Is filing for bankruptcy the “responsible” thing to do?

(See my blog about bankruptcy and the bible).

I would argue that yes it usually is not just smart to file for bankruptcy if your debts have gone beyond your ability to pay but that it is also the responsible thing to do.  That is because bankruptcy gives you and you creditors finality and it puts you on the road to good credit as you can now re-build our credit score and become a more productive person.

Many people ask me this question about responsiblity because they seem to think that filing bankruptcy and discharging your debts is somehow not honoring their promise to pay for the debts that they have incurred.  They feel that they are being irresponsible and dishonorable.

I remind them that debts have a creeping quality that can slowly accumulate and take over all of your available resources until there is nothing left to pay your ongoing bills.  This can happen insidiously without your noticing and with out you intending for it to happen.  It is just a miscalculation on your part but one that can lead to disaster if left unchecked.

Also it is true that your financial situation can change where you income is cut by a job loss or just a loss of hours at work.  There can be divorce, sickness, a new baby, an accident or a business downturn or any of a whole host of reasons why you cannot honor your debts like you originally intended.  These intervening circumstances can cause your financial situation to become critical in a hurry like a nuclear meltdown.  One day you find that you can’t afford to buy groceries but the phone is ringing fifty times a day from some collection agent who is trying to get you to promise to pay money that you don’t have.  It’s not responsible to let this situation continue.

So it is not irresponsibility that usually leads a person to need a bankruptcy.  It is just the facts of life with its ups and downs and twists and turns.   It is also true that we are human and therefore inherently imperfect.  We make mistakes all the time.  We can’t predict the future but we are naturally optimistic about it.  We always expect things to turn out well but that expectation is not always realistic.  When things don’t turn out well some may need bankruptcy.

Now I would argue that if your finances get far out of hand and your ability to pay your debts is not there then it is time to throw in the towel and do the responsible thing.  Admit that you were wrong.  I have done it personally many times in my life.  Once you admit that then you can notify your creditors that you are choosing the legal, moral, right, and responsible thing which is filing bankruptcy.  You are notifying them that you will not be paying their debts back.  The creditors will go away and stop bothering you for debts you cannot pay and they will move on to someone else and use your bad debt as a tax write-off.

Now you can re-build your credit score.  With that you can once again get financed to so you can buy things like a car and a house if you choose to.  Your score will be better on average three years after bankruptcy and a fresh start than if you choose to try to pay those old debts back because on average most people will fail to do so.

So do the responsible thing.  File bankruptcy.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  Please visit my websites for further information on bankruptcy at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office to speak to me about any bankruptcy issue for free at (619) 702-5015.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

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