Modern Family Matters

There's No Shame in Bankruptcy! Detangling the Stigma Around Filing for Bankruptcy

November 16, 2022 with Darin Wisehart Season 1 Episode 72
Modern Family Matters
There's No Shame in Bankruptcy! Detangling the Stigma Around Filing for Bankruptcy
Show Notes Transcript

We sit down with Bankruptcy Attorney,  Darin Wisehart, to unravel the stereotypes around filing for bankruptcy, and the importance of viewing bankruptcy as an ethical and legal right, rather than a shameful last-resort. In this interview, Darin discusses:

  • Bankruptcy is something that can happen to anybody.
  • Understanding the stigmas around bankruptcy that can make people feel as if they are doing something immoral or unethical.
  • The many situations beyond a person’s control that can lead to bankruptcy. 
  • Bankruptcy isn’t some sort of scam; it’s lawful, ethical and moral. 
  • The bankruptcy system was put in place by Congress as a safety net to catch people who have fallen and need help getting back up.
  • Bankruptcy is an important part of the economic system and exists for a reason; it's available for anyone who truly needs the relief.
  • Why you SHOULDN’T feel ashamed about filing for bankruptcy.

If you would like to speak with one of our family law attorneys, please call our office at (503) 227-0200, or visit our website at

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.

Steve Altishin  0:28  
Hi everyone, I'm Steve Altishin, Director of Client Partnerships there at Pacific Cascade Legal, and today we have our bankruptcy attorney, Darin Wisehart, to discuss why there is no shame in filing for bankruptcy. So Darin, how you doing today?

Darin Wisehart  0:46  
I'm great. I'm great. Thanks for having me on today. 

Steve Altishin  0:49  
Oh, it's great to have you on for a great topic not often discussed. So let's sort of just kind of start in about why many people just feel embarrassed about filing for bankruptcy.

Darin Wisehart  1:06  
The human aspect of filing bankruptcy, a lot of times, is getting over the hurdle of figuring out how--obviously, for me, the first question is always a financial decision. It's always, is it the correct move for you? What are the nuts and bolts of what a case could potentially look like for that individual. But most individuals, on their side, and you do this long enough, and you kind of get these recurring themes that they deal with what you would call the moral aspect of filing for bankruptcy. And that's the side of hey, you know, I don't want to treat my creditors different, I don't want to, you know, I don't want to pay less than I owe, or those pieces that come into bankruptcy in the conversation. And that's a lot of the financial side as far as that goes. But the the mental training that we've had for the course of our lives, that most of the time, most people don't even know have to do with this, this shame aspect that comes in, this embarrassment of filing for bankruptcy. And it's ingrained in the process, it's where, you know, the person thinks that, to get into this, they have, you know, this moral idea of whether or not bankruptcy is the right move, or whether they should do it. And you hear this a lot from some of the older participants in society. They tend to have this a little stronger than the younger ones. But you get this conversation a lot. And it's important to have because as you get through or start looking at this process, you want to make sure that you can separate these maybe emotions and mental trainings that you've had, so that you can get into the point of, is it the right financial move? Is it something that I need to entertain? And how do I get over these hurdles? All the hurdles, which the mental hurdle is one of those hurdles.

Steve Altishin  2:56  
Yeah, I absolutely get that. You know, first of all, you know, bankruptcy can happen to anybody, this isn't a, you know, I'm gonna go scam somebody kind of situation, but you're right, it kind of falls back on to that, you know, why am I doing something that is bad for someone else. But it really isn't bad for someone else, is it? It's part of the process. It's the reason that bankruptcy exists. 

Darin Wisehart  3:33  
Yeah, absolutely. Right. I mean, when you talk about bankruptcy, you're talking about something that can conceivably happen to anyone, and you get people all the time, they will say family members or friends, they will say something like, Oh, I've never filed bankruptcy, I couldn't do that. And most of those people haven't really thought through the process of bankruptcy and how you could potentially be there. Because in our society, you know, anywhere in the United States, you're dealing with medical issues or something, you know, in that world, or maybe you're just dealing with dealing with a lot of debt that that a loss of job brought on or there's a lot of reasons you could file bankruptcy, maybe you just got behind on your on your house payment, and you want to catch your house up, chapter 13 Bankruptcy is perfect for allowing you to catch up something. So these are the different types of things for bankruptcy that, you know, maybe you just need more time, maybe they're going to foreclose on your house, and you just want a little more time to try to sell it. A lot of different uses for bankruptcy, that are not just the Hey, I'm going to zero out my creditors and move on, even though that's a process that is written into this as well that the code allows for it. And that's, you know, it's the site of anybody can be there. And it's it definitely is true, that you know, regardless of where you happen to be in life.

