The emotional toll of a bankruptcy
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"A bankruptcy is a severe loss just like a death or a divorce," says Karen Zager, New York psychologist. She says a bankrupt consumer intensely grieves the person they once were. "They go through anger and definitely denial for having to declare bankruptcy."

Charlesworth says the problems can be stressful. "One of the major problems with stress is it will affect your immune system. Stress hormones will be dumped into your body. Some symptoms are gross muscle tensing, headaches, grinding teeth and backaches."

In fact, consumers' feelings toward debt have been noted in a study. Family Credit Counseling Service in Rockford, Ill., released in November an annual financial stress survey that took a random sample of 1,500 adults in the United States carrying credit card debt. It found that most feared they would never get out of debt, they wouldn't be able to retire nor be able to maintain their lifestyles.

These fears seemed to play themselves out physically. Of those who responded to the questions about the physical effects of debt, four in 10 had trouble sleeping, just over one-quarter found it hard to concentrate and one in five experienced stomachaches and headaches. Only a few went to see a doctor.

The debt also took a toll on relationships. Most reported having fights with significant others. Some even worried that their partner no longer trusted them with money.

Psychologists warn that bankrupt consumers could become more vulnerable to an emotional imbalance, depending on coping skills.

"One of the things I look at is whether they had a well-adjusted psyche," Charlesworth says. "What coping skills are they starting with? Is the person exercising every day, using good relaxing skills, talking to loved ones? Does the person have a good emotional support group and a spiritual foundation? I also have people look at their organization and time management."

Pam McAfee, staff attorney with the U.S. Bankruptcy Court, Eastern District of North Carolina, advises people suffering from a mental illness to consult with their attorney to see if it's relative to their case.

"Any mental illness could be relevant," she says. "Most frequently we see depression or bipolar disorder, but it would not be unusual to see addictive disorders (substance abuse, gambling addictions) or post-traumatic stress disorder. It really depends on the context. It could be relevant to how debt was incurred (in the instance of a spending spree, for example) or to whether debt can be repaid."

McAfee says an example would be a student-loan debt that's generally not dischargeable. She explains that a student loan can be discharged if the debtor can show that not discharging will create an undue hardship.

"There's a legal test for undue hardship, and one of the elements is that you can not maintain a minimal standard of living," she says. "Often people with a mental illness can't maintain employment sufficient to maintain a minimal standard of living."