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How To Deal With the Stress of Bankruptcy

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In a Nutshell

The stress leading up to bankruptcy can often be overwhelming and difficult to mange. Many people struggle with the emotional toll of being in a lot of debt. Luckily, you’re not alone and bankruptcy is a great way to get relief after difficult times.

Written by Jonathan Petts
Updated November 15, 2023

It may sound strange, but bankruptcy can be one of the best decisions you ever make for your financial future. It provides relief from your debts and creditors and gives you a second chance at financial independence.

The Negative Feelings That Bankruptcy Can Elicit

The main ways that bankruptcy affects your emotional health is through stress and anxiety. Most people filing for bankruptcy have never been through the process before and likely never thought they'd have to. Many people experience feelings of uncertainty, stress, anxiety, depression, and failure.

Alongside this stress is the social stigma around filing for bankruptcy. In spite of the fact that bankruptcy is fairly common in the United States, it's often seen as a shameful. Many people don't want to acknowledge or admit to others that they are going through bankruptcy. Instead, they keep these feelings of anxiety and stress to themselves, making the emotional turmoil even worse. In severe cases, these feelings can eventually lead to depression, as well as other serious mental health problems.

Different Ways To Think About Bankruptcy

If you're struggling with the stress of bankruptcy, one of the best ways to help alleviate that stress is to shift your way of thinking about bankruptcy. Our culture tends to think about bankruptcy as a consequence of bad spending decisions, a shameful outcome.

But the truth is that bankruptcy is a tool put in place by the federal government to protect debtors from malicious creditors and overbearing debt — especially after financial shocks. You’re entitled to not be overburdened with debt and trapped behind financial obligations.

Bankruptcy Is a Fresh Start

So rather than thinking about the stress of bankruptcy or seeing it as a shameful outcome of debt, consider it in a more optimistic light. Bankruptcy, in its simplest form, is a fresh start. It's a chance to start over, to get past your previous financial choices.

Filing for bankruptcy provides you with a renewed sense of financial independence. Rather than having your earnings, belongings, and investments indebted to others, they will once again belong to you. You'll be able to start rebuilding your finances, credit, and savings, without the fear and stress of looming debts and creditors.

Bankruptcy Helps Build a New Financial Future

Bankruptcy also provides you with the perfect chance to establish a new financial plan. With your new, clean start, you can avoid the mistakes you made before and set yourself up for much greater success. Set a budget, borrow responsibly, use tools and resources to improve your situation.

By carefully monitoring the way you use your money, and planning strategically, you can not only protect yourself from the negative aspects of debt, but use your money to your advantage.

Tips For Staying Productive During Bankruptcy

When you're dealing with the stress of bankruptcy, it can be easy to fall behind your filing duties, let alone your day-to-day obligations. Depression and anxiety in particular lead to a "freeze" response. This means that the individual experiencing these emotions will cease their normal or required duties in order to cope with and avoid further stress. However, this only makes the situation worse. The work that needs to be done isn't going anywhere on its own. The best thing you can do is to stay productive in spite of the stress of bankruptcy.

Make a Plan or a List

The best way to handle any monumental task is to break it down into smaller steps. Buildings are laid one brick at a time, step by step, and the same applies to your bankruptcy filing.

The first step in this process is to form a plan for tackling your pre-filing and post-filing process. Figure out all of the documents you need, all the paperwork that will need to be filled out, the people you'll need to consult with and the work that will need to be done.

Make Progress

Once you've got a solid list of everything that needs to be done, put it in an order that makes sense, and do at least one thing every day to help get that list done. Some days will be more productive than others. But so long as you're making steady progress, you'll be able to tackle your bankruptcy filing while also reducing the stress of bankruptcy.

Just remember to take breaks throughout the process. Taking breaks is also important for your mental health and will keep you from burning out from the stress of bankruptcy.

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Keeping Your Emotional Health In Order During Bankruptcy

Once you've started to get a handle on the work aspect of filing for bankruptcy, you need to start taking care of yourself. This is important for managing the stress of bankruptcy.

Stay Positive and Proactive

As mentioned above, staying productive and rethinking your perspective of bankruptcy will both help with the stress and anxiety significantly. Work provides you with a sense of pride, progress, and accomplishment. Not only that, but as you take care of the work, you'll have less to worry about. And rethinking your perspective on bankruptcy will help you realize that while it's not an easy process, it's also not as scary or daunting as you first thought.

Get Help When You Need It

Another great way to deal with the stress of bankruptcy is to seek outside help. The most obvious way to seek out this help is through a bankruptcy attorney. While not required, a bankruptcy attorney will help you navigate the legal aspects of the process, ensure that nothing is left undone, and will manage many of the more involved tasks for you. Another professional that can provide you with help is a therapist. Therapy is a great way to get to the root of stress and develop healthier ways of coping.