Steve Altishin  4:48  
Yeah, yeah. And kind of got back to that, you know, it's built into the law that it is lawful, first of all, but it also an ethical path to take. You know, it seems to me that our financial laws all over the country on many different issues are there which, you know, also help people who have financial issues. I mean, you know, there's social security, you know, there's Medicare, there's just the whole tax structure, there's the corporate structure, there's a lot of stuff that government says, you know, these things some people could say I'm getting some sort of an advantage, but they're there for good reason, aren't they?

Darin Wisehart  5:39  
They are, they are, the bankruptcy code is written specifically to help people out of these situations. It's written for these, you know, these finite reasons that, that you want to make sure that you're using if you need them. And when you talk about needing bankruptcy or getting into bankruptcy, you're talking about using that kind of bottom line, typically, bankruptcy is a last resort, it's something that you use, as you know, okay, we'll try this, we'll try this, we'll try this and all of those are exhausted. Now, we really have no choice but to do the bankruptcy every once in a while you do it as the second to last or third, the last process, because it may have a better fit for what you're trying to accomplish. Maybe you're trying to save your house, and you can repay and catch up your house. And these are the kinds of things that a bankruptcy can really allow you to do. But it's it's thinking through how that process goes. And, and then just looking at the statutes, and the statutes are black and white. They're they're they're they're written to help people in situations so that the debt doesn't have to follow them over the course of their life. And that's, that's written into the equation. When we talk about economics and the balancing of those economics. When we talk about credit card companies and how they have written into their equation, a certain default rate and a certain rate, a lot of times they will know where you can default, just by seeing your income, seeing your household income, seeing what you have, as far as the last three years, every once in a while well, not every once in awhile more often than you'd like. You have creditors that will take advantage of that knowing that you will default on something and then laying out the you know, here's the terms of this agreement, even though we know that this is the point where we make money. And this is the point where you'll default within a certain amount of months, the game is sort of rigged in a lot of those senses, because they have the numbers. They know what they're doing when when they run this through. And that means that when you go through bankruptcy, sometimes you need to also have the numbers and some weight of what does it mean mathematically for me to go through on the financial side of things? And that's, that's, that's the question, a lot of times that people don't entertain until they chat with me, because I want to know what it's going to do to your finances where it can lead your finances. And a lot of times these codes, these statutes that were written to make sure that this debt doesn't follow you forever. And that's part of getting you back on your feet.

Steve Altishin  8:05  
Yeah, and you really, I think, said something important in that the cost, the cost to the creditor, let's say, you know, not being able to click that debt, bankruptcy law, first of all, is also sort of written to help protect the creditors. And you know, I know one of the things that go into, you know, scheduling the cost of that car, is the car companies uncollectable debt. So the cost is built in. Already it is. So it's not as if this company is Oh, my God, this is terrible, and I never would have seen that coming, or I would have charged him that kind of a thing.

Darin Wisehart  8:56  
True, true. And you add the extra factor to that, which is that a lot of times when you go into bankruptcy, if you have a secured claim, which is that claim that is attached to something like a car, or maybe it's lean to your house, or you know, a mortgage or something like that, you you pretty much have to pay that in order to keep that item. Otherwise, that creditor could very well get that item back and then sell it get what proceeds they can and you know, maybe return or pay out other creditors whatever happens with the bankruptcy as far as that particular property item. And that's, that's one of those things that they have written into this whole equation. They know they know how that process is going to work. And so if if you're talking about unsecured creditors, like credit cards and medical debt, that are not attached to anything, they have a path to become attached to something they have a path to, to force you to pay to push past and they can do those things and that's often why I say in bankruptcy the lazy lose, and that's because if if they want to if they fully want to you know Move along with their legal rights, they can do it. And they can go attach, they can go, you know, get a lien on a house or do something that that will allow them to get paid earlier. A lot of times they don't, because it costs money to do that. And they have this part of the equation written in already. They know if they if somebody defaults, they can sell it for this and the collection company then comes into the equation, and then we can we have that long conversation that is, you know, the collection company buying for pennies on the dollar. But a lot of that is written into what they do. And if you look at their training manual, the training manual for any creditor will have that inherently put in. And so for our side, we have to think of it on the debtor side of what is the process from just the financial of how we're going to get to where we're going. And then part of that process has to do with what do we do with the mental aspect of it, to be sure that we can smoothly get through this process without having to overthink things or over stress and lose years off of our lives? 

