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Bankruptcy–A Moral Choice

When is it moral to break your promises to pay your debts?


We Humans Are Moral Creatures

Your decision about whether to file bankruptcy could sensibly be just a weighing of its economic costs and benefits.            

But there’s more to life than dollars and cents. Whether in the front of our minds or nagging us in the back of our minds is the very human question: “Is it the right thing to do?”

Our important life choices are often moral ones. They are choices between doing what’s right and doing what’s wrong.

When deciding about bankruptcy you could skip that part of the decision-making process. You could make it a purely economic decision. But there’s a good chance that will leave you at least vaguely unsettled. You’ll likely feel good about the decision only after you believe in your head and heart that filing bankruptcy really was the right thing to do.

How to Make a Good Moral Decision 

1. Know what got you here.

What got you to this point of financial crisis? Over the years you made a bunch of legal commitments to your creditors to pay your debts. What has gotten in the way of you sticking with those commitments? Is there anything you would have done differently, and WILL do differently in the future?

2. Consider the moral costs and benefits of attempting to meet your financial commitments.

Don’t just look at the financial and legal costs and benefits of filing bankruptcy or not doing so—impacts on your credit record, your monthly budget, your present and future debt service.

What are the moral costs and benefits?

To the extent that you continue to struggle to pay your debts, the moral benefit is the one you likely focus on when you think about doing what’s right: you keeping your promises to pay your debts.

But consider the costs if you continue down that route.  Consider the potential detriments to your physical health from working too many hours and from the stress. Consider your emotional health. Consider how the financial pressures affect your marriage and other significant relationships. Consider what responsibilities you have to your children and other dependents, now and in the future. And consider not just financial responsibilities but the time and attention from you that they need. Extend your responsibilities not just to yourself and your family but also to your broader community.

Don’ts just focus on your moral obligation to your creditors. It’s not only appropriate but even necessary to balance that against obligations to yourself, to your spouse, to your kids, and to society in general.

3.  Focus on making a good decision now.

The past and its decisions are in the past. Accept the responsibility to make the best decisions that you can now.

This means facing your situation honestly and realistically. It is normal to be afraid to face tough realities, ones that make you feel embarrassed and even ashamed. Dealing with it challenges your self-image. Find the courage to be honest with yourself.

Avoid avoidance behavior! Otherwise you’re just staying with the status quo by default. That’s very likely not the morally best route. It’s seldom even the economically most sensible route.

4. Get legal advice about your options.

You need to know your available legal options and all the consequences of those options. Only then can you weigh your options and decide on the right thing to do—morally as well as financially.

You can’t make a good decision without knowledge. And you can’t have adequate knowledge about your options and their consequences without the guidance and advice of a dedicated professional who has spent years, day in and day out, dealing with these kinds of decisions.  

Self-education in the law only goes so far. And it’s not nearly far enough to make the right decisions, on your own behalf much less on behalf of anybody else who relies on you.  

Your bankruptcy lawyer is your legal advisor, not your moral one. So he or she will respect that the final decisions are up to you. But he or she is human, too, and recognizes that it’s a tough choice for you. Having counseled many people making these kinds of decisions, your lawyer should be able to help you find moral closure with yours. If not, find one who does.  

5.  Weigh your available options and decide.

Do whatever you know helps YOU make good decisions. Get motivational help from the right people and resources. Get past your embarrassment and talk with people whose advice you value—your genuine friends, and emotional and spiritual counselors. If it helps, write in your journal about it.

Do whatever it takes to focus on the task. Then make the decision and get it done.


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