What You Shouldn't (And Should) Say to Someone Going Through Bankruptcy

The do's and don'ts of offering financial advice to someone navigating bankruptcy.

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Updated May 28, 2024
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Financial troubles can be overwhelming, especially when they lead to the difficult decision to declare personal bankruptcy.

It's during these trying times that people need the most support and understanding from their loved ones. But most people don’t like talking about money, especially when it is upsetting someone’s life.

How can you provide the right kind of support to someone going through bankruptcy? Here are some ideas for what you shouldn't say, what you should say instead, and some ways to pay off debt.

"How could you let this happen?" (Don't say)

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This question places blame on your loved one when they’re likely already feeling tremendous shame and embarrassment about their situation.

Bankruptcy is usually a result of complex financial challenges that are often beyond the person’s control.

It’s crucial to approach the situation empathetically and offer support rather than cast judgment.

"You should have been more responsible with your money." (Don't say)

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Assuming that someone filing for bankruptcy was irresponsible with their money overlooks the many factors that can lead to financial hardship.

Although some people file for bankruptcy because of overspending, many file due to external circumstances they had no control over. This could include job loss, medical emergencies, or divorce.

"You should have asked me for help!" (Don't say)

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This probably comes from a place of love. After all, you would have helped if you had known their situation. However, it’s important to understand why the person filing for bankruptcy hesitated to ask for help.

Financial struggles are usually accompanied by shame, embarrassment, and the fear of burdening others. Unfortunately, these feelings can get in the way of seeking help from loved ones ann financial professionals.

"You’ll never recover from this." (Don't say)

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It’s entirely possible to recover from bankruptcy fully. Bankruptcy allows people to eliminate and restructure their debts, providing a fresh start and an opportunity to rebuild their financial foundation.

Telling your loved one, “You’ll never recover from this,” is discouraging and disregards their potential for financial recovery and personal growth from the experience.

"You should just sell everything you own to pay your debts." (Don't say)

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The purpose of bankruptcy is to provide a path toward financial recovery. While selling assets may provide immediate funds, it usually won’t solve the person’s underlying financial issues.

Additionally, state and federal laws often prevent certain assets, like primary residences and vehicles, from being liquidated during bankruptcy. If these assets are protected, selling them may not be the best option.

"You’re taking the easy way out." (Don't say)

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Bankruptcy is rarely a choice made lightly and often comes after exhausting all other options.

To file for bankruptcy, a person must navigate intricate legalities, confront debts, and make difficult decisions. They also often face stigma and emotional distress while trying to rebuild their finances.

Furthermore, bankruptcy doesn't magically erase financial obligations. It can have lasting effects on credit scores, access to credit, and favorable interest rates.

Now let’s look at what you should say to someone facing bankruptcy.

"I’m here for you. Is there anything I can do to support you?" (Say)

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Bankruptcy can be an incredibly stressful and isolating experience, so it’s crucial to show your support. Letting someone you care about know, “I’m here for you,” is one of the best things you can say.

These simple words can have a powerful impact on someone who feels like they’re struggling alone with no one who understands what they’re going through.

"Do you want to create a plan together to help you regain financial stability?" (Say)

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Offering to build a plan together is another great way to show your support for someone going through bankruptcy.

It demonstrates your understanding of their situation and shows that you’re willing to actively help them work toward regaining financial stability.

By working as a team, you can provide both emotional and practical support, which can be invaluable in helping them get back on their feet.

"I believe in your ability to rebuild your finances. You got this!" (Say)

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It can be challenging to stay positive when going through bankruptcy. Reminding your loved one of their strength and resilience can profoundly affect their morale and mindset.

It may give them an extra boost to keep going during tough times when they know you have faith in them.

To avoid a disastrous financial situation that may lead to bankruptcy, here are some steps to take.

Assess your financial situation

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Knowing where you stand financially gives you a clear picture of the steps you need to take to reduce your debt.

Start by tracking all sources of income, expenses, and debts so that you understand what needs to be paid off first and where your money should go each month.

Prioritize debt payments

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To prioritize debt, allocate more funds toward debts with the highest interest rates while making minimum payments on the others. As you pay off each debt, redirect the freed-up money toward the next high-interest debt.

This approach will reduce the overall interest you have to pay and help you pay off debt sooner.

Increase your income

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More money coming in each month can make it easier to pay off debts faster and reduce the interest you’re paying on loans and credit cards.

While it may not be easy to increase your salary, there are other ways to boost your income that can help get you out of debt quicker.

Negotiate medical debt

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Medical debt can be overwhelming, but tackling it is possible using the right strategies. Creditors such as hospitals are often willing to work with people to create a payment plan that suits their needs and budget to reduce the amount owed.

If you don’t qualify for a payment plan, consider a personal loan or a 0% interest credit card.

Bottom line

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If you know someone going through bankruptcy, try to offer words of compassion and understanding rather than casting judgment.

You can also advise your loved one on ways to relieve money stress. However, you should ask them if they would like advice or just a shoulder to cry on before bombarding them with money tips.

Financial struggles can happen to anyone, and bankruptcy is a chance for a fresh start, not a mark of failure.

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Author Details

Carley Clark

Carley Clark is a personal finance writer from Michigan. She graduated from Spring Arbor University with a bachelor's degree in business. After graduation, she worked in finance as a revenue auditor at a casino. Carley strives to write informative content that will help readers meet their financial goals.