Remember the book, The Scarlet Letter? You know, the one where the woman does something and is marked for the rest of her life with a huge letter “A” pinned to her blouse?
When I was a kid, I took an English class that included this classic book. Each night I’d stay up reading another chapter or two, utterly appalled by the subject matter. It was like a horror film played out in words on a page; this unspeakable indignity couldn’t be endured by a human being for long. Yet here was Hester Prynne, scorned by the world yet holding her head as high as she could.
Little did I know that the real world wasn’t too different. In fact, filing bankruptcy was like a real-life Scarlet Letter (except it was a “B” rather than an “A”).
For better or for worse, filing bankruptcy has lost the stigma it once had. That’s reality, and more people are realizing it.
The Great American Hangover
As more Americans end up in foreclosure, unemployed or just plain overextended as a result of chasing the American Dream, we feel as if we’re nursing a terrible hangover. We had fun for awhile, people told us the party would never end, and then. . . suddenly. . . the house lights went up.
“You don’t have to go home, but you can’t stay here,” came the call. Dismayed, we went home and fell asleep. Just like when the stock market bottomed out and the foreclosure wave began in 2008, we figured it would be OK if we just went home and let it all go by.
Couldn’t be further from the truth. We saw people filing bankruptcy in near-record numbers, understanding that they could either take care of their families of seek the protection that the federal legal system provides.
Maybe I’m being naive about it. Maybe it wasn’t a cold splash of water that served as the reason so many people started filing for bankruptcy. Just as likely, it was the shock that even corporations thought of as being, “too big to fail,” could be in the same boat.
If Lehman Brothers could do it, so could everyone else. The stopper went out of the bottle, and the red ink flowed freely.
A Time Of Peace And Clarity
Filing bankruptcy may not be an easy pill to swallow, but it’s not going to make things worse. In fact, as millions exit the court system each day they realize that their lives as easier now than ever before.
No more overdue credit card bills. No more medical debts. No more worries about judgments after foreclosure. Filing bankruptcy erased those problems, leaving a void to be filled with other things – enjoyment of family, a good night’s sleep, hopes and dreams for the future.
The hangover is over for those people. Filing bankruptcy helped them, clearing their credit histories and allowing them to begin to re-build their lives financially and psychologically.
The scarlet letter has been ripped off of the notion of filing bankruptcy. It’s not a badge of honor, but a mark of someone who has gone through tough times and has made a decision to take care of his or her family.
Peeking At The Future Of the Scarlet Letter
There’s no question that as filing bankruptcy continues as part of the fallout of the economic downturn, tens of millions of Americans will be added to the ranks of those without debt problems. Many will find the doors open to new mortgages and car loans, primarily because those financing companies need to make loans in order to generate profits in the form of interest payments. Others will be shy of debt in the future, opting for the Dave Ramsey school of “no debt is good debt.”
Both are valid points of view. But one thing is for certain–we’ve also quickly realized that filing bankruptcy is no scarlet letter, and certainly not the end of the world. After all, it’s not too far to fall from the top of the mountain to the bottom of the valley.
Jay S. Fleischman is a bankruptcy lawyer in New York as well as the New York State co-chair for the National Association of Consumer Bankruptcy Attorneys. He is also the co-founder and past President of the Bankruptcy Law Network.
Many thanks to Jay for this great post. If you need a bankruptcy lawyer and live in New York City, I heartily recommend him. I’ve seen his posts and his contributions to the National Association of Consumer Bankruptcy Attorneys. Jay works hard for his clients and gets great results.