On May 15, 2012, the Associated Press reported that Nadya Suleman, popularly referred to as the “Octomom,” had her Chapter 7 bankruptcy case thrown out after failing to file the proper paperwork. One week later, Reuters reported that Newt Gingrich, the one-time front-runner for the Republican presidential nomination who had a personal net worth between $6.7 million and $30.1 million, left the race with $4 million in campaign debt and now saw his private ventures filing bankruptcy. Even Junior Seau, the former National Football League (NFL) linebacker whose suicide on May 2 led to increased discussion about the effects of repeated concussions in professional football players, could have been dealing with money issues. Former Houston Oilers cornerback Willie Alexander told the Houston Chronicle on May 12, 2012, that he was told by “someone in a position to really know the truth” that Seau was broke.
While nobody may ever learn the exact reason why Seau chose to take his own life, an issue with money would not be particularly unique for a former NFL star, even though Seau earned more than $75 million during his playing career. As Sports Illustrated reported in 2009, an estimated 78 percent of NFL players go bankrupt or suffer financial distress two years after retirement. Jordan Babineaux, a defensive back for the Tennessee Titans, told the Beaumont Enterprise that “an athlete with a $1 million home and a $7,000 monthly mortgage is a conservative estimate.”
I bring up these recent cases of famous names being involved in the bankruptcy process for a couple of reasons. The first is that celebrities are essentially no different from ordinary Americans when it comes to consequences for bad spending habits, meaning that just because a person earns a substantial income for a short period of time, it in no way means that the person will be set for life if he or she does not live within his or her means. Secondly, high-profile bankruptcies also provide the rest of us with some rather invaluable lessons that can be learned not just to avoid having to file bankruptcy, but how to do it properly as well. I will go over some more examples on Wednesday and Friday.
Law Firm of Kevin D. Judd – Maryland bankruptcy attorney