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The Basics: Bankruptcy as a Moral Choice

You usually DO have a moral obligation to pay your debts. But sometime you have higher moral obligation NOT to.


The Human Side of Bankruptcy

Deciding whether or not to file bankruptcy on behalf of a big corporation is a “business decision,” a weighing of economic costs and benefits.            

But because YOU are so more than a business, as YOU think about filing bankruptcy, a question comes to mind that has very little to do with dollars and cents: “Is it the right thing to do?”

Our important choices are often moral choices. We choose between doing what’s right and doing what’s wrong. We could skip that step—make the decision a purely “business decision” —but then we are more likely to have made a poor decision. We’ll food about the decision only after we believe in our heads and hearts that it really was the right things to do.

The Road to a Good Moral Decision  

1. Understand what got you to this point of your financial crisis. You made a bunch of legal commitments to pay your debts—the original creditor agreements. What has gotten in the way of you sticking with those commitments?  

2. Consider BOTH the moral costs and benefits of continuing to try to meet those financial commitments. The moral benefit is that you would be keeping your promises to pay your debts. But how about the costs in your physical and emotional health, your marriage and family relationships, and whatever other responsibilities you have to your community? You have moral obligations not just to your creditors, but also to yourself, to your spouse, to your kids, and to society in general.

3.  Appreciate that you now have the opportunity to make a good decision. Face your situation honestly. Otherwise you’re just staying with the status quo by default, which is likely not the morally best route.

4. Get advice so that you know your legal options. You can’t make morally good choices about how to attack your debts without knowing your legal alternatives for doing so.  You cannot know whether there are morally more acceptable ways to deal with your creditors—such as to file a Chapter 13 payment plan instead of a “straight” Chapter 7—if you don’t know those legal options.

5.  Weigh your legal options—as to your creditors, yourself, your spouse, your family, and anyone else affected.  Get help from the right people and resources. Do whatever you know helps YOU make a good decision. Talk with a bankruptcy attorney. He or she is mostly your legal advisor, not your moral one. So he or she will respect that the final decisions about how to proceed are up to you. But having counseled many people dealing with these kinds of decisions, your attorney should be able to help you with yours. 

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