Why do some people choose to believe lies(or not believe the truth) concerning people they care about?

A friend of mine says this type of behaviour is more common in the South (where we're from). I believe it is common here, but I'm thinking it's a generational thing more than a geographical thing. I have family who have "created" a very self-centered and convenient reality. I despise this so much that it is rocking the foundation of my feelings for them. My wife thinks we should just "get past" this because it concerns past events. I hold no grudges or ill will about the past, but a lie is a lie, and I don't want to, nor can I build anything from a foundation of lies. So why can't some people admit the truth so there can be a future built from the ground up- with a new foundation of truth and trust?