The Psychological Toll of Debt: How Bankruptcy Can Improve Mental Health

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It’s no secret that Americans are struggling in this economy. Record inflation and stagnant wages have crippled the American households and left many people wondering if it’s still possible to get ahead. It goes without saying that debt is often the biggest contributor to this financial anxiety. Debt can have a psychological toll on your mental health. Debt is known to cause significant anxiety and stress, contribute to depression, strain relationships, and even manifest as physical health problems. Chronic worry and stress about debt can feel like an overwhelming burden, and for many people, mounting debt can also cause feelings of hopelessness or a sense that they are trapped in a cycle of financial distress.

However, there is hope. As a bankruptcy attorney, I’ve witnessed the transformative power of bankruptcy in improving the mental health of my clients. In this blog, we’ll explore the psychological toll of debt and how bankruptcy can be a crucial step towards relief and recovery.

How Bankruptcy Can Improve Mental Health

  1. Immediate Relief: Filing for bankruptcy puts an immediate halt to collection efforts, including harassing calls from creditors. This relief alone can alleviate significant stress.
  2. Fresh Start: Bankruptcy offers a chance for a fresh start. It wipes out qualifying debts, allowing you to regain control of your financial future and reduce the anxiety associated with insurmountable debt.
  3. Financial Education: Bankruptcy requires a financial counseling course which gives you the tools to better manage your finances in the future. 
  4. Peace of Mind: Knowing that you’re taking proactive steps to address your financial issues can provide peace of mind. It can help restore your sense of control and alleviate feelings of hopelessness.
  5. Improved Relationships: Bankruptcy can also improve relationships strained by financial difficulties. By addressing the debt problem head-on, you can work towards rebuilding trust and stability within your family and social circles.
  6. Focus on Well-being: With the burden of debt lifted, you can redirect your focus towards your mental and physical well-being. You’ll have the opportunity to invest in self-care, therapy, and activities that promote a healthier lifestyle.


The psychological toll of debt is real, and it can have far-reaching effects on your life. If you’re struggling with overwhelming debt and its emotional consequences, consult with a qualified bankruptcy attorney to explore your options and take the first step towards a brighter, debt-free future. Remember, there is hope, and you don’t have to face your financial challenges alone. At WM Law, we are here to help.

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Jeffrey L. Wagoner


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