There is a movement growing online of self-proclaimed financial advisors trying to change the perception of personal bankruptcy. Instead of seeing going broke as a shameful thing—the theory goes—we should view it as an act of financial empowerment and feel no regret about filing Chapter 7, even multiple times.“We have to pay attention to all the things that they tell us not to do but are doing themselves,” explains TikToker @Thebouncebackcoach, in a video. “The rich file bankruptcy every seven years, and that clears the debt that they may have accumulated over the past few years, wipes their debt clean, and gives them a completely new slate.”“The poor think bankruptcy is failure; the rich and powerful understand that bankruptcy is not only a tool, it’s leverage to become more successful,” says @nikeoje in a video. “The average wealthy person will file bankruptcy at least six times in their lifetime,” they add.So are these online money-talkers actually right? Can we just discharge our debt every seven years? Short answer: No. Long answer: Nooooooo. What online bankruptcy advocates get rightI’m going to start with the positive: People really shouldn’t be ashamed of going broke. Bankruptcy exists for a reason, and personal shame is no reason to make poor financial decisions. Within a capitalist system, it’s extremely possible to go belly up through no fault of your own, and it’s good that we have a way to escape it. But if there is any other option besides personal bankruptcy, it’s probably a better choice. Bankruptcy is a last resort, not a hack or a cool trick banks don’t want you to know. Rich-people bankruptcy vs. poor-people bankruptcyBankruptcy is complex, and there’s a grain of truth to the idea that some rich jerks and major corporations use bankruptcy strategically, but those are business bankruptcies, usually designed to restructure debt while protecting assets and keeping operations goings. Rich people don’t usually declare personal bankruptcy. They file for businesses, investments, or properties, not car notes and hospital bills.If you’re seeking financial advice from a TikToker in their car, and not from an attorney you have on retainer, you’re probably thinking about Chapter 7 bankruptcy, or personal bankruptcy, and a person going broke is way different than a busted business. Personal bankruptcy can erase some forms of debt, such as credit card debt, medical debt, and personal loans, but there are other debts that you still owe no matter what—student loans, child support and alimony, recent tax debt, and more. And if you think you’ll walk away hassle- and worry-free every seven years, you will learn quickly that the legal and financial systems have long memories, and they do not care about you. The reality of filing bankruptcy It would be nice if we could all say “I declare bankruptcy!” and have our credit card debt magic-ed away, but the reality is an invasive and exhausting trip through paperwork and legal-system hell—the opposite of “empowering.” Here are only some of the hassles you’ll have to deal with if you declare bankruptcy:Disclosure of all financial information: All income, spending, debts, and assets, right down to your Venmo account, must be accounted for and documented. Mess it up and you could be denied bankruptcy protection or even prosecuted for fraud.Mandatory credit counseling: Before you can even file Chapter 7, you’re legally required to complete a government-approved credit counseling course. After filing, you have to do a second “debtor education” course before debts are discharged. I imagine this is not fun at all. Legal fees: Despite the “do it yourself” claims of some TikTokers, you’ll most likely need an attorney to navigate bankruptcy, and it generally costs over $1,000. As if you have the money!Court scrutiny: If you were hoping to pull a fast one by lying about the money under your mattress, you’d better be good at perjury. Bankruptcy requires meeting with court-appointed trustees and sometimes your creditors, and testifying under oath. “Just lie under oath” is almost never the answer. Asset liquidation: If you own anything above the exempt limits—nice cars, expensive jewelry, family heirlooms— you won’t any more. Dealing with “the system”: In my opinion, the key to a happy life is having as few interactions with The State as possible. Bankruptcy is basically inviting the state to live in your bedroom for years. When the dust settles: your post-bankruptcy lifeSuccessfully navigating the personally and financially invasive bankruptcy process could result in your debts being discharged, but your post-bankruptcy life is going to be challenging in many, many ways, including:Your credit is wrecked: Bankruptcies stay on your credit report for 10 years, so that’s a decade of having major problems getting a car loan, renting an apartment, or getting a credit card. Do you like check cashing places? Because that’s where you’ll be spending your time. Potential employers hold it against you: Many companies run credit checks and won’t hire applicants with a bankruptcy on their record. Maybe it’s not fair, but it is common. You have no safety net: You can only go bankrupt every eight years, so, in the event that you get in financial trouble after your bankruptcy, there’s literally nothing you can do but take what comes to you. (Luckily, we don’t have debtor’s prisons anymore, but who can say what the future holds?) It’s likely to keep you poor: Spending a decade paying cash makes it nearly impossible to build better credit, and any money that is loaned to you is likely to have a very high interest rate.It’s stressful: Living on the fringes of the established financial system is terrifying. There’s no “I’ll just put it on a card” for you, and no “I could always take out a loan” either. You can’t really file for bankruptcy every seven years, anywayThe overall myth at the center of many of these TikTok financial advisors is that the rich file bankruptcy regularly, wiping out their debts as often as you and I buy a new mattress. But it doesn’t really work that way. The wealthy don’t actually do this: Rich people who file for bankruptcies use corporate bankruptcies, LLCs, and asset protections. These have totally different rules than your personal credit card debt. It’s just not a world you’re likely to live in if you’re watching TikTok. Courts don’t like serial bankruptcies: You are unlikely to get away with declaring bankruptcy as a financial strategy one time, but if you try to do it twice, woe unto you. The judges and trustees assigned to scrutinize your case will take a long look, and are likely to deny your debt discharge or even charge you with fraud. (Which you’d probably be guilty of.)Tiktok “financial advisors” may be peddling disastrous advice, but there’s a reason people believe them. Medical bills, student loans, rent, and credit cards are crushing people in 2025 America, so of course they’re looking for a way out. But they’re also looking for a little dignity. People don’t want to be shamed for falling behind in a system that wasn’t built for them, especially when they see others “failing upwards” so frequently. “Don’t be ashamed” is a powerful message, especially in communities that have historically been excluded from wealth-building, so yes, you should be skeptical about financial advice from TikTok, but also aware of why so many people are not.