There is definitely a trade-off when filing for personal bankruptcy that people have to consider very carefully. They will derive protection from debt collection activity and potentially discharge some of what they owe, but there will be a cost. Not only does someone have to pay to file for bankruptcy, but the decision to file will also have an impact on someone’s finances for a few years.
People often understand the financial risks, including the likely closure of secured lines of credit and a drop in their credit score. They will probably factor those consequences into their decision about whether to file for bankruptcy or not and may plan for the process based on their biggest concerns. For women who file, in particular, it may also be necessary to consider the health consequences of a bankruptcy.
How can bankruptcy affect a woman’s health?
When looking at those who filed for bankruptcy when compared with those who did not, the research was relatively clear. Women who needed the protection of bankruptcy were more likely to experience a downturn in overall health and an increase in depression-related symptoms than those who are in a more stable financial situation.
Research does seem to indicate as well that Chapter 7 bankruptcy overall tends to have a stronger negative impact on people’s health than Chapter 13 proceedings, possibly because of the association with lower-income households and higher levels of unsecured debt. Physical health issues were more common among those who filed for Chapter 7 than among the general population, and those who filed for Chapter 7 were more likely to report mental health challenges than Chapter 13 filers.
The right help could make a big difference
Stress is one of the reasons that people experience depression and other medical side effects when pursuing bankruptcy. If someone has an attorney representing them and managing the bankruptcy process, they may have an easier time minimizing the personal consequences they experience. Their stress levels may be lower when someone else handles parts of the process on their behalf. Additionally, having an advocate and professional to support someone during bankruptcy might help them stave off the sense of failure that may accompany bankruptcy and contribute to someone’s depression.
Employing a thoughtful approach to personal bankruptcy can help someone maximize the positive consequences of filing while minimizing the negative consequences they must endure.