The Coronavirus pandemic has left the global economy teetering. Despite the efforts of governments to provide income support, such as JobKeeper payments, large-scale layoffs are likely. Shifts in consumer behaviour, driven by necessity towards online shopping platforms, are forecasted to crystalise and become the new normal. This heralds doom for many bricks-and-mortar businesses without the capital to inject into digitisation or drop-shipping distribution models. As recurring shockwaves start to ripple throughout each industry, the personal impacts of the global downturn will start to surface.
On 25th March this year, the Federal Government instituted changes to bankruptcy laws offering temporary relief and protection to people in financial difficulty. Clearly, the government foresees a wave of debt problems coming and seeks to minimise the damage. Yet despite the increase threshold for bankruptcy notices from $5,000 to $20,000, one only need cite Australia’s status as the holder of the world’s second-largest household debts to know many will benefit little from this change.
In a recent publication citing the mental health ramifications of COVID-19, The Black Dog Institute cited the unemployed and casualised workforce as being particularly vulnerable to depression and anxiety. It seems only logical to place small business owners in this group as well. Collectively, the enhanced financial insecurity caused by economy-wide stoppages in commercial activity, places them at a much higher risk of experiencing unbearable financial stress, resulting in mental illness.
Much like mental illness, bankruptcy carries a stigma that often prevents people seeking help. Mounting fears, shame, withdrawal and avoidance – all ordinary symptoms of depression and anxiety – become the daily mental diet of a person struggling under severe financial pressures. And since our culture, rightly or wrongly, assumes that an individual’s financial situation is entirely the product of their own behaviour, those suffering financial stress are more likely to turn to toxic forms of mental positivity rather than pursue available avenues which can restore their financial stability and mental health.
The stigma of Bankruptcy is the hangover of the ancient (and barbaric) practice of imprisoning debtors unable to repay their creditors. To this day, the aura that creditors hold supreme, unlimited power to deprive an individual of all their freedom and property persists. While support service websites encourage dialogue about financial and mental health; simply do an internet search of ‘mental health’ and ‘debt’ – you won’t find a single bank website addressing the topic.
The result is a stifling silence about the important rehabilitating role Bankruptcy plays. Bankruptcy laws use the word ‘rehabilitation’ to describe the process of restoring a person’s right to property ownership and full social participation. Though while it isn’t the express purpose of Bankruptcy to restore a person’s well-being, in effect, that is what it does. The fresh start offered through bankruptcy isn’t simply a means for renewed financial stability, it provides those experiencing extreme stress a rational pathway towards renewing personal wellbeing.
At Doug Constable Group, we’ve long held the view that bankruptcy isn’t just about debts or property – it’s about people. It’s vital that intuitions and professionals working closely with people experiencing financial stress increase their awareness of the enormous psychological stresses facing financial
challenges can bring. And in doing so, work towards removing the ‘Mark of Cain’ attitude surrounding bankruptcy.
Much like the hand-sanitising and social-distancing we’ve all conscientiously practiced – it may save lives.