RECENT STUDY SUGGESTS BANKRUPTCY IS COMMON FOR LOTTERY WINNERS
Posted on 11 06,2014
Winning the lottery seems like a dream come true. Some regularly try their luck at the numbers and others will buy a lottery ticket to celebrate a momentous occasion, such as the birth of a child. No matter it happens, winning the lottery can seem the perfect financial boon. While this money is taxed, it can still provide substantial amount of income.
For some, the dream that came true when they won the lottery turned into a nightmare when they were forced to file for bankruptcy. Are lottery winners that file for bankruptcy an anomaly? Recent studies suggest that many people who win the lottery may not know how to handle such a large amount of money, which ultimately leads them into bankruptcy.
WHY LOTTERY WINS FACE BANKRUPTCY
The University of Kentucky, University of Pittsburgh, and Vanderbilt University sought to answer what happens when individuals that are already in financial trouble come into significant amounts of money. They gained information from nearly 35,000 winners of a Florida lottery and checked this information with bankruptcy records. The results indicate that even if an individual wins a large amount of money in the lottery, it does not reduce the likelihood of bankruptcy.
The study further concluded that:
- 1,900 lottery winners went bankrupt within 5 years
- 1% of lottery winners go bankrupt any given year
- Winners of amounts between $50,000 and $150,000 had a high chance to go bankrupt within 3 to 5 years
- Most who filed for bankruptcy won enough to pay off their unsecured debts
The study came up with a few suggestions as to why those winning such large amounts of money in the lottery did not pay back their debts right away, eventually forcing them to file bankruptcy down the road. One such suggestion is that many of those that play the lottery regularly have lower incomes and education, showing that they may be less financially savvy. Another idea is the mental difference between winning and earning, which means that those that win money may be more likely to spend it rather than those that earn it.
If you are facing bankruptcy, don't go through it alone. The Virginia Beach bankruptcy attorneys at the David McCormick Law Group can help you get back on your feet. Give our firm a call today!