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Blunt on Bankruptcy: Morality and Personal Responsibility

May 2, 2011

For this week’s advice on filing for personal bankruptcy, I wanted to talk about the emotional side of dealing with debt. It’s ingrained in most of our psyches that we’re personally responsible for the debts we incur, and we shouldn’t leave others in a lurch. That’s true whether our creditor is a family friend or a bank, our dentist or even Target. Wanting to repay your debts is a good thing, but sometimes it’s just not feasible. Here’s some advice I give potential clients:

Concern: I’m a bad person if I don’t repay my debts.

Response: Struggling with debt does not make you a bad person. Yes you probably made some choices that don’t seem wise now. Heck, we can all look back and say, “I shouldn’t have spent money on X, Y or Z,” but that’s really besides the point because you can’t change the past. All that matters now is getting back on your feet financially so that you can afford your reasonable and necessary expenses. Walking away from many of your debts in a Chapter 7, or setting up a repayment plan through a Chapter 13, may be the only way to secure a decent future. You certainly cannot be a bad person for considering a legal way to protect your future.

Concern: But I really feel like I need to repay this one particular debt.

Response: Generally this comes up regarding debts owed to friends or family, or to a person’s longtime dentist or medical provider. You can certainly choose to repay a debt despite your bankruptcy filing, but you shouldn’t let this one debt stop you from filing for bankruptcy protection. Just give them a head’s up that you listed them on your bankruptcy filing (which you must do, because you must list ALL creditors, even ones you want to pay back), but that you still intend to repay the debt. I realize it can be embarrassing to tell someone about your bankruptcy filing, but most people will understand.

If you really want to keep paying on a particular credit card because you want to keep using it, beware that the creditor will shut off your card as soon as they get notice of your filing. A credit card issuer might possibly leave the account open if you have a zero balance, but I wouldn’t count on it.

Concern: I’m a very religious person and believe that filing for bankruptcy is a personal and moral failure.

Response: This response doesn’t work for everyone, obviously, but debt forgiveness is in the Bible. Specifically, in Deuteronomy 15-1, 2: “At the end of every seven years, you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor. He shall not exact it of his neighbor, his brother, because the Lord’s release has been proclaimed.” If you are struggling with debt forgiveness and bankruptcy from a religious standpoint, I encourage you to talk with your minister, priest, rabbi, or other faith leader for guidance.

If you are considering bankruptcy, e-mail anne[at] or call 651-252-4611 for a free initial consultation.

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