As a Bankruptcy attorney for over 20 years, one of the most common stories that I will hear from clients is how they went on a spending spree without even knowing why they did it. After establishing some trust with the client, they eventually confide in me that they suffer from bipolar disorder. Every Bankruptcy attorney is familiar with this cycle, however, because of the sensitive nature of mental health we rarely discuss it.
In the most rudimentary of terms, bipolar disorder is characterized by a manic or hypomanic episode sometimes followed by a major depressive episode that is not attributable to substance abuse or other medical condition.
Manic episodes are a period of significant mood disturbance and increased energy. Oftentimes manic episodes are characterized by issues related to impulse control, spontaneity, that can manifest itself in unrestrained spending sprees. In many cases, a period of depression follows the manic episode and when someone realizes that they have placed themselves in serious financial distress this can add to the depressive mood, which causes the person to withdraw and ignore their bills leading to a vicious downward spiral.
Here is where bipolar disorder runs squarely into Bankruptcy law. Bankruptcy laws were written for the honest but unfortunate debtor, but they have to take into account those who might abuse the system. Because we cannot look into someone's mind to determine someone's intent, much of Bankruptcy law is written in a way that that has hard bright line rules on conduct that does not take into account someone's intentions. For example, purchasing luxury goods in the 90 days leading up to filing of the Bankruptcy case is an indicia of fraud, even though there may have been no intent to defraud anyone.
During a manic episode, the person suffering from bipolar disorder may go on spending sprees without appreciating what they are doing. It is the process of shopping rather than the thing that they are shopping for that is the point of the spending spree. Unfortunately, this is often done using credit or loans. Sometimes people will then pawn the items purchased in order to obtain money, when they have run out of credit, in order to continue the shopping spree. This can lead to a vicious cycle of debt that eventually lands someone in a Bankruptcy attorney's office.
A Bankruptcy attorney can resolve the debt you have, but not the debt you will acquire in the future, so while Bankruptcy can be an important element in the solution to the problem it is only fixing the symptom and not the underlying problem itself.
So, the first strategy is to work very closely with your mental health care provider. If you are on medication, make sure that you have someone who can keep track of whether you are using the medication, and who can also take note of any changes in your mood that may require adjustment to type or dose of your medication. Next, if you have to consult with a Bankruptcy attorney, be as honest as possible about everything that you can recall doing using your assets and your credit. Your Bankruptcy attorney needs as much information as possible to advise you accordingly.
After you receive a Bankruptcy discharge many creditors will aggressively seek out your business because they know that you cannot file for Ch. 7 Bankruptcy for at least 8 years. This provides a real potential pitfall to further financial problems. After a Bankruptcy, consider giving a power of attorney to someone that you trust and have them handle your financial affairs for you. In extreme cases you may need to apply to have a guardian appointed to assist you in managing your finances. Above all do not ignore the advice of your health care professionals and try to make a point to see your health care provider on a regular basis. Your financial health can be linked to your mental health so it is important not to ignore one to the detriment of the other.