Three emotions, not reasons, keep people from filing bankruptcy and getting out of debt.
Emotions keep people mired where they are.
Fear
Stubbornness
Pride
While not as sexy as the seven deadly sins, they still keep my clients mired in debt long after logic says “quit”.
Fear
Fear of the unknown probably kept our primitive ancestors alive. In the age of the internet when nothing remains unknown, it’s ironic that fear continues to keep people from filing bankruptcy.
People fear life in a consumer society without credit. They fear being branded as a failure. They fear the judgment of others about whether they are worthy of bankruptcy relief.
Some of this fear is rooted in bad information that circulates; some of it is deliberately planted by those who profit as long as you avoid the bankruptcy remedy.
I’m with Franklin Roosevelt: all we have to fear is fear itself.
Stubbornness
It’s hard to knock stubbornness, even when it keeps people doing foolish things. After all, stubbornness, the drive to finish what you started, is often a virtue.
I’m talking about the attitude that says “these are my debts, and by d***n, I’ll get them paid”. Honorable, but not always rational.
See how long it takes to pay off a modest credit card balance by paying the monthly minimum.
Life is about choices, and the choice to keep chipping away at a Mt.Rushmore of debt means usually that some other need, real and important, goes unmet. The greatest of these neglected choices, in my world, is retirement savings.
Cultivate stubbornness as a virtue, and the negative events of the past poison your future as far as the eye can see.
Pride
I’m not the kind of person that files bankruptcy, I often hear.
Well, what kind of person is it that files bankruptcy?
It’s people who’ve gotten sick, even with health insurance; people who’ve divorced; people who’ve lost jobs; and people who got suckered into believing that the marvels of a consumer society were available to everyone.
Bankruptcy is not a moral failing; it’s a legal solution to an economic problem.
Look around at the celebrities and the iconic corporations who have all filed for bankruptcy relief. Do we think that they are lesser people for starting over? Not usually. Walt Disney, one of the more famous debtors, is an American hero.
For too many, it takes exhaustion to get over the emotional barriers: when the wall of these corrosive emotions is worn down, rationality wins out.
