Do you know someone who has recently won lottery winnings and then lost it all? In the midst of a financial challenge, receiving a large influx of money might initially seem like the answer to all your problems. Studies show, however, that lots of lottery winners struggle to make things work even after winning millions. Some may even face bankruptcy.
Most people assume that a large infusion of cash would help their financial situation tremendously but plenty of studies have shown that even people who benefit from receiving a large amount of money from a trust fund and inheritance or winning a lottery could be subject to bankruptcy in the future. With high Powerball jackpots in recent years, this points to just how many people struggle with life even after bankruptcy. The reality is that many people may at some point in their life face the prospect of needing to file for bankruptcy.
A 2016 study found that neighbors of lottery winners are in fact significantly more likely to declare bankruptcy within a few years after the big event than people living near ordinary neighbors. The study looked specifically at lottery winners in Canada and found that every $1000 increase in the amount of lottery winnings increased the risk of neighbor bankruptcy by almost 2.5%. When people win the lottery, they typically spend money on items such as new boats, TVs, and new cars. These lifestyle upgrades however, encourage a keeping up with the Jones’s phenomenon in which neighbors attempt to match that standard of living. Down the road however, this could lead to more bankruptcies and other financial problems after people rely on credit in an effort to finance some of these items.
If you or someone you know is currently struggling with what to do in a financial struggle and you’re not sure of the next steps that you should take, scheduling a consultation with an experienced bankruptcy attorney may be the best way to consider all of your options to begin preparing for the fresh start of your financial future. Taking action now by speaking with a bankruptcy lawyer is the first step.