She sat at my desk, scared and frustrated. Then I strongly recommended she go bankrupt. The tears welled in her eyes and then she started crying. Culturally this was not acceptable; she did not want to be a failure. Was she? Of course not! That’s the problem with the word bankruptcy, it carries a bad stigma.

My long mortgage career began working for financial institutions including a large major bank. My training included not giving away the lowest rate immediately and bankrupt people are the lowest of the low. I honestly believed that these people overspent, had no pride in their credit and took advantage of the system. My first encounter with a bankrupt person was a gentleman chemist who was trying to cure cancer. That did not sound to me like someone trying to take advantage of the system. Then a lady who was in a devastating car accident, then a business that got crushed during the recession, then a family who was spending money trying to save their son from a rare disease. These were not bad people. They just had bad luck. Most of these circumstances were beyond their control or economic circumstances had changed.

In Canada over 1 million people have declared bankruptcy in the last decade and have faced the stigma.
There are two kinds of stigmas:

EMOTIONAL & SOCIAL STIGMA
See themselves as failures
Have a moral conscience
Highly responsible and hopefully time will heal it

FINANCIAL STIGMA
Credit scores dive
New credit will be hard

In business, this is where the competent take over the incompetent.

I am meeting that lady this Thursday. Since our emotional meeting, she has gained her confidence again. She made a good decision going bankrupt. She got a second chance, learned valuable lessons and is doing well. What did l learn; most bankrupt people are good people who had bad circumstances