A loved one should file for bankruptcy. How can I talk to them about it?

It can be hard to watch a loved one struggle with their finances. You know they are a good person, but personal economic struggles can have an impact on nearly every area of a person’s life. They might be more irritable. They could be more likely to get sick, and they can become withdrawn or depressed because they never have the money to do anything. It’s also more likely that they will ask to borrow money more often from friends or relatives, which can make their struggles not only their problem, but yours.

The decision to file bankruptcy can be hard to make. Many people try to avoid it when they can. However, for some people holding off on filing can be more trouble than it is worth. But many people still feel a stigma when it comes to bankruptcy. They worry that filing means they are a failure. They may even feel that they don’t deserve the relief that bankruptcy could bring, or that their friends and family will judge them for not being able to handle their finances on their own.

Offer a Gentle Suggestion

When a person has been struggling with their bills, there is a good chance that they have thought about filing bankruptcy, but they may not have let themselves take the time to think about the idea seriously. But when things aren’t working, they aren’t working. Sometimes all it takes to get the idea of bankruptcy to move from being a passing thought to being something that your friend or family member will seriously consider is to hear the suggestion out loud from someone that cares about them.

Choose a time when you are able to speak in private and simply ask them, “Have you ever thought about filing for bankruptcy?” They may tell you they “can’t” or they “don’t believe in it,” or say they want to “pay their own bills.” If this is the case, you can admire your friend or family member for wanting to do what is right while still mentioning that continuing to struggle isn’t helping anyone. If they are a little behind and have a feasible way to catch up within a reasonable amount of time, that’s one thing, but chances are, they didn’t ask for the circumstances that put the idea of bankruptcy on their personal radar. Starting over gives them a chance to regroup financially and provides a real opportunity to do things right.

Let Them Know You are in Their Corner

The fear that others will look down on them is another reason why many people avoid or delay bankruptcy. If they have to choose between being broke or being alone, they would rather be broke. But when it comes to true friendship or family ties a person’s bank balance or credit score should not play a role. It is important to remind a person of this fact, and assure them that you do not measure their value in dollars and cents.

Limit Financial Support

While you do want to support a friend emotionally, it is wise to avoid large loans while a friend or family member is going through bankruptcy. Having an unnecessary financial connections can complicate familiar relationships. When you lend money to someone who is filing bankruptcy, any repayment of that loan goes through their bankruptcy case. If they file a Chapter 13 bankruptcy, it becomes part of a 3-5 year repayment plan. If they file a Chapter 7, there’s a good chance the debt will be discharged completely.

If you do decide to lend money, it should be done with a real understanding that you may not get that money back. If your friend or family member wants to pay you back outside the bankruptcy it can potentially jeopardize their case. Consider your relationship and your own financial concerns before lending money.