Is Filing for Bankruptcy a Failure?

Short answer: No. Bankruptcy is an economic tool written into the Constitution — a legal remedy, not a verdict on your character. Divorce, job loss and medical bills happen to responsible people. Filing means using the tool the law provides instead of struggling with debt indefinitely.

The question people ask before any other

In more than thirty years of practice, the thing that keeps people out of my office is not confusion about Chapter 7 or Chapter 13. It is embarrassment. People sit with the paperwork for months, sometimes years, because filing feels like an admission that they failed at something everyone else manages.

That instinct is understandable and it is wrong. It also costs money. Every month spent avoiding the conversation is another month of interest, another month closer to a garnishment or a foreclosure sale date, and another month of options quietly closing.

Bankruptcy is in the Constitution for a reason

The power to establish bankruptcy laws sits in Article I of the United States Constitution, alongside the power to coin money and regulate commerce. The framers built debt relief into the structure of the country because they understood that an economy where failure is permanent is an economy where nobody takes a risk.

Congress has rewritten the details many times since. What has never changed is the premise: honest people who cannot pay what they owe should have a lawful way out. That is not a loophole. It is the system working as designed.

What actually brings people here

The cases I see are rarely about recklessness. They are about a divorce that turned one household into two on the same income. A layoff that lasted nine months instead of two. A diagnosis, and the bills that followed it. A business that did not survive.

Sometimes people did make choices they regret. That is human, and the law does not require you to have been perfect. It requires you to be honest now — to disclose everything and to deal straightforwardly with the court and your attorney.

A fresh start, or a plan to catch up

Chapter 7 is the fresh start. It eliminates credit cards, medical bills and personal loans and lets you begin again, usually in about four months.

Chapter 13 is a consolidation — you repay all or part of what you owe over three to five years at a payment you can afford, which is how people stop foreclosures and keep vehicles they have fallen behind on.

Either way you are using a federal remedy to solve a financial problem. That is what it is there for.

Full transcript of the video

is bankruptcy a failure I don’t believe so I believe it’s an economic tool it’s something put in the Constitution to give you the right to get either a fresh start or a Chapter 13 it really means that certain things happened in your life either through your own volition or sometimes things happen to you divorce job loss medical issues and you find a solution financially either through a Chapter 7 or a Chapter 13 so I don’t consider it a failure I consider it a fresh start I consider it using the available tools available so you don’t struggle for the rest of your life with debt it’s not something someone sets out to do but once you are in the predicament you can avail yourselves of the federal law that make a fresh start or a consolidation available for you to enhance your life and not keep you down in the dumps for the rest of it

Related questions

• Chapter 7 vs Chapter 13: what is the difference?
• Do I qualify for Chapter 7?
• Thinking about bankruptcy? Do this first

About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. His offices are in Wheeling, South Chicago, Joliet and Westchester.

This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.