From Sudden Wealth to Bankruptcy: How and Why?

So, you didn’t start off the New Year by winning any of the latest big lottery jackpots. However, two lone winners did. One winner from New Hampshire has yet to claim the $560 million Powerball jackpot. The other 20-year-old winner from Florida claimed his $450 million Mega Millions grand prize. He chose the one lump sum amount of $282 million.

When we think of coming into sudden wealth, we think that one of the quickest ways to do so is by winning the lottery. Let’s be honest; if you do play the lottery from time to time, you know your odds of winning are very slim. For example, the odds of winning that Mega Millions jackpot was 1 in 302.6 million. That’s more than 2,000 times less likely than being killed by a lightning strike.  The odds of winning that Powerball were just a little better of 1 in 292.2 million.

Even with those slim odds, many folks still choose to play the lottery. The more people buy lottery tickets, the higher the jackpot amount and the higher the odds of winning.

Lottery winners are more likely to declare bankruptcy within three to five years than the average American.

Whether we come into sudden wealth through winning the lottery or through a large inheritance, studies show that it does not necessarily make you happier or healthier. According to economist Jay L. Zagorsky, “studies found that instead of getting people out of financial trouble, winning the lottery got people into more trouble, since bankruptcy rates soared for lottery winners three to five years after winning.”

So, why do some lottery winners declare bankruptcy within such a short period of time? 

There are many reasons, but many of those lottery winners’ sudden lifestyle upgrades tempt them to boost their spending on big ticket items such as vacations, houses, and expensive cars. Consequently, many of the lottery winners run through their winnings and then find themselves in financial trouble very quickly.  USA Today recently published an article called “What to do if you win the lottery in 2018,” and the bottom-line advice given was not to make hasty decisions and to avoid becoming reckless with the newfound wealth.

You do not need to win the lottery to be financially happier or healthier.

Easier said than done, but this is very similar advice given to folks who are contemplating filing for bankruptcy relief. They may not have recklessly spent their lottery winnings or inheritance, but they find themselves in financial trouble possibly due to a sudden illness, the loss of a job, divorce, or some other major life event.

Filing for bankruptcy relief is just that, a form of financial relief. Upon filing for bankruptcy relief, through the advice of their bankruptcy attorney and the required financial management courses as part of complying with their bankruptcy petition, people can have the opportunity to create and manage an effective spending plan, save for emergencies, and make better decisions on the types of credit products.  Ultimately, an individual can be on the path to living a financially happier and healthier lifestyle without winning the lottery.

 

If you are having financial difficulties, our offices offer a free initial consultation with an attorney who can sit down with you and discuss your options to finding a solution and exploring your options. Contact us today and get the financial relief you deserve.