bankruptcy posts

The Super Bowl is approaching and the glitz and glamour of the game and surrounding festivities are stark reminders of the money washing around the game. Players earn tens of millions of dollars but, recently, a number of stories have come to light of ex-players experiencing financial difficulty and even bankruptcy only a few years out of the game. As many as 78 per cent of former NFL players have gone bankrupt or are under financial stress after only two years out of the game, according to Sports Illustrated. It's not just the bling that's hurting these guys. Here are some reasons why multi-million dollar football players often find themselves destitute after retirement.

No Financial Literacy
Most players come out of college where they have lived on scholarships, which don't make them rich but pay most of their bills. By the time they make NFL they've never had to think about a budget, or at the very least they haven't had to think about the bottom line for a good many years, and some players have no clue how to take care of their finances. As a consequence, many athletes trust their money to the wrong people. Former wide receiver Terrell Owens, known for his flamboyant ways on and off the field, reportedly blamed his "advisors" for his bankruptcy, after he burned through about $80 million in a short amount of time after a 15-year career.
Source: NBC

Since 2009, filing for bankruptcy has gotten more expensive and longer in Canada than ever before. If you make just $200 above the income level set by the government, your bankruptcy status gets extended for a year. As a consequence, you have to pay half the amount of your surplus income into your bankruptcy for 21 months, instead of the requisite nine months.

Bankruptcy is one of those things that is much easier to get into than it is to get out of, especially with these new more stringent rules in place. If you ask a bankruptcy trustee, they will all tell you that filing should always be your last resort when it comes to settling your debt. When you meet them, you know it's the end of the line. But, what is it like for trustees from the other side of the desk? Trustees have seen people at their most destitute, so no one knows better than they do what it takes to keep your head above water and never have to see them in a professional capacity.

Douglas Hoyes, founding partner of Hoyes Michalos & Associates Inc., started his career as a bankruptcy trustee for a corporation, but in 1999 he realized he'd make more of a difference aiding individuals with their financial difficulties. Now he's one of the most high profile bankruptcy trustees in the country, with appearances on Canada AM, 'Til Debt Do Us Part and CBC Newsworld.

He makes it his business to help people rise above their financial circumstances and frequently writes about what it takes to not have to see him. Here are some of his greatest tips:

So just where does debt settlement fit in the spectrum of solutions for those who find themselves in over their head, financially?

(We've talked about debt settlement before – this is where you hire a third party to negotiate with your creditors on your behalf, in the hopes you'll be able to settle for an amount that's less than you owe.)

In the lineup of options available, outside of the conventional ways people pay off their debts, we have settlement, credit counseling, consumer proposals and bankruptcy. Each has its own set of conditions and repercussions.

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Lynnette Khalfani-Cox

Rebuilding your life after bankruptcy – including your credit rating, finances and your emotional well-being – can sometimes seem like an overwhelming task.

But if you've recently filed for bankruptcy protection, it's important to realize that there is life after bankruptcy. And it doesn't have to be a life where you're treated like a financial outcast and banished to years of credit exile.

On the contrary, life after bankruptcy can be enormously rewarding – but only for those who strategize properly and commit themselves to not wasting the second chance that bankruptcy can offer. Ultimately, how well you rebound from a bankruptcy filing depends on the post-bankruptcy steps you take to safeguard yourself against future financial calamities.

Having debt puts everybody into a position of vulnerability. The degrees of this vulnerability vary widely: For most people – for those using the credit card that gets paid off every month, for most of those with a mortgage and for just about any student or recent graduate – debt is simply a part of life that is rarely thought about in terms of risk or vulnerability.

While people are accruing debt too, it's rare that they think about how the amounts they've borrowed could ultimately impact their retirement plans. (They can, drastically.)

So what exactly is it that typically drives seniors and retirees into bankruptcy? Personally, I think it's just as important to know and be vigilant about this as it is to plan and save for that so-called comfortable retirement that's so often held up as the ideal, in order to make realistic course corrections along the way.

The thought of seniors declaring bankruptcy in growing numbers is a surprising one, largely because most people think of retirement as a time of winding down and, hopefully, living comfortably on their pensions and savings, with the help of some government assistance along the way.

As we discussed earlier, credit cards are muddying this picture considerably. Turing a blind eye too, thinking it couldn't happen to you, would be a mistake: A lot of people declaring bankruptcy in their old age were doing just fine (thank you very much) while working, but failed to fully account for the costs of their new lifestyle shift.

When thinking about retirement, the word bankruptcy is not often found among all the others. Yet a growing number of seniors are finding themselves faced with the prospect of declaring bankruptcy.

It's a difficult thing to imagine. Not only do seniors have limited ability to earn income, most are of a generation when money troubles weren't discussed openly, leaving them unable to confide or even ask for advice when they feel debt burdens growing.

What's more, no matter what you think of your own ability to stay on top of debts, it seems that more people are susceptible to this trend than you might think. Bankruptcy trustees observe that often "individuals who have successfully carried and paid off credit card debt during their employment years, do not adjust their standard of living or financial practices upon retirement and find they are unable to pay." [Growing Old Gracefully, An Investigation into the Growing Number of Bankrupt Canadians over age 55, Office of the Superintendent of Bankruptcy Canada.]