing readers with useful information about addressing their financial struggles so they can make the most informed decisions about their financial future.
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