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Should people with mental health conditions 'come out proud,' disclosing information about their condition(s)? Recent research highlights how disclosing this information can promote empowerment and decrease self-stigma. However, many people with mental health conditions still fear that stigmatization and discrimination follows if they disclose information about their condition. This article shows that their fears reflect reality. It shows how recent research on the philosophy and psychology of stereotyping and implicit bias, and how mental states are attributed, suggests that they face a serious dilemma. If they want to avoid being misperceived, for example, as dangerous or incompetent, then both disclosure and nondisclosure bring substantial risks. Disclosure could lead them to be misperceived due to stereotyping. Meanwhile, nondisclosure could lead to their mental states, dispositions, needs and character being misperceived. There are strategies that can be used to reduce the misperception associated with disclosure, that is, strategies to combat stereotyping. However, whether or not these strategies are implemented is often beyond the control of people with mental health conditions. So, it shall be argued, societal changes are required to ensure that people with mental health conditions can be 'out and proud' without penalization.