Steve Altishin  11:07  
So what do you say to someone who, you know, has this giant negative association, and I guess negative association is-- there's sort of the difference between shame and maybe guilt. I mean, you know, people can feel guilty because maybe they overspent or did something that did something. And maybe that's not a terrible thing. They have a little guilt, but shame is hating yourself. And it's a bit different, but that's what you say. So that negative association that come to filing, will you see that, but that can make them not do something that really needs to be done and should be done. I mean, so how do you know what do you say to someone who's just like, I've got this vision, but you know, in your heart that this thing needs to get done for everybody's good?

Darin Wisehart  11:57  
Yeah, and it is a tough conversation, because you want to, you want to address that in terms that the individual specific individual that you're talking to can understand, and really try to sort of to make it about the one person that you're talking about, it's not a broad conversation, because you want to make sure that it's very specific to that individual. And a lot of times when you talk about the shame versus the guilt, you know, you're you're talking about learned attributes, you're talking about things that we spent years and years and years learning whether we knew it or not, that these are the things that we're programmed with, that parents or friends or family have been telling us and, and things that we're trying to ascribe to, and detaching those things, especially in the necessity of needing to file detaching those things from what you're trying to functionally do is is huge, especially because, you know, oftentimes people will come to me, and they'll talk through their situation, and I'll say, hey, you know, we need to get filed. We don't have to get filed for some people today, but we need to get filed, it's the best path for you. And then they come back with the well I don't know if I can do what I just don't know, if I can tell my my brother that I filed bankruptcy or something to that effect. And then you have to have the conversation that, you know, when you when you learn these kinds of things, that's okay. And it's okay to have those ideas. You know, we're human, we have these all these interesting thoughts and processes running through in our heads. But to get to the point where we can displace the emotional aspect of it and get to just the sheer financial. That's, that's where we're talking about. And then Then the question comes in, usually, what I'll do is I'll break down how long it would take them reasonably to repay whatever amount of debt they have on their plate, over whatever amount of time. And then, of course, if it's over two or three years, then you you're saying to them, if you could take that money, and put it in a savings account, to never have to file bankruptcy again, and place you and your family in a better spot. In three years, you'll have a savings account or 401k, or something like that built up, rather than trying to chase these debts. Is it worth it for you to try to jump the mental hurdle of of the possibility of filing bankruptcy? Is it worth it for you to really retrain your brain on how to go through this? And and most everybody will say, absolutely it is because I'm staying up, staying up nights, I stare at the ceiling, just thinking about the debt and how I'm supposed to ever get a hold of this. And some of the methods are more difficult than others. But bankruptcy is usually that last resort, hey, we've tried these other things we're not going to get there. Now let's displace the mental aspect. Let's figure out how the financial aspect goes and let's move forward the best we can with as the least amount of stress possible.

Steve Altishin  14:48  
It's a great that's a great finish on that because, you know, talk about talking about a little bit but how you do that, you know how someone sees the light at the end of the tunnel? Oh my I'm just gonna ruin my, my credit score oh my god, no one's ever gonna loan me money again, you know, oh my God, I'll never buy another car or house. How do you lead them through that?

