This may help a lot of people: "Good guilt" is a mechanism that God gives us directly within our conscience (God speaking to us within our heart of hearts) that such and such an action was not good. The purpose of good guilt is to make us aware of the harm we have done, our need to return to God's ways, amend our lives, and repair as best we can whatever harm we have done. "Bad guilt" is living in a state of hating myself because I'm just so pathetic. "Bad guilt" is not from God; because though God will give us the sting of conscience for doing something that alienates us from our best selves, God will not lead us into a trap some call "Catholic guilt," i.e. constantly feeling terrible in a narcissistic way. When someone talks about "Catholic guilt" they are either talking about a family dynamic of fault-finding or they do not understand the spiritual life at all.
There is, however, a virtue called "compunction." "Compunction" is an abiding sense of honesty, a clearly seeing how one's actions have diminished the glory of God which is meant to shine through us. "Compunction" is the virtue of knowing in the core of my being that I am very much loved by God, yet very much in need of God's patience, mercy and forgiveness. "Compunction" does not lead to self-recriminations or self-hatred. It leads instead to a profound sense of gratitude and joy for God's being so kind and merciful.
"Bad guilt" leads to one vice after another and eventually to a dead end. "Good guilt" leads to changing our ways. "Compunction" leads to greater and greater virtue.

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