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BANKRUPTCY-RELATED
DEPRESSION: DEALING WITH THE MENTAL HEALTH OF YOUR
CLIENTS
Published in September/October
1997 Commercial Law Bulletin, by CLIA (Commercial Law League of
America)
A very critical part of the bankruptcy
process doesn't have anything to do with legal issues,
reorganization plans, or creditors claims - it's the mental health of the
debtor.
Most debtors will experience some degree of depression
during bankruptcy. Generally, this depression can be managed
with readily available treatment's. Some debtors will also suffer from
what Karin Huffer calls legal abuse syndrome. Huffer is a marriage
and family therapist in Las Vegas and the author of Overcoming
the Devastation of Legal Abuse Syndrome (Fulkort Press,
$19.95). She defines legal abuse syndrome as "a type of
post-traumatic stress disorder that people develop after a cumulative
crisis."
Chapter 11 cases in particular can be lengthy, complicated,
and very emotional, points out Milton P. Goldbarb of Newman, Goldbarb,
Freyman & Klein, P.C., in St. Louis, Missouri. "In the vast
majority of cases, it will boil down to the principal of the company being
the one responsible for bringing the company into line, helping to do
everything that needs to be done in the bankruptcy court to keep the case
going, and then still negotiating the plan,
dealing with the plan, and working with the
company to bring it out of Chapter 11 and make it healthy," Goldbarb
says. "If the attorney is going to be able to help his
client have a successful Chapter 11, it's very important to keep the
client as focused and mentally well as
possible."
Attorneys don't need to understand or be able to distinguish true
clinical depression from the casual bad day, but they should be alert
to potential problems, says Patricia Weik, a consultant, clinical
psychologist, and lawyer with RHR International Company
in Wood Dale, Illinois. "If the question [of depression] even comes
to their mind, it's going to be because they're seeing
someone who is in obvious distress," Weik says.
It's a good idea to bring up the issue of depression at the
beginning of the bankruptcy process, Goldbarb says,
"one of the things I do at the first meeting with
a prospective Chapter 11 client is to explain that depression is natural,
they should expect it, and we all have to look for it. I try to get
a commitment that if either of us sees it coming on, the person will get
professional help." Later on, if the symptoms appear, Goldfarb will
remind the client of that initial conversation and suggest some form of
action.
Occasionally, depression becomes an issue with creditors.
Sometimes it's the owner of a smaller company reeling from a major
customer's bankruptcy . More often, says Goldfarb, depression
manifests itself in the credit manager who granted the extension of credit
and is not dealing with the consequences. The basic techniques for
dealing with the problem are the same: recognize and address the
issue, and refer to a competent professional.
Depression may also become an issue with employees of companies
that are in bankruptcy, and attorneys may
want to remind owners to watch for symptoms in their
staffers. Nancy Garbett, president of Transition Management, Inc.,
in Salt Lake City, Utah, says that open and honest communication with
employees about the status of the company and the
reorganiza-tion efforts is essential. "Employees need to
understand what changes are occurring and what it means for
them," Garbett says. If they are feeling insecure and stressed, they
won't perform at their maximum level and they could hinder the company's
financial recovery.
Though attorneys must be willing to address the issue of depression
and anxiety in the clients, they must clearly do so from the perspective
of a non-mental health professional and protect their own emotional
well-being in the process. "Bankruptcy attorneys can end up with
compassion fatigue from watching what their clients are going
through," Huffer says. She points out that many clients will
attempt to sue their attorneys as therapists, and that
attorneys must take control of their situation and make
appropriate referrals.
WHAT TO WATCH FOR, WHAT TO DO.
Weik says symptoms of depression include feelings of sadness or
blueness; a loss of concentration, excessive crying, changes in sleep
patterns; changes in eating habits; loss of energy or listlessness; guilty
thoughts; a sense of worthlessness or hopelessness; thoughts of suicide or
even, in some cases, of homicide. When one or more of these symptoms
are present, Weik advises addressing the situation in a
matter-of-fact but direct manner.
