Is Filing For Bankruptcy ‘Dishonest’?

As discussed in the first part of this series, there are many myths surrounding the bankruptcy process. This article, the second in the series, will address Great Myth #2: “Bankruptcy is dishonest.”

I frequently hear from clients that they feel it is somehow “dishonest” or “immoral” to wipe away debts they would otherwise owe. In fact, nothing is further from the truth. In debunking this myth there are three points to consider:

First, and most fundamentally, as a United States citizen, our Constitution entitles you to the protection of the laws of our country. The bankruptcy laws are enshrined in our legal system. As a citizen, there is no need to feel “bad” or “immoral” about availing yourself of the protections of our country’s legal system. Everyone goes through ups and downs in life; the purpose of the bankruptcy laws is to give you the bump up when you’re experiencing a downturn.

Second, financial institutions, credit card companies, and other lenders, are well aware of the bankruptcy laws. They are well aware that when they lend money they may never see it paid back if the borrower files for bankruptcy. They are well aware that borrower’s often have low income and few assets. Despite this risk, they lend money and extend credit anyway. All this is done with full knowledge that a bankruptcy filing may extinguish the debts. For these lenders, the risk of bankruptcy filings is nothing more than the cost of doing business.

Finally, many creditors, credit card companies, and financial institutions in particular have themselves filed for bankruptcy in the past. Bankruptcy is simply a normal function of today’s business world. It provides borrowers a fresh start. Without this fresh start, many individuals and businesses alike would struggle to continue. In turn, lending would dry up and the economy would stagnate. When confronted with these challenges, the bankruptcy process not only provides a mechanism of relief for the borrowers, but equally as important, enables the economy to survive and continue to grow.

Nothing is “dishonest” about this.

Stay tuned for the final part of our three part series, which will address Great Myth # 3: “If I have no assets, I don’t need to file for bankruptcy.”

Btzalel Hirschhorn is an attorney specializing in the areas of Bankruptcy Law, Debtors & Creditors Rights, & Real Estate. He may be contacted by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 516-418-7520.