Unfortunately, addiction is everywhere in America. It’s becoming almost normative for adults to use some substance or engage in some activity to such excess that it becomes an overriding compulsion, trumping family, health, and financial solvency. The classic heroin addict has usually descended too far down the scale to benefit from filing for bankruptcy, but he has plenty of more respectable cousins still clinging to a tenuous middle class lifestyle while their compulsions drive them deeper and deeper into debt.
Alcoholism, abuse of prescription medications, gambling, and pornography are some of the commonest “respectable” addictions recognized as such by the medical community. Compulsive shopping, while not officially recognized as a disorder by the American Psychiatric Association, has much in common with gambling and pornography, including inducing changes in brain chemistry that trigger craving for more. For a good discussion of the addictive qualities of compulsive shopping, see: Compulsive shopping: Illness or Bad Choices.
Teenagers may become involved with hard street drugs such as heroin and methamphetamine. When they do, it’s disastrous for the rest of the family. An addicted family member will steal and sell household possessions, find a way to clean out bank accounts, and run up huge obligations through mandatory treatment and penalties from the criminal justice system. Addicted older adult children may persuade parents or grandparents to cosign for loans or otherwise underwrite the addiction at the expense of the parents’ financial security.
Active addiction contributes to bankruptcy in a number of ways. A budget which looks adequate won’t cover living expenses if a large chunk of it is being diverted towards alcohol or the gaming table. The addict (and often his or her spouse) will be in denial about just how much money the addiction consumes, and concoct implausible explanations for the chronic budgetary shortfall.
A mind befogged by alcohol or painkillers is prone to poor budget management and unwise spending decisions. An addict will neglect to pay insurance bills or make mortgage payments even though there is money in the bank to cover them. He or she is easily persuaded that some product or service will cure the misery his addiction fosters, and will shell out for a lavish vacation, a Cadillac-grade home-entertainment center, or a high-profile personal development seminar, incurring debt for something that fails to deliver the promised relief.
As addiction progresses is erodes employability, beginning with missed promotions and fewer hours and ending in layoff. A person fired or laid off because of substance abuse finds it virtually impossible to get another job while he is still using. Unless the process is somehow halted, there’s a good chance he’ll end up on the streets or in prison.
Addictions frequently lead to divorce. The non-addicted spouse is now free of the day-to-day drain on household finances, but hasn’t taken much away from the breakup and now has difficulty collecting child support. Accustomed to a chaotic unmanageable budget, the spouse may continue to make poor decisions. She (or he) may be headed for bankruptcy.
A certain class of addict has learned to form relationships with vulnerable individuals and then exploit them as a source of cash, persuading them, for example, to use their good credit to obtain a loan the exploiter swears to pay back. We see clients in our office who could use some counseling or a support group aimed at avoiding getting involved with suitors whose professions of undying love and admiration are immediately followed by a request to cosign on a loan. Some people embroiled in such relationships find support in Al-anon or Nar-anon, the 12-step programs for spouses and family members of alcoholics and addicts.
A bankruptcy attorney’s office will encounter people in various phases of this process – from those in early stages of addiction, for whom other factors are more important, through families with an unemployable primary wage earner, to the truncated family trying desperately to recover from the wreckage wrought by an addicted ex-spouse. In other articles I will address some strategies for working with addicted bankruptcy clients, and how the legal bankruptcy process can coordinate with 12-step programs such as Alcoholics Anonymous.