Bankruptcy Stigma: A Socio-Legal Study

Abstract

For as long as the institution of bankruptcy has existed, legal commentators have debated whether it is appropriate for debtors to experience some social stigma upon filing for personal bankruptcy - that is, whether it serves the goals of bankruptcy law for debtors to feel shame. While this issue has been extensively discussed as a theoretical matter, to date no legal commentator or scholar has examined the question as an empirical matter: do debtors in fact associate feelings of shame with filing for bankruptcy, and, if so, why (or why not)? This article, for the first time, undertakes precisely this inquiry. Specifically, the article relies on empirical methods to report findings gathered from extensive interviews with debtors themselves. What emerges is that debtors experience a wide array of feelings associated with filing for bankruptcy, from debilitating shame to no shame at all. This finding, in turn, raises serious questions about the theoretical role of shame and stigma in designing bankruptcy law and policy.