Until recently, there was a strong social stigma against filing for bankruptcy. People saw it as immoral and a way to cheat the system.
Since then, attitudes have changed. Reforms to the U.S. Bankruptcy Code and a decline in the stigma associated with bankruptcy have made people more willing to consider bankruptcy during difficult financial times.
Declining social stigma
Studies have documented that public attitudes toward bankruptcy have steadily grown more positive since the 1960s. Instead of blaming the debtors, many people started to blame the banks and predatory lenders.
At the same time, more and more people began filing for bankruptcy. Between 1960 and 2004, bankruptcy filings increased by an average of 8% per year.
Though you may still come across people who judge you for filing for bankruptcy, the majority will likely sympathize with your financial struggles.
One contributor to bankruptcy’s declining social stigma may be changes to the U.S. bankruptcy code. These reforms make it more difficult to abuse the bankruptcy system while also protecting debtors’ rights.
As a result, debtors may be less likely to see bankruptcy as a way of cheating the system.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduced stricter requirements for filing for bankruptcy. It also protected certain retirement assets from being sold to pay off debts.
In December 2020, the Consumer Bankruptcy Reform Act of 2020 was introduced. If passed, this law may extend consumer bankruptcy rights and allow additional payment plans.
The risks and benefits of filing for bankruptcy
Though the social stigma of bankruptcy has declined, there are still some risks associated with it. Bankruptcy will be present on your credit report for 7 to 10 years, making it potentially more difficult to obtain loans. You may also lose some of your assets. It’s important to note, that it is not as difficult as some people believe to obtain loans after filing bankruptcy, primarily because creditors know a debtor cannot claim bankruptcy again for another 7-10 years.
Nevertheless, bankruptcy is a viable option for many people under financial strain. It can give you a chance to start over without debilitating debt on your shoulders. Talk to a bankruptcy attorney at The Werner Law Group today to decide if filing for bankruptcy is your best option. The Werner Law Group is now the only consumer bankruptcy firm based in Victoria.
We understand that this is not an easy decision to make and we are here to help as best we can. Please call us today at 361-578-7200 to learn more.