How Can a Lottery Jackpot End in Bankruptcy?

Phrases like “winning the lottery” or “hitting a jackpot” are often uttered in our everyday lives and have become a sort of “Deus Ex Machina” of the modern times. More and more people are struggling to make ends meet, and all it takes are six numbers to change your life forever. Indeed, winning the lottery is a dream for most hard-working Americans, a way to settle all your debts, resolve other financial issues and enjoy life the way you always wanted to.

But did you know that according to Certified Financial Planner Board of Standards, around 70% of those who win a lottery end up filing for bankruptcy? Yes, you read that right. Winning the lottery actually makes their life worse than it was before in financial terms! Additionally, among the one third of the remaining “lucky ones” most wind up divorced, estranged, depressed or developing an alcohol or drug addiction.

But how does an American dream like this one get so sickly twisted? How does a man who one day sits on top of a massive fortune end up looking for a bankruptcy attorney in San Diego the very next day? Well, there’s no easy answer to that, but there’s certainly a pattern to be analyzed in all of these lottery-related bankruptcy cases.

Their Generosity Suddenly Knows No Bounds

Suddenly becoming entitled to a massive fortune is impossible to hide in the era of social media. Sooner rather than later, a relative you barely know shows up at your doorstep asking for a small loan so his or her family can cover their debt, send their child to college or simply survive through the month. And you will be happy to oblige, happy to share your wealth with and help someone in the same situation you were in just before winning the lottery.

Suddenly, more and more relatives start showing up, and it feels incredibly unpleasant to say “no” after you’ve helped the others out. Once you started giving out small loans you cannot go back into hiding and anonymity. People are going to come knocking and believe they are entitled to your help.

They Become Addicted to the Green

Giving away money to desperate people who need it does not seem like that grim of a scenario compared to the other way lottery winners often waste their money. Coping with the sudden spotlight and more money than they know what to do with, many lottery winners end up spending their fortune on alcohol, drugs, gambling or other expensive vices. Addiction burns through your wealth like a hot knife through butter, and all of a sudden you are left addicted and bankrupt, a dangerous combination that often leads to a tragic outcome.

They Don’t Seek Professional Financial Help

What do you do when you suddenly become entitled to a huge wealth? Well, the logical thing to do is look for someone to help you allocate that wealth and possibly invest in something that will only make it grow. However, most lottery winners completely ignore asking for financial advice from a finance expert or hire someone untrustworthy to handle it for them. A financial advisor can help you learn how to save the money, what to invest it in and how to make the most out of it. This is why it’s best to contact a financial advisor before you let all your relatives know you won on Facebook or go to a bar to celebrate buying rounds to everyone around. Not skipping this step could save you and your family much trouble and suffering.

They Waste Too Much on Impulse Shopping

What’s the first thing you do the day after the news sink in? Buy everything you’ve ever wanted, naturally! New cars, new clothes, jewelry, vacation or a new house? Or all of the above? While this is a normal impulse, some winners blow all their fortune on things that don’t have a lasting value. Instead, lottery winners who seek smart investment options or start a trust fund make their wealth grow rather than immediately spending it on things they are going to have to renounce when they file for Chapter 7 bankruptcy.

They Do Not Research What They are Investing Their Money In

Even those who take the right turn and start investing in real estate or small businesses can end up bankrupt if they don’t know what they are doing. Investing requires an individual to be business savvy and have a certain attitude most common folk don’t have. Someone with zero experience in the niche they are looking to invest in doesn’t have what it takes to do a proper analysis of the market and put their money where it’s guaranteed to pay off. This is why it is important to either take the time to learn everything you need about a certain business niche or hire someone who can do it for you in order to avoid bankruptcy.

Why Seek Help from an experienced Bankruptcy Attorney in San Diego?

If you have been a victim of the lottery curse or are a simple man struggling to make ends meet, hiring an attorney specializing in Bankruptcy cases can benefit you more than you realize. Our bankruptcy experts can not only help your bankruptcy process as painless as possible, we can help make your life easier helping you face the creditors and by teaching you how to get your car back after filing for bankruptcy, how to properly file your taxes and everything else you will need to know to get your life back on track.

With almost two decades of joint expertise, The Bankruptcy Lawyers Chang & Diamond, APC serves the San Diego County and most of the Southern California region.  Contact our offices for a free initial consultation at (619) 312 – 4900 or reach out to us through our website form.