Many people face substantial debts through no fault of their own such as medical bills or the loss of employment. However, in other cases, people will use “retail therapy” as a way to cope with challenging and stressful situations. With immediate accessibility of most stores available online 24 hours a day, seven days a week, any person can buy almost anything, at any time of day. Spending compulsions can lead to financial ruin. In some cases, these shoppers will need to eventually file for Chapter 7 bankruptcy in order to be able to gain a financial fresh start. However, without directly addressing the key issue of spending compulsion, the likelihood is that the debtor will find themselves in the exact same situation months or years later. In many cases, the bankruptcy courts impose limits on how many times and how often a person can declare Chapter 7 bankruptcy, therefore, it would benefit that person to make adjustments to their spending habits and perhaps even find some therapy to help them find better ways of handling stress and anxiety.
Credit Card Debt
If a debtor finds themselves making too many purchases, the chances are that most of those purchases are being paid for by a credit card that they are unable to pay back within a reasonable amount of time. If that debtor makes the choice to file for Chapter 7 bankruptcy, and passes the means test to be eligible for the bankruptcy, most of their credit card debt will be discharged (eliminated) and the debtor can start fresh.
However, if a person does not address their spending habits or patterns, they will likely end up very quickly back in the exact same financial situation. The ability to file for Chapter 7 is not unlimited. A debtor must wait years before being allowed to refile, and the court will scrutinize that second bankruptcy request carefully to ensure that the debtor is not attempting to commit bankruptcy fraud. Bankruptcy fraud occurs when people intentionally create a large amount of consumer debt with the expectation that they will simply be able to discharge it with a Chapter 7 bankruptcy filing.
If you, or someone you love, has filed for Chapter 7 bankruptcy, and has a history of spending issues or a spending compulsion problem, consider attending a meeting of Debtors Anonymous. This excellent organization is similar to the program established by Alcoholics Anonymous and includes a 12 step program and even a support group. Taking the time to create new spending and financial habits will help ensure that you begin to save money instead of spending it, and never find yourself in the position to need to declare bankruptcy again. If you are considering bankruptcy with a spending compulsion, consider visiting the Debtors Anonymous website which can help give you some excellent guidance regarding how to restructure your financial future.
Contact an Experienced Bankruptcy Attorney
If a spending compulsion has created the need to declare Chapter 7 bankruptcy, contact an experienced bankruptcy attorney at Lankford & Moore Law to help you understand your legal rights, and help you through the bankruptcy process.