Societal Norms and Social Stigma of Bankruptcy

19 Feb Societal Norms and Social Stigma of Bankruptcy

Sheryl Schelin blogs about the social stigma of filing bankruptcy. She notes that although experts acknowledge that many people who are “entrapped in the prison of debt” should file bankruptcy, they are discouraged from doing so.

This is what concerns me about the social stigma placed on bankruptcy filing. The simple fact is, whatever stigma attaches, does so because of societal norms. But what do societal norms say about constantly struggling with debt collectors — about alternatively bargaining with and avoiding the dunning call? Is it not more admirable to face facts, admit that it isn’t working, and protect your family and your assets?

When even the Bible speaks of debt forgiveness as a mandatory and good thing, you have to wonder how we got so judgmental and compassionless. I’d like to think of my job as one small part of a movement to educate and change the societal norms.

Sign me up for your crusade, Sheryl. And I would add this: What about the morality of credit card interest rates, or universal default clauses, or exploding ARMs, or marketing credit to those least able to afford it? What about the morality of harrassing phone calls, baseless threats, and outright scams to collect debts? What about the morality of the sale of debt which has been discharged in bankruptcy, of mortgage servicer’s junk fees, of punitive credit reporting? Why don’t societal norms condemn those practices with the same fervor?

If the relative worth of the individual who seeks the protection of bankruptcy is weighed against the practices of the credit industry, it seems clear to me where the scales end up.

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