The filing of bankruptcy can be an emotionally challenging legal process for most individuals and their families.  But, while the beneficial financial aspects of bankruptcy are well-known, it is important to also consider the psychological impact that bankruptcy can have on individuals.  In this posting, we will explore the psychology of bankruptcy and will provide some tips for coping with the emotional challenges that the filing of bankruptcy can bring.

You are More Than the Poor Decisions You Have Made

One of the primary emotional impacts of bankruptcy is a sense of shame or failure.  Bankruptcy can be seen as a public admission of financial struggles, and many people may feel embarrassed or ashamed to admit that they need help.  This can lead to feelings of isolation and depression, which can be compounded by the stress of the bankruptcy process. 

Take a moment and remind yourself – everyone makes mistakes, and we all sometimes find ourselves in situations in which we feel that we are in over our heads. 

If you are facing the prospect of filing for bankruptcy, some of the decisions you made did have to do with your finances – whether you were the victim of unscrupulous people and unfortunate circumstances or simply made poor money management decisions.  The good news is that bankruptcy laws were created and designed to help you to overcome those bad decisions and to prove that you can make better decisions.  If you think about it, there are many areas of life where people find themselves in over their heads without a clear pathway for recovery.  Putting a positive spin on your situation can go a long way towards relieving some of the stress you may be feeling.

Another common emotional response to bankruptcy is anxiety about the future.  Bankruptcy can significantly impact an individual’s financial stability and creditworthiness, and many people worry about their ability to rebuild their credit and financial security after bankruptcy.  This anxiety can be particularly high for those individuals with significant debts, as they may feel overwhelmed by the prospect of repaying them.

Additionally, there are many misconceptions surrounding the amount of time it takes to rebuild credit after bankruptcy.  According to a recent study by LendingTree, more than 40 percent of consumers end up with a credit score of 640 one year after filing for bankruptcy.  Approximately 65 percent of filers see, at least, the same score three years after the bankruptcy case is over.

Owning Your Problems and Solving Them

By filing for bankruptcy, you are finally admitting that you are in over your head and that you cannot solve the problem on you own.  It is sad just how many people try to deny the fact that they need help.  Instead, they struggle through, stressed and miserable, shuffling the debt around.  They make a few payments here and there but never admit that the debts are insurmountable.  

The sooner you admit that you have a problem, the much better off you will be when you emerge from the other end of the filing.  By taking that step, you have taken responsibility for resolving your situation and put yourself and your family back on the path to a prosperous future.

 Yes, there is going to be some social stigma surrounding the bankruptcy filing and re-entering the credit markets will take some time.  But, by understanding the key points previously made, you will be able to put your bankruptcy filing into perspective, which should help you treat it for what it is – a chance for a fresh start.

Bankruptcy Aids in the Creation of a New Financial Future

With your fresh start, you can now avoid some of your previous mistakes and set yourself up for a great success story.  Make a budget, borrow responsibly, and improve your situation with other available financial tools and resources.  You can not only protect yourself and your family from the negative aspects of debt but can also use your money to your advantage by carefully monitoring how you use your money and through strategic planning.

In addition to working with a bankruptcy lawyer, there are some additional steps that you can take to cope with the emotional impact of bankruptcy.  Seeking support from friends and family members can be helpful, as can participating in support groups or counseling sessions.  It is also important to practice self-care during this time, such as getting enough sleep, eating well, and engaging in activities that bring joy and relaxation.

Bankruptcy can be a difficult process both financially and emotionally.  By understanding the psychological impact of bankruptcy and taking steps to cope with the emotional challenges, you can navigate this process with greater ease and hope for the future.  Remember, bankruptcy is not a sign of failure, but is rather an opportunity for a fresh start and a path towards financial stability and success.

The Alliance Legal Group, PLLC – Your Hometown Attorney

We at The Alliance Legal Group, PLLC believe that bankruptcy filing should not be an overwhelming process, adding to the stress and anxiety that you are already feeling about your financial situation.  Our team of knowledgeable and experienced bankruptcy attorneys will advise you of your options, will create a tailored bankruptcy plan for you, and will make the process of becoming debt free as simple as possible.

Ready to get started?  Reach out today.  Call us at (757) 923-4357 or contact us online to schedule a free, no-obligation consultation.  Do not let debt or fear ruin your life.

 

 

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