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A few economists have written about stigma, but the results are pretty much the same. They focus on a few economic measures—the unemployment rate, the GDP level, the inflation rate, and so forth—without ever actually talking to families, either those who file for bankruptcy or those who do not. These researchers then declare that a decline in stigma accounts for anything and everything that the bare numbers don’t explain.7 For example, if bankruptcy goes up while inflation goes down, it must be that stigma diminished because no other explanation presents itself. By this logic, the rise in bankruptcy filings might as well have been attributed to the number of SUVs on the roads or the number of burritos consumed—with exactly the same result.

Despite all the harrumphing, there is plenty of evidence that stigma is alive and well among families in financial trouble. One long-term study of family economics found that fully half of bankrupt families were unwilling to admit—even in an anonymous survey—that they had filed for bankruptcy.8 Economists have calculated that there are millions of families who, after they took account of the legal fees and other costs, would be better off financially if they sought the protection of the bankruptcy courts. According to one estimate, about 17 percent of all households in the United States would see a significant improvement in their balance sheets if only they were willing to sign a bankruptcy petition.9 That’s 18 million households that would profit from a bankruptcy filing, compared with the 1.5 million that actually filed, suggesting that at least 16.5 million families are still trying to pay their debts for some reason that has nothing to do with the legal rules. It would seem that bankruptcy may look like just another “financial planning tool” to the economists who study it, but it is very different for the families who actually have to file the petitions and show up in court. 10

Many commentators seem concerned that the families who file for bankruptcy are not sufficiently contrite. Democratic Senator Patricia Murray from Washington argues that the Senate should make it a priority “to recapture the stigma associated with a bankruptcy filing.”11 The idea that they do not feel bad enough about their bankruptcy filings would have come as a shock to most of the families who filed. In her discussion of the psychology of bankruptcy, Constance Kilmark describes the people she has counseled to file for bankruptcy: “The anguish, shame, and embarrassment they experience over their situation is real and compelling.”12 In our own research, several mothers were willing to talk with us only on the condition that we not use the word “bankruptcy” during the telephone interview for fear that a child might pick up the extension phone and hear the dreaded word. Some said that just hearing the word still makes them cry, and they asked us to refer simply to “the event.” More than 80 percent of the families we interviewed reported that they would be “embarrassed” or “very embarrassed” if their families, friends, or neighbors learned of their bankruptcy.13

So why would families file for bankruptcy even if they felt ashamed? Because they believed they had no other choice. By way of analogy, consider the stigma against nudity. Pretty much anyone over the age of three feels extremely embarrassed about getting naked in front of a stranger. But when people come down with a serious illness, when they are frightened by odd lumps or unexpected pains, they willingly shed their clothes in front of a bevy of medical professionals. They don’t bare their bodies because they feel no stigma about nudity; they take off their clothes because it is the only way to get some help.

So it is for more than a million families each year. When given the choice between losing their homes or filing for bankruptcy, they chose bankruptcy. When faced with a choice between never paying off credit card debts and getting a chance