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.Sousa states that
The word “stigma” traces its origins to ancient Greece, where the citizens of Attica and Athens branded their slaves with a tattoo known as a “stigma,” stemming from the word “stig,” which meant “to prick.” Today we use the terms “stigma” and “stigmatization” to refer to the societal disapproval associated with an individual or group based upon some characteristic, trait, or behavior that deviates from accepted norms or expectations. Traditionally, sociologists have limited their studies on stigmatization to the physically disabled, mentally disabled, mentally ill, homeless, homosexual, elderly, or the stigma associated with being a known criminal, prostitute, or a member of a minority group. While the characteristics and traits that receive social opprobrium may differ from one society to the next, the phenomenon of stigmatization is universal and the volume of sociological literature on stigmatization is, in a word, massive.
While sociologists consider the phenomenon of stigma to be universal, conceptions of what attributes tend to be stigmatized are bound by culture, time, and history. Beliefs about what attributes receive a stigma are social constructs and are “socially distributed” throughout a particular culture. In the western world, one such attribute appears to be the moral disapproval of personal indebtedness and the general societal disdain towards individuals who file for bankruptcy protection.
To date, very little sociological attention has been devoted to studying the stigma associated with being heavily in debt and, in particular, with declaring bankruptcy. Despite the existence of American bankruptcy law for over one hundred eighty years and the escalating use of personal credit in America, only a handful of studies have addressed this stigma. The scholars in this small group have primarily focused on the question of whether bankruptcy stigma exists in modern society and whether it has declined over the years. They have reached sharply differing conclusions.
The need to study bankruptcy stigma remains relevant today. The filing rate for consumer bankruptcy debtors has risen steadily since the 1960s, with the greatest increase occurring during the 1990s. This dramatic spike in consumer bankruptcy petitions reinvigorated public debate over the role and efficacy of stigma as a means of controlling the bankruptcy filing rate. From the 1990s to the present, more than one million individuals have filed for bankruptcy protection every year. The 2005 Amendments to the Bankruptcy Code, through the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), were predicated, in part, on a belief that debtors were abusing the bankruptcy process and that the shame and stigma associated with bankruptcy had eroded. The sweeping changes in the Bankruptcy Code were designed to ferret out the abusers, allowing debtors with primarily consumer debts to file a Chapter 7 bankruptcy petition only if they truly had no ability to repay a meaningful portion of their debts. It has been approximately eight years since BAPCPA took effect. There is a need to reexamine whether those who ran the gauntlet under this new law and were deemed worthy of filing chapter 7 bankruptcy, nevertheless, continue to experience shame associated with having declared bankruptcy.
This Article does not address whether the changes in the law were successful in screening out “abusers,” nor does it intend to weigh in on the debate as to whether bankruptcy stigma has eroded over the past several decades. Instead, this Article offers a synthesis of existing scholarship on the nature of bankruptcy stigma and then presents the findings of my qualitative, sociological study of this issue. The first half of the Article will address the sociology of stigma in general terms, offer possibilities for the cultural sources of bankruptcy stigma, and then summarize the existing studies that have focused exclusively on bankruptcy and debt stigma. The second half of this Article will present my empirical findings on bankruptcy stigma, based on my study of consumer debtors who filed for bankruptcy in the years 2006, 2008, and 2010.
In the law and society tradition, my approach here is not to explain the act of filing for bankruptcy relief in legal terms, but in social terms. Therefore, my main concern is not in advancing prescriptive arguments about bankruptcy law in general or in making recommendations for revising the Bankruptcy Code. Rather, my overriding purpose is to explain how consumer bankruptcy filings affect the lives of the individuals who have sought its relief. To borrow a phrase from Roger Cotterrell, my purpose is to offer a small “picture[ ] of the social world of law” from the perspective of former bankruptcy debtors, and to convey and describe their experiences with filing for bankruptcy. In sum, my findings suggest that debtors’ internalized notions of shame and stigmatization today occupy a full spectrum of attitudes.