There Is No Scarlet Letter Stigma to Filing Bankruptcy
One of the concerns most frequently expressed in consultations with potential Chapter 7 and Chapter 13 bankruptcy filers is whether their reputations will be ruined by the filing of a bankruptcy. It is almost universally believed that a bankruptcy, once filed and once known of by the general public, will result in both a sullied business and personal reputation. While these concerns are largely based on the various myths surrounding bankruptcy, they are serious for those expressing them and deserve to be taken seriously. Particularly where a potential filer is involved in a profession requiring interaction with the public or licensing of some sort (realtor, stockbroker, and so on).
Reputation After Bankruptcy: Nobody's Business But Your Own
Regarding the reputation concern, however, failing to take necessary action because of a general worry that others might perceive you to be less responsible or less financially capable may be a self-defeating tactic. Bankruptcy stops financial bleeding, if it does nothing else, and allows you to move forward, to rebuild credit, to move past unfortunate circumstances and, yes, even unfortunate decisions. The perception of a person who is meeting their obligations rather than drowning in them will almost always be a more positive perception. After a bankruptcy, when you are no longer seen as a person "struggling with debt," you will be viewed as a better credit risk and even, if you are in a sensitive profession, potentially a better security risk. Reputational damage is only a concern, firstly, if anyone finds out that you have filed bankruptcy--and, then, only if they actually care that you have. The odds of either are small than might be thought. Bankruptcy filings, although public record by way of the US Federal Court System's online PACER system, are not typically published anywhere else. Generally, if you do not tell anyone that you have filed a Chapter 7 or Chapter 13 bankruptcy, they will not find out about it. If they do, the question will be, as noted above, whether it is something that they truly perceive as a negative. Consider this: according the US Federal Courts, in 2010, in the Eastern District of Michigan alone, where I practice, and which consists of Detroit, Ann Arbor, Flint, Saginaw, Bay City, Port Huron, and all of the municipalities in between, 50,787 bankruptcies were filed in that year alone. This means that the odds that anyone discovering the bankruptcy are very high indeed that, if that person alone has not filed for bankruptcy, they very likely are closely acquainted with someone who has. Given the state of the economy over the past several years, the necessity and efficacy of a bankruptcy for many families as a means of moving forward from unemployment, divorce, undervalued real estate and multiple mortgages, has become clear. It remains one of the most effective means available in the US legal system for the benefit of consumers, and, on a cost-effectiveness basis, one of the least expensive legal remedies, period.
Post-Bankruptcy Licensing Fears
Consumers considering bankruptcies who have reputation-reliant professions, such as insurance sales professionals, realtors, and others, are rightly concerned that their businesses may be affected. However, as, the character Paul Atreides often chanted in Frank Herbert's classic science fiction novel Dune, "Fear is the mind-killer." Do not be paralyzed by fear when the solution to your financial problems is at hand. That said, there are many, many different licensing standards for differing real estate, law, securities, and other licenses for various professions. At The Hilla Law Firm, PLLC, we never take a concern over future licensure prospects after a bankruptcy lightly. Before filing a Chapter 7 or Chapter 13 bankruptcy for one of our Michigan clients, we review the exact language of particular licensing requirements in each case before recommending a filing. However, we have had military personnel, attorneys, stockbrokers, realtors, and many other clients requiring licensing or security clearance as clients, and not one has reported any difficulties moving forward from their Chapter 7 or Chapter 13 filing. Your concerns may be valid, but don't let them stop you from having a conversation with a Michigan bankruptcy lawyer about your options if you are experiencing debt-related difficulties. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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