Last week we wrote about the bankruptcy filing process for NFL legend Warren Sapp. Many of our readers were probably surprised to hear that someone so successful would end up filing for personal bankruptcy, but the reality is that many different factors can lead to bankruptcy, even for people with very high-paying jobs.
Professional athletes in particular are vulnerable to financial woes that can lead to the decision to file for bankruptcy. Most Florida probably find it hard to imagine that athletes with contracts worth millions of dollars could wind up with overwhelming debt, and many probably assume that it’s the result of lavish overspending on luxury goods. However, a new documentary reveals a very different picture that includes needy relatives, scam artists, and huge medical bills.
Many professional athletes also rise in the ranks at a very young age, perhaps before they’ve been in a situation where they must manage their own finances. Some receive their first million dollar check before they know how to open a bank account.
Professional athletes also deal with the fact that their newfound wealth is widely publicized. This puts them at particular risk for being targeted for fraud schemes promising to double or restructure their wealth. Unfortunately, these types of schemes are sometimes successful and victims can end up losing or simply mismanaging a portion of their income.
These factors are just some of many different reasons why people may end up in a position to file for bankruptcy protections. Chapter 7 filings have different advantages and disadvantages from Chapter 13 filings, so it’s important to consider both options and determine the best fit with the help of an experienced advisor.
Source: The Wall Street Journal, “Pro Athletes Go ‘Broke’ in New ESPN DocumentaryPro Athletes Go ‘Broke’ in New ESPN Documentary” Jacqueline Palank, Oct. 1, 2012