Part 2: What are the Symptoms of Bankruptcy Trauma?

Posted on June 6th, 2024
Two people signing a bankruptcy deal document

Now that you know what bankruptcy trauma is and what causes it, it’s important to know what signs to look out for when someone is struggling with it. Understanding how to recognize bankruptcy trauma will help you take the steps you need to start the journey of healing. It could also assist you in recognizing if a family member or friend needs support or help.

Bankruptcy trauma behaves in much the same way as many other traumas. We can become emotionally dysregulated as anxiety and depression start to overwhelm the system. The arousal of these emotional triggers sets off our flight or fight response, and your sympathetic nervous system kicks into overdrive, fuelled by panic and fear.

This type of mechanism can quickly overwhelm an individual, leading to dissociation, shutting down, hopelessness, and more. Left unprocessed, this type of trauma can be crippling.

So, here are the signs and symptoms that might indicate that someone who has gone through the process of bankruptcy is grappling with some level of trauma from the process. Keep in mind that these symptoms could present themselves during the bankruptcy process or sometime afterward:


Sleeping problems are a common symptom of trauma. There are a number of reasons for this, and one of them is simply because the brain is overwhelmed and in overdrive. Anxiety can lead to overthinking, which, in turn, makes us more alert and makes it harder to fall asleep. Your body could also be producing huge amounts of adrenaline and cortisol which will have a profound impact on the quality and ability of sleep.

Lack of sleep has a knock-on effect on those struggling from trauma, as it means that they aren’t able to go about their daily lives at an optimum level, and this could lead to more anxiety, stress, and depression. It can become a vicious cycle.


Hypervigilance is a steady state of heightened arousal and alertness. This can include physical symptoms like sweating, faster heart rate and shallow breathing. Trauma can induce a chronic state of hypervigilance, which makes people extremely sensitive to their surroundings and puts them on alert to any perceived hidden dangers, whether that’s from other people or the environment.

Hypervigilance makes people jumpy and nervous; they have knee-jerk reactions, and if left untreated, it can evolve into serious paranoia.


A common response to trauma is to have flashbacks of the event that triggered it. This can cause people to relive the bankruptcy process again and again. These flashbacks often happen quickly and can come out of the blue, which can be incredibly distressing.

They also appear in the form of nightmares, which can contribute to the insomnia and fatigue associated with trauma.


People who are struggling with bankruptcy trauma are often racked with the shame and guilt of having ‘failed’. While their friends and family might not think the same way, it’s how someone perceives they will be treated if they are truthful about going bankrupt.

This can cause someone to withdraw completely from social situations. They could withdraw from their family and friends, refusing to go to gatherings and no longer participating in activities that they previously enjoyed.

Self-destructive behaviors

It’s not uncommon for people who are struggling with trauma to engage in self-destructive behaviors. This can come in a variety of forms; it could be something like simply not taking care of their health and wellness or overeating. However, it could also look like the use of drugs and alcohol to numb the feelings of despair, or driving too fast, going out partying a lot and taking risks that they normally wouldn’t.


When our flight or fight mode activates, many people expect to feel a lot of emotions and adrenaline. While this is common, this flood of adrenaline and cortisol can sometimes be so overwhelming that it causes someone to shut down or become numb completely. This could look like not reacting or participating in conversations, not giving their opinion on causes you know that they are passionate, and much more. People struggling with this are simply going through the motions. They are on autopilot.

Healing and Recovery from Bankruptcy Trauma

Bankruptcy trauma can leave lasting effects on your life and your mental health and well-being. Left untreated, it can lead to significant emotional distress, anxiety, and depression.

With professional help and the correct strategies in place, you can heal and recover from bankruptcy trauma. How? We’ll examine this in the next blog in this series on bankruptcy trauma.

Contact us if you or someone you know wants to heal from a traumatic event.

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