Why Bankruptcy Doesn’t Make You A Failure (Really)

Why Bankruptcy Doesn’t Make You A Failure (Really)

By |January 11th, 2014|

choosing failure or success

Awhile back, my practice went from boom to bust. One day I had a staff of 14 people, the next I was sitting alone at a desk in 2,500 square feet of prime downtown Manhattan office space.

At the time, I considered myself a failure. Looking back on it, I realize that I couldn’t have been further from the truth.

My office, prior to the collapse, was making a ton of money – but all of it was going out the door in overhead. My clients weren’t disappointed, but they sure weren’t thrilled with the service we were giving.

On paper, things looked great. And when I sent everyone home, things looked pretty bleak.

If you’re on the verge of filing for bankruptcy – or if you just filed – you probably feel like a failure too.

And like me, you’re wrong.  Here’s why.

What’s The Financial Definition Of Failure?

According to Wikipedia, failure is the state or condition of not meeting a desirable or intended objective.

If we’re talking about money, the desirable or intended objective is to have money in the bank and be able to meet your expenses on a monthly basis – ideally with a few bucks left over for a rainy day.

If you’re not in that position then you’re not meeting the desirable objective.

It Comes Down To A Moment

One minute you’re debt-free, and the next you’re submitting an application for a loan.

That’s the moment of financial failure. If it weren’t failure then you’d be in a position to do whatever you want to do without getting into debt.

That goes for cars and homes, credit cards and televisions. If you can’t pay for something by writing a check and you go ahead with the purchase, you’re putting yourself in the position of not meeting the desirable objective.

Reset The Failure Clock

When you get out of debt, you’re trying to achieve the desirable objective of having money left over at the end of the month. Once the debt is gone, you’re no longer required to make monthly payments towards that debt.

It’s not terribly unlike cutting your cell phone bill by $100 per month – in doing so, you free up more money to achieve your goals.

Of course, there are lots of ways to get out of debt.

There’s the slow an steady method of paying off your debts as quickly as possible. There’s the faster means of debt relief that involves filing for bankruptcy. And there are a host of options in between the two.

Does Bankruptcy Make You A Failure?

Bankruptcy isn’t failure because it doesn’t involve an inability to meet a desirable or intended objective.

If your objective is to get out of debt then bankruptcy is nothing more than a legal means to that end.

Whether that legal means to an end is right for you … well, that’s a question of your assets and your liabilities in light of your abilities.

Have the ability to repay your debts over some reasonable amount of time without sacrificing food, clothing, shelter or reasonable health care? If so, bankruptcy isn’t right for you because you haven’t failed – you’re meeting your desirable financial objective already.

If, however, you’ve already failed financially then finding a way out of debt – including filing for bankruptcy – may be something to consider.

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About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.