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Facing Bankruptcy After Addiction: All is Not Lost

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Bankruptcy-After-Addiction:Many people throughout their lives encounter debt or even bankruptcy at some point. Whether it is through illness, loss of employment, mismanagement of wages, or by simply overspending, it happens to the best of us. However, an increasing number of people are now facing debt because of problems relating to drug or alcohol abuse and in these cases, the issues need sensitive handling and patience.

Debt Amongst Addicts

When someone becomes addicted to drugs or alcohol the damage that occurs is not just physical or mental, there are other long term implications and consequences that affect the everyday life of the person involved and their loved ones.

Addiction can be a cruel affliction and it is not unknown for those in the grip of such a condition to start to borrow money in order to feed their habit. Common monetary issues that come out of drug and alcohol addiction include:

  • Taking out home equity loans or loans against their car
  • Maxing out their credit cards
  • Ending up with an overdrawn bank account
  • Pawning their own valuables or the valuables of others
  • Stealing

Therefore, it’s not surprising that one of the most serious knock-on effects can be getting into debt. Problems can seem even more insurmountable if the addict is struggling to hold down their job, or is not in gainful employment.

Dealing with Bad Credit After Drug and Alcohol Problems

All this may sound scary, but it is not insurmountable at all. Knowing where to go and who to turn to with help for drug problems and then looking to sort out any issues with bankruptcy and debt afterwards is the main thing. It may seem at first like it is all too much to deal with, but taking a step back to assess the situation is the right thing to do. Many times an addict will find that because of their history and issues, that their credit rating will be low, so once they are clean, they might find renting somewhere to live or hiring a car difficult. However, taking the concerns one step at a time prevents them from becoming too overwhelming and all encompassing.

The first and most important thing to do is address the issue of getting clean and staying clean. Sobering up and learning to try and cope without drugs and alcohol is the main thing. Once the road to recovery has started and a degree of stability has been reached, then is the time to start looking at issues with money and bankruptcy. This is an option that for many can relieve much of the burden and financial pressure and allow you to start from scratch and rebuild.

Some Debts May Need Repaying

However, it is important to note that not all debts are able to be wiped out. If you were part of a marriage that has dissolved and that marriage resulted in children, any payments of alimony or child support would remain and need to be paid.

Similarly, if the debt was created as a result of fraudulent behavior or activity and it can be proved to be so, then that also would stand and need to be repaid. An example of this kind of situation may be if a creditor, who could in fact be a friend or family member, states that you asked them for money to buy something for the house, or for a new car or similar and then you actually spent the money on drugs or alcohol then the courts may be able to stop this debt from being discharged and you would have to repay it. However, while this again does seem tough, it is worth remembering that if other debts have previously been discharged then it may make any remaining sums of money easier to pay off.

Help From a New Kind of Credit Card?

For general day to day issues, help may be on hand in the form of a newly designed credit card designed especially for recovering addicts, by a recovering addict. Called the “Next Step Prepaid MasterCard” it is marketed as a way of helping anyone with drug issues and debt to learn to manage their money safely and easily without racking up any more new debts.

The card is used with the help of a co-signer who will limit the amount of money that can be spent with it, thus meaning the addict’s spending limit is kept low and manageable. It is not designed as a long term solution, rather something that can help stabilize the monetary situation of someone recovering until they are able to fully manage their own finances again.

A final point also worth noting is that as part of a recovery program, working to pay off the debt, however long it takes is probably the safer route to improving your credit rating in the long run, though in some instances this simply isn’t possible. In those instances it is worth your while contacting and speaking with a local bankruptcy attorney. The biggest and most sensible piece of advice for anyone facing debt as a result of drug or alcohol problems is to get clean first, become stable and then resolve your financial situation.

This is a guest blog post contribution by Evelyn Robinson.

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Author: affordablebankruptcycourses

Based in Plantation, Florida, Affordable Bankruptcy Courses (ABC), together with Advisory Credit Management (ACM) offer EOUST approved Pre-Bankruptcy Credit Counseling and Pre-Discharge Debtor Education Courses. ABC prides itself on being the low cost solution and offering the required bankruptcy courses 24 hours a day, 7 days a week, in English or Spanish, and there’s no phone call required for certification.

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