If the client does appear to be experiencing some serious
depression, avoid minimizing their feelings. "A lot
of people - particularly attorneys, because attorneys
are trained to solve problems - will want to back away from this
uncomfortable situation and say something like, 'It's not that bad,
things are okay.' What that does for a depressed person is
essentially tell them that they're being ridiculous, that things are not
as bad as they think, and that gets them into another
negative spiral," says Weik. "You need to normalize the process for
them. Say, 'Yes, this is really a tough situation,
and most people would feel bad in your shoes.'"
Encourage the client to seek help for the depression. This is
especially important if the client is making statements that
are either suicidal or homicidal. "If you hear those kinds of
statements, you need to take them seriously," says Weik. "The idea
that people who talk about suicide never do it is wrong; it's a
myth. If you get somebody in your office who is making statements to
the effect that they want to die, or that their family would be better off
without them (or if they are expressing a desire for retribution against
someone who has wronged them, stay calm and ask the
person if he or she has been having thoughts for a while." After
drawing the person out and getting a sense of how serious the
problem really is, make a suggestion of seeking help - or, if it appears
that a crisis is imminent, make a call for help from your office while the
client is there. Weik suggests exploring referral options ahead of
time so you know who to call when the need arises. If
you're unsure about your local resources, the psychiatry
department of a reputable hospital is a good place to
start.
Huffer's book includes a list of what not to say to a depressed
client, including:
~ "It's only money." Money reflects the person's status,
feelings of worth, security, earned lifestyle, and
taste.
~ "I know just how you feel." You probably don't; saying "I
care how you feel" is better.
~ "You still have your health/kids/family." Kids, family, and
health opposed to material goods are apples and
oranges.
~ "Crying isn't going to help anything." Probably not, but we
don't cry to help things, we cry because nothing helps. It's a
natural party of grieving.
~ "You should have..." and "Why didn't you...?" Don't
criticize or promote further guilt by focusing on what the debtor might
have done to avoid the current situation.
EIGHT STEPS FOR THE DEPRESSED DEBTOR.
"When a lawyer takes on a case, he or she is taking on a
person who feels like a hostage," Huffer says. "The person feels
dependent, angry and trapped." In her book, she suggests the
following eight steps for a debtor dealing with depression and legal abuse
syndrome:
1. Debriefing. This is the process of going
through everything that has happened, and requires an objective,
patient, nonjudgmental listener. Debriefing typically occurs
when the debtor arrives in the attorney's office with boxes
of files and lengthy, complicated explanations of what has
occurred to bring him or her to this point.
2. Grieving. The debtor must take the time
to grieve over what's been lost, no matter how trivial or significant
each element is.
3. Obsession. Huffer says this is a natural
attempt to regain control, and it's important to acknowledge these
feelings so they can be managed. Left unchecked, they can be
distracting and damaging.
4. Blaming. It's common for debtors to look
for a scapegoat or to severely castigate themselves for what's
happened. Learning to deal with blame is part of
healing.
5. Deshaming. Huffer says this has to do
with "putting the shame in the right place." Debtors often feel
that they lack control, and find that more
embarrassing than if they had deliberately done
something wrong. "You have business people who have
wielded clout in their community for years who are in bankruptcy
and suddenly they control nothing," Huffer says.
"They feel shamed." Debtors need to work
through their feelings of inappropriate
shame.
6. Reframing. The first five steps lead to
this, the beginning of recovery, where negative emotions are turned
around. For example, an initial perception of "I should have seen
it coming. How could I have been so stupid?" can
be reframed to "I am not responsible for knowing everything. I am
an intelligent person who cannot control other people
or situations."
7. Empowerment. Once empowered, the debtor
can focus his or her energy on sur-viving the bankruptcy, working
through the reorganization and rebuilding his or her personal and
professional lives.
8. Recovery. In recovery, the debtor can be
reaffirmed and reenter the game of life.
If it appears the client is resisting your efforts to assist with
depression, Weik advises remembering and using the natural balance of
power that occurs in most attorney/client relationships. "Attorneys
who have a relationship with someone also have a certain
degree of authority with the person, and
they may be able to use that in the sense of stating assertively, "I
really think you need to see someone and talk about this," she
says.
