In our post-Covid world we are all reconciling ourselves to new realities.  One of those realities is that many of our loved ones are suffering from illnesses of despair.  Why would a Bankruptcy attorney be talking about mental illness? 

There is no Bankruptcy attorney who has been practicing for any length of time who has not heard from a client whose financial woes really stemmed from some form of mental illness.

Bi-polar disorder, depression, substance abuse, gambling addictions, and cognitive decline almost always exhibit problems related to finances.  The reason that this is important is that you, as someone who cares about this person, may see the financial problems before you recognize that the root cause is actually something deeper.  Most people are very uncomfortable having these types of conversations with their loved ones, but these conversations must be had.

According to the New York Times, recent research performed by the Federal Reserve Bank of New York and Georgetown University studied the connection between cognitive decline and financial problems.  That study found that financial problems preceded an eventual diagnosis of dementia and Alzheimer's disease.  In fact, in many cases, people began falling behind in their debts as much as five years before being diagnosed with cognitive decline.

“The results are striking in both their clarity and their consistency,” said Carole Roan Gresenz, a Georgetown University economist who was one of the study's authors. Credit scores and delinquencies, she said, “consistently worsen over time as diagnosis approaches, and so it literally mirrors the changes in cognitive decline that we're observing.”

This makes sense if you have ever had to care for a loved one suffering from mental illness.  Their focus is off.  Their ability to stay organized diminishes.  All the things that you need to be financially successful are some of the first things to go when someone is suffering from illnesses of despair.

According to the New York Times, “There's not just getting forgetful, but our risk tolerance changes,” said Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine who has studied dementia's impact on people's finances. “It might seem suddenly like a good move to move a diversified financial portfolio into some stock that someone recommended.”

This type of behavior is pretty common with people suffering from bi-polar disorder, depression or other conditions.  They hope that risky financial behavior will either make them feel better, or will result in immediate financial gain (such as gambling or risky investments).  When those actions don't work out, the condition (especially depression) gets worse.

For you, as the loved one, your job is not just to help the symptom, as tempting as that might be, but to recognize that something deeper might be at work, and that resolving the financial problems may not be enough.  Above all, it is critical to recognize that a person's poor financial decisions may not be intentional and we must approach the situation with patience and understanding.

Certainly, resolve the financial problems, and sometimes that means speaking to an experienced Bankruptcy attorney, but you really need to help them resolve the underlying problems which may require therapy, a doctor, or other mental health professionals.

We absolutely need to get past the stigma about talking about mental illness and treat it like any other health problem, without judgment and with charity and love in our hearts.