Should Bankruptcy Cause a Guilt Trip?

Sheep dog covering her eyes with her pawASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

I filed for bankruptcy a year ago. I felt badly about filing, but after paying my bills every month I had $10 left to last until the next month. Financially, I am now better off. Can I pay my old creditors back in order to get credit? I know it’s not right to run out on creditors. 


Dear Carol,

I’m really glad you’re now better off.

But your old credit is gone. Paying the old creditors does not make it come back. However, you can take steps to rebuild your credit so that you can get new credit or loans in the future. For tips, see Nolo’s Rebuilding and Improving Credit topic page.

Bankruptcy ≠ Running Out on Creditors

I’d like to clear up something else. By filing for bankruptcy, you didn’t run out on your creditors. In your bankruptcy, you subjected all of your assets to administration by the court. If the trustee found anything of worth, he or she would have sold it to pay your debts.

If you had engaged in financial wrongdoing, the court would not have granted you a discharged. And in giving you the discharge, the court also determined that you could not afford to pay anything and maintain a very modest standard of living. The privilege of a bankruptcy discharge is reserved for people like you who are honest but unfortunate.

I wonder if the CEO of General Motors feels bad about the millions of shareholders, bond holders, and creditors who didn’t get paid those billions of dollars owed in the GM bankruptcy. I certainly hope so, but I doubt it.

Keep doing well, and stop looking back.

— Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

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