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What are the emotional effects of bankruptcy?

On Behalf of | Apr 2, 2024 | Bankruptcy And Debt Relief

Declaring bankruptcy can significantly affect one’s mental health. However, this is usually overlooked, as most people focus on financial effects. 

While the latter consequences are serious, it’s vital to also take into account the emotional effects of bankruptcy, which include:

Loss of identity

Money is substantially linked to one’s identity. How someone responds to life may be determined by their wealth. When people have money, they have more options. They can go golfing on the weekend, buy clothes when they want to change their wardrobe, eat at a luxurious restaurant to relax and so on.

So, when all this is taken away, someone may lose their identity. They may not know what to do on the weekend or when they want to relax. This can harm their mental health.

Loss of security 

Financial security is crucial. It’s comforting for one to live the life that they want. Affording expenses can make them feel secure. Thus, declaring bankruptcy can lead to a loss of this security, which can be stressful. 

Even people who have managed to untie their identity and self-worth from money may experience this emotional effect.

What can you do?

Accepting the feelings caused by declaring bankruptcy is crucial. Do not avoid them. Thus, give yourself time to feel shame, guilt, anger, sadness and so on. A therapist can provide you with the tools to embrace these feelings and eventually let them go.

You should also adjust to a new reality. Find new things to do, such as spending time with loved ones. Additionally, magnify the benefits of declaring bankruptcy to your mental health – you no longer have to worry about debts you can’t pay. It’s a fresh start for you.

If you believe you need to file for bankruptcy, get legal help to learn more about your case to protect your mental health.