Darin Wisehart  15:13  
That's talking about the reality of those statements because our mind our mind is a weird thing when it comes to the unknown. Okay, so the unknown is one of those. Whoa, what am I thinking about? How do I think about space and the continuation of space forever, the human mind doesn't really wrap around that very well, I'm sure there's select people on the planet that can do it. But mine certainly can't. And I haven't met very many they can't. So here we're talking about the unknown, we're going to go through bankruptcy. And we're going to figure out how we can put those into perspective. And the idea is to say, Okay, we have this this aspect of the bankruptcy that is repairing your credit score, well, let's put, let's put the rubber on the road, let's figure out how that's going to happen in your situation. And a lot of times that has to do with getting through the process as best you can, because the credit score and the bankruptcy are two, you know, almost completely different things not quite completely, but almost completely, because the way that they're they're, you know, effectively taken is the financial aspect is your bankruptcy. And that's the that's the side that gets you cleaned up and gets all that debt in your past so that you don't have to chase that down for however long you were going to have to. And that's that's kind of the scrubbing part. Now we're going to clean it up, we're gonna shine it a little bit natural credit score, your credit score is really for all intents and purposes, it's how good a bet, are you if somebody loans you money. And that's really all the credit score is, most people in the United States don't really need the credit score for anything other than buying a car buying a house. And yes, you need it for buying a house because it has to be certain amount. Buying a car, the the conversation always comes to Well, can I get a car? Am I going to be able to get a car? Absolutely, you find that when you file a Chapter Seven, nowadays, you get inundated with advertisements to go get a car, everybody wants you to get a car. And I always make sure that I tell people why. Because you can't file another chapter seven, chapter seven, Chapter Seven is eight years. So of course, you could file a Chapter 13 earlier, and you can do some other things. But you can't really get a discharge on a chapter seven for eight additional years. Which means if somebody the day after your bankruptcy is filed, gives you a car loan, you're on the hook for that if you default for a long time until you can finally do something with another bankruptcy.

Steve Altishin  17:42  
So while a bankruptcy shouldn't cause shame, I guess what you're kind of saying is, it should cause some caution.

Darin Wisehart  17:50  
Absolutely, absolutely. You always want to be careful with it. Because you want to make sure that it's the right move for you. You want to go through that process with the attorney to make sure that everything fits for what your situation is, every case is different. And absolutely, you should have some caution when you go into this. You should go in with your eyes wide open, you should go in with what's possible. Bankruptcy is not perfect. It's not designed to be perfect. It's not a oh, here's the debt shot into a bucket and we're gone. We're moving on, you know, you got to assess what type of assets you have, what type of income you have, you know, there's a lot of little pieces Did you repay family or friends, any debts in the last year? All these types of questions that come in. And you you're required to get in the weeds a little bit before you get all the way through it. But a lot of times when people talk to me, and we're talking this this conversation, it's the right move for them. It just has to be something that they get over the hurdle. And part of that getting over the hurdle is putting shining some light on how things are going to functionally work for you. As you get into that next step. Maybe you Okay, let's, let's say theoretically, you filed now, what's your next step? What's it going to look like? Are you ever going to be able to get a home loan? And the answer is absolutely you would if your income allows you, after two years you're getting an FHA loan, you're qualifying for an FHA loan doesn't mean you automatically get it. But you're able to qualify for these things. It doesn't mean the end of your, you know, financial life, it just it's very important to start shining a light on what's it going to look like because we don't want the human mind to take over with that unknown. And now all of a sudden, you just have this void that your brain will fill in, and it'll always fill in, it always fills in the worst case scenario, right? That's just how it always works. So we want to we want to make sure we put some some terms to it to what it's actually going to look like. That way you don't just fill in with incorrect information.

Steve Altishin  19:44  
And I guess someone feeling that way, it's important I guess for them to know and it sounds like that this is kind of what you do also is done but you're not the only one came in with that I mean, this is common? This is a this is something you know, you're not. You're not weak, because you're feeling this.

Darin Wisehart  20:09  
Yeah, absolutely, absolutely. And that is, it's, it's not a judgment of a human to go through bankruptcy. It's not a judgment of where you were. And you know what, what you aspire to be, nobody calls me with good news, they don't call me to say, hey, I want to file bankruptcy, I'm really happy about it. At the same time, it's not the end of everything. It's a process to get you cleared to say, You know what, I don't want ever want to do this again. And I tell clients all the time, I don't want to recurring customers, I want you to get through this thing with as least the least amount of stress. So you save yours on your life, and you get through it nice and smooth. And in the end, you have an opportunity, then to put money aside for your children's education, or do these things that that earmarked money would have been chasing those debts for such a long time that I want you to call me in two years, three years, four years, or send me a Christmas card saying, things are looking very good for my family, now we're doing fine, we're able to keep a roof over our heads and food on our table. And we don't have to worry about Chase or Citibank or Capital One. garnishing our wages. And that's, that's an important spot to be in. Because if it's the financial move that you need to make, then getting over the mental hurdle, all the shame, the guilt, all the different emotions that pop up can be unlearned. And that is crucial to remember, it's really important.