NOTE: To order a copy of Overcoming the
Devastation of Legal Abuse Syndrome, call 800/ 829-8969.
[NOTE: Or Contact Redress, Inc. to order a
copy.]
ARE COLLECTORS DRIVING UP THE RATE OF
BANKRUPTCIES?
A comment attorneys frequently hear from individual debtors seeking
to file bankruptcy goes something like this: "I just can't take the
collection calls any more." In fact, the reason St. Louis bankruptcy
attorney T.J. Mullin uses the question, "Are bill collectors driving
you crazy?" in his advertisements is because it's a question
debtors identify with and, therefore, is an ad that
works.
So are collectors driving up the rate of bankruptcies?
"Absolutely not," says Elizabeth Melton, general counsel for I.C. System,
inc., in Vadnais Heights, Minnesota. "I think there are a number of
things that are happening that could make it seem like collection agencies
push people into bankruptcy." She cites technology such as automatic
dialers that provide a greater amount of telephone contact
with debtors, as well as the fact that most consumers in financial trouble
have multiple creditors. "It may not be one agency's actions that
are pushing a consumer into
bankruptcy, but the fact that collectors seem to be
coming out of the woodwork. Debtors have multiple bills,
they're getting calls from multiple sources, and it's so
overwhelming that bankruptcy seems like an easy way to resolve
it."
However, Kenneth R. Richie, a creditors' attorney with Maguire,
Voorhas & Wells, P.A.., in Orlando, Florida, believes that collection
activity plays a large role in a consumer's decision to
file bankruptcy. "Sometimes collectors get too rough when they make
the calls, and perhaps imply that they're going to take
everything the people have, and that sometime can push [a debtor] over the
edge," Ritchie says. "Certainly, a softer sell could make
a difference."
As the number of personal bankruptcies increases and the stigma
declines, collectors walk a fine line: If they aren't aggressive
enough, the creditor won't get paid; if they're too aggressive, the
debtor may resort to bankruptcy - and the creditor still won't get
paid.
Of course, the underlying cause of bankruptcy is the debts people
can't afford to pay. Bonnie Baker, vice president
of The Out$ource Group in Columbia, Missouri, says it's not collection
activity that drives people to bankruptcy, it's the debtors'
own behavior. "Bankruptcy is the most widely known solution for
people who can't pay their bills," Baker says. She points out that
collection agencies do not want to waste time and money contacting debtors
who truly do not have the means to repay their debts. "Our job is to
assess who has the ability to pay," she says, explaining that those are
the people who will be contacted by collectors.
Mullin thinks many bankruptcies are driven not by collection
activities, but by an increased consumer awareness of bankruptcy as an
option. It's not, he says, that people take bank- ruptcy any less
seriously than they used to, but that they are more aware that bankruptcy
can stop the unpleasant collection activity. In fact, he says, many
of his clients will deal with calls and letters, and only decide to file
after their wages are garnished. There may be times when it's better
for creditors if the debtor actually files a Chapter 13 rather than
struggling through the various collection steps. For example, Mullin
believes that debtors who can be garnished ought to be in Chapter 13
instead. He reasons that if they have wages and can afford to
pay at least a portion of their debts, a 13 generates a
more equitable distribution than a garnishment by one
creditor.
Mullin says he regularly helps clients avoid bankruptcy by
negotiating settlements with creditors. Richie points
out that while most creditors are receptive to settlements
based on a "something is better than nothing" attitude,
they still must be careful to avoid getting a reputation
as a creditor that will settle easily.
In an effort to deal with the rising rate of individual
bankruptcies, agencies are adjusting their approach to
debtors, being more willing to accept payment arrangements and attempting
to counsel people on how to avoid bankruptcy. "All collection
agencies across the country are very much interested in helping mitigate
this bankruptcy situation," says Baker. "We try and counsel
people on how to get help with their debts."
Richie agrees that it's important
to work to reduce the rate of bankruptcies, but not at creditors'
expense. He asks, "Do you want to lower the number of bankruptcy
filings by not requiring people to pay their debts?"
WORKING TOGETHER TO ATTAIN
FAIRNESS | 
