“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.”
So are these online money-talkers actually right? Can we just discharge our debt every seven years? Short answer: No. Long answer: Nooooooo.
Rich-people bankruptcy vs. poor-people bankruptcy
Bankruptcy 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.
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:
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.
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.
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 life
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.
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 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, anyway
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.
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.
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