The post-bankruptcy rebuilding process : how the chapter 7 debtor learns to begin life anew



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The Chapter 7 bankruptcy process is designed to provide economic closure for those unable to pay their debts and to provide the debtor with a financial fresh start. The law, however, provides no guidance for the debtor once their debts are discharged. The purpose of this study is to illuminate and understand how the bankrupt debtor learns to begin life anew, building upon the fresh start granted by the legal system. Using transformational learning as a theoretical perspective and phenomenology as a methodological perspective, this qualitative study examines the lived experience of the debtor and is situated in the lifeworld of each of the study’s six participants. This study examines the nature of the bankruptcy experience for the debtor, how filing bankruptcy changes the debtor’s life, how the bankrupt debtor learns to begin life anew and build upon the fresh start granted by the legal system, and the nature of this learning. This study found that for the six people interviewed, the nature of the bankruptcy experience centers around the theme of brokenness: broken families and broken relationships, fragmented careers and shattered dreams, broken health, and psychological brokenness and chaos. Findings regarding how the debtor learns to begin life anew focus on rebuilding financial wholeness, and rebuilding the whole person through physical wellness, supportive community, and spiritual practice. Findings on the nature of these learnings focus on changes in the participants’ core values. This study also reveals the limitations of the Chapter 7 bankruptcy process to enable the fresh start. The findings of this study suggest that financial decision making is often emotional and non-rational, and they support bankruptcy policy that provides for the rehabilitation of debtors while continuing to encourage risk-taking. This study supports policies and practices which provide for the broader needs of the debtor, including education in managing money, job training, and counseling in relationships, stress management, and personal self-worth. The findings of this study support Mezirow’s theory of transformational learning which states that a disconcerting dilemma may lead to a change in perspective transformation through reflection on underlying assumptions. The element of brokenness at the core of the bankruptcy experience suggests that bankruptcy may precipitate a disconcerting dilemma. This study illuminates and extends the importance of values and values clarification in the process of transformational learning. This study suggests that spiritual practice may trigger, encourage, or support personal transformations by fostering critical reflection.