When Colorado residents face unexpected life changes, such as a job loss or medical incident, their finances may be dramatically impacted. For many, filing for bankruptcy may be a viable option to deal with these sudden financial challenges. Unfortunately, some may be hesitant to file for bankruptcy because of the perceived emotional effects.
To be sure, individuals going through bankruptcy may experience a variety of emotions, including sadness, shame and loss of self-esteem. There may be stress worked on a person's family when going through bankruptcy, which can be psychologically challenging.
It is important to recognize these feelings of doubt and confront them head on. Much like an individual must stay on top of the financial steps in bankruptcy, such as compiling the list of debts, the individual should also be sure to stay on top of his or her emotional well being throughout the process.
Fortunately, bankruptcy does not carry the stigma it may have years ago. Moreover, many stereotypes of bankruptcy are simply not true. For example, contrary to what some believe, bankruptcy will not permanently destroy a person's credit score, as a bankruptcy will be erased from a person's credit history after 10 years.
Accordingly, experts suggest that people reconsider their views on bankruptcy, and see it for what it is --- a fresh start and a new beginning. In Chapter 7 bankruptcy, most of a person's debt can be eliminated after the individual's non-exempt assets are turned over to a trustee. In Chapter 13 bankruptcy, a repayment plan is created to preserve assets and allow the individual to pay off debts over time.
In either event, the individual can regain control over their financial state of affairs by filing for bankruptcy. In doing so, individuals can learn better financial strategies along the way, and obtain debt relief while rebuilding their credit --- and their personal worth.
Source: US News & World Report, "Surviving the emotional toll of bankruptcy," Daniel Bortz, Jan. 18, 2013