Remember That You’re Not Alone

One of the most important things to remember during bankruptcy is that you are not alone. Filing for bankruptcy is pretty common, despite the fact that most people are unwilling to talk about it. And not only are there more people going through your situation than you realize, but there are people in your life who can be there for you and help you through the process. Family members, friends, and professionals can all give you advice on the situation and be there for you when you need it. The worst thing you can do when dealing with the stress of bankruptcy is to bottle your negative feelings up and keep them to yourself.

Family and friends can also help relieve a lot of the stress of bankruptcy. While seeking help may seem uncomfortable at first, they'll likely be much more understanding than you would first assume. Alongside talking to trusted individuals, picking up healthy habits like exercise, dieting, yoga, and regulating your sleep will all contribute to improved physical health. And research shows that the healthier you are physically, the healthier you will be mentally.

How Bankruptcy Can Actually Reduce Financial Stress

Something else that most people don't consider when filing for bankruptcy is that the process itself can actually be stress relieving. The stress of negotiating, communicating, and fighting off creditors is often more stressful than the stress of bankruptcy itself.

You Get Relief From Your Creditors Via the Automatic Stay

As soon as you file for bankruptcy, the court will grant you an automatic stay. An automatic stay is a hold the court places against your creditors. It prevents them from pursuing you during the course of the filing process. This means no more wage garnishments, phone calls, letters, etc.

You Can Erase Your Debts With a Bankruptcy Discharge

Filing can also relieve financial stress in the long term by discharging your debts. This means that after you get through the stress of bankruptcy, you'll be able to resume your life without the burden of your debts.

This is perhaps the best way that choosing to file can reduce the stress of bankruptcy. The longer you wait to file, the longer you will be stuck beneath the pressures of your debts: interest rates will compound what you owe, creditors will become more aggressive, and your financial wiggle room will continue to shrink. By choosing to file for bankruptcy, you are lifting that burden and providing yourself with new financial opportunities.

How You Shouldn't Deal With The Stress Of Bankruptcy

There are healthy ways to manage stress, and unhealthy ways to manage stress. The stress of bankruptcy, and stress in general, can lead to even more damage in their life. While some of these damages can be remedied, many will take a serious toll on you beforehand. They may seem like they reduce stress in the short term, but overall they only amount to more problems and anxieties. This is a big part of why it's so important to seek help and advice early on, as well as to be proactive about your situation.


A common way that people try to deal with stress is by procrastinating. Procrastination can lead to feelings of shame, and ultimately it will increase the amount of pressure you're under. Procrastination is fairly prevalent among most adults, and can even be tied back to genetics. One of the best ways to beat procrastination is to set daily, manageable goals that you can consistently work toward.

Substance abuse

Sometimes, people try to cope with the stress of bankruptcy through substance abuse. Whether it's alcohol or drug use, these things will seem to relieve the stress temporarily. However, each has serious negative consequences, for your future as well as your present. Substance abuse impairs your ability to make rational decisions and remain responsible, which can interfere with your ability to make sound financial decisions. This can also make it more difficult to stay on top of your bankruptcy filing, hurting you even more in the long run.

Stress is more than just emotionally tumultuous. It can have serious, medically observable effects on your well being. Long term stress, in particular, can be very dangerous for your mental and physical health. Individuals under a serious amount of stress will usually have an impaired short term memory, difficulty thinking rationally, and trouble expressing their feelings to others. Along with these problems, stressed out individuals might see changes in their appetite, weight, happiness, sleep patterns, concentration, and personal relationships.

When you're in a mentally and emotionally impaired state for long periods of time, you can think, feel, and act in ways you never would under normal circumstances. This can cause problems that go far beyond finances. Denial is one of the most potent stress-related problems to occur in bankruptcy filers. Psychologists sometimes refer to this as the "opossum response". This response is when you become so overwhelmed and distressed that you mentally check out. Rather than face the problems plaguing you, or even performing your day to day activities, you retreat inward and avoid anything that could cause you the slightest amount of stress.

To prevent the stress of bankruptcy from getting to this point, individuals need to remain proactive and engaged with their mental and emotional health. Always be taking steps to improve your mental health and to relieve stress. And if you feel like things ever start to get beyond your control, seek help from a professional as soon as possible.

Let's Summarize...

If you find yourself becoming overwhelmed by the stress of bankruptcy, talk about it with trusted loved ones and friends, professionals, and even your attorney. Bankruptcy can be an isolating experiencing, but the truth is that you are not alone. So long as you prioritize your mental health and remain productive, bankruptcy can be a positive and stress relieving experience.

Written By:

Jonathan Petts


Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and CEO of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in bankrupt... read more about Jonathan Petts

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