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Is Bankruptcy Bad?

We have been asked “Is bankruptcy bad”?

Chapter 13 Bankruptcy

The short answer to the question “Is bankruptcy bad” is no.

When a lender borrows money, they are gambling that the borrower can not only repay the debt – but also that the borrower is going to pay them a fee for doing so.

The borrower is betting that they can utilize the borrowed funds to increase the value enough to not only repay the debt but also pay a fee for the use of the funds.

When the gamble fails both sides lose. It can be easily argued the lender has much the easier ride. Banks especially are not actually using their money to lend, but simply creating a line item in an accounting field and setting up a payment plan to receive interest, where the borrower has to actually earn the funds to repay as well as all interest due.

In this case you can see that neither party is more at fault if the loan fails. They both gambled and they will both pay a price.

As a nation of capitalists (hopefully it stays that way!) it behooves us to not overly punish bankruptcy filers. If the price for bankruptcy is excessively high, less people would borrow and less wealth would be created for all.

If anything, creditors seem to have the advantage over the debtors as being the party with the most power tend to have more ability to influence law.

Maybe you heard presidential candidate Donald Trump say the following during a recent debate: “These lenders aren’t babies. These are total killers.” If you look at is objectively it is clear this is true. The bankers, financiers, and other money people like to present themselves as the good guys in town by being so generous with their funds, but they never mention they own the banks and the insurance businesses for a reason.

Do not think of yourself as ‘bad’ for considering or even filing bankruptcy. There are two sides to the deal. The other side of your deal does not feel ‘bad’ and neither should you.


We are a debt relief agency and have practiced bankruptcy law for a combined 50 years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code.


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