Steve Altishin  21:39  
It's like treating yourself like a business a little bit. Because, you know, you mentioned three companies, two of which I think, maybe have filed bankruptcy. And there are there are more than one, I believe chapters about a bankruptcy that allows businesses to do this. And it's a part of business, it's a financial disjoint situation and decision for companies, why shouldn't it be for people?

Darin Wisehart  22:07  
Absolutely, absolutely. And I like to make the joke about the person that is in New York, in a high rise on the 62nd floor in a dark office that just has their computer in front of them that can do the numbers, and they can figure out exactly where you stand and how long it's going to be that you're going to be able to do what you're doing. They know all of these things, they've, they have a spreadsheet for this. For for individuals, a lot of times we don't have a spreadsheet, we don't look at it like that, from the you know, just the black and white of what the terms will look like. And that's why it's important. When you talk with a good attorney, you know, you give us a call, we can chat through these things. It's important to put the black and white on there, what's it gonna look like? What what are these debts, what's going to happen? what's likely to happen with all of these things. And that allows you to then take away the unknown, break it down to just with a whiteboard, I have a whiteboard behind me for a reason. Because sometimes when I'm in my office with people, I will stand up and I'll play teacher, I'll make sure Okay, here, let me let me tell you what it's going to look like for you to try to tackle this without a bankruptcy. And we give them that full look of this is this is how it's gonna look without this is how it's going to look with a chapter seven or chapter 13, maybe a chapter 11, all the different aspects, you know, of those few cases that they might look at. And it It then starts to remove us from? Well, I just don't think it's the right thing for me to do. Because now we're talking, well, here's the dollars and cents. And this is, this is what its gonna look like. And that's the way that Capital One is looking at it to Citibank, you know, they're not looking at it from the emotional, the only reason they look at it from an emotional or they bring emotional in is because at a collection point, they want you to be motivated. And they know they can take advantage of your your mental state by saying, Oh, you don't want to pay your debts, or some some one of those guilt statements that they use all the time. And those are the ones that you want to really remove yourself from to get to the proper financial location. That's, that's what you're looking to do.

Steve Altishin  24:10  
I love it. I love it. And we're just about out of time. But it seems everything with what you've talked about is that this stuff needs to be heard. Not only to get them to fall, but but I can see a situation where they came in into a bank that really didn't really talk about it again, I don't care about that. Just here's what it is. That's fine, let's go. Processing through the bankruptcy becomes much easier, when you've helped show them that this isn't a moral, ethical problem, no doubt about it.

Darin Wisehart  24:47  
And it also, I use an adage all the time that I like happy clients, and we talk about happy clients. That's the statement that I make all the time is that I want you to be as happy about your decision to go through bankruptcy as you are thinking you are going to be. So when you look back on this thing, your pre file, you talk to me, you work through all the different scenarios, I want you to take the choice that's best for you. And as we get through the bankruptcy six months later, you you talk to me, I want you to be just as happy about your decision, I want you to be very comforted knowing that you've taken the proper path, you've taken the path that's right for you and your family. And sometimes that means you got to turn the mental emotional side off of it, but breaking it down into those different paths. And that's why every client that I speak with, we talk about no filing, what's it going to look like, if you don't file? What's it going to look like if you file chapter seven? And what's it going to look like if you file a Chapter 13? And those are your three most likely paths. And sometimes we have to entertain another another path because of that particular potential case. But it's, it's those pads that they can choose from. And here's the positives and the negatives, there's always positives and negatives and every side, how do you get over all of those to where the best decision is, so that when you look at this in five years, and you're sitting talking to your friend, you can say, I'm really glad I tackled it that way, even though, you know, my attorney had to tell me to get to turn off the the emotional or the overstressed angle of my brain.

Steve Altishin  26:25  
Wow. You know, I don't think a lot of people, maybe until today, would associate bankruptcy with happy and comfortable. And I think that's really, really important. We're out of time. Gosh, darn it. So once again, Darren, thank you so much for just sitting down with us to talk about really why there is no shame in filing for bankruptcy and how it is a forward thinking then it's an important topic doesn't get talked about very often. So thank you very, very much.

Darin Wisehart  26:56  
Yeah, no problem. Thank you.

Steve Altishin  26:58  
Thank you. And again, thank you, everyone, for joining us today. If anyone has any further questions on today's topic, post it here, we can get you in connection with Darin. And until next time, stay safe, stay happy and be well.

This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at or You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.