Athletes Show that Anyone Can Go Bankrupt
One of the most common and pervasive myths in bankruptcy is that it is for poor people, or people who don’t earn a lot of money. In fact, bankruptcy is a tool that can be utilized by people of almost any means, as evidenced by the number of athletes and celebrities who turn to bankruptcy.
Bankruptcies Are Common For Athletes
A recent article explored bankruptcies filed by former NFL football players. The article found that almost 20% of NFL players filed for bankruptcy within 12 years of ending their playing career, regardless of how much money the player earned while he was in the league.
Some of those numbers are even higher, depending on the study. One report stated that after only two years of retirement, 78% of NFL players filed for bankruptcy. After five years after retirement, 60% of NBA athletes will file for bankruptcy.
Many find themselves in debt after being taken advantage of by “advisors,” or after making investments that go bad or that never pan out as planned. Some simply find themselves in a lifestyle that they cannot afford to maintain once the regular paychecks from a professional sports league stop coming. Others find themselves injured and disabled after retirement, and thus unable to go back into the workforce.
How Do They File?
The reason why so many people of means can file for bankruptcy is that for most kinds of bankruptcy, the court only looks at your previous six months of income. That means it doesn’t matter how much money you once made—if you are having financial problems, debt problems, and income problems (as many people are suddenly experiencing during the COVID-19 crisis), bankruptcy can be an option for you, regardless of how much money you once made.
What about the expensive items that many former athletes own? At least in Florida, many of these athletes’ homes are generally protected by Florida’s homestead exemption, so long as their properties are homesteaded. Money in certain retirement accounts cannot be touched, and any items that have a lien or loan on them may have insufficient equity to even be taken by a bankruptcy trustee.
Of course, what stories of athletes filing for bankruptcy don’t tell you is whether they are in fact keeping all of their property. In some cases, they may be surrendering some property to the trustee. In other cases, they may be making cash payments to the bankruptcy trustee, in return for being allowed to keep certain personal property.
Additionally, many may be filing Chapter 13 bankruptcy, which requires that you make payments towards creditors, but which allows you to file for bankruptcy even if you earn a very high income.
Bankruptcy is an option for anyone. The West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller at 561-264-6850 can help you see if you are a candidate for bankruptcy. Call today for a consultation.