The Top 5 Reasons Professional Athletes and Celebrities Go Bankrupt
Jamal Lewis, the retired pro football player and former Super Bowl champion, has filed for bankruptcy protection. Among the ex-NFL player’s listed assets are are five homes, a 401k valued at $500,000, part ownership in a water park in Ohio valued at $6 million, and a Super Bowl ring worth $17,500. The reported total value of his assets is over $14 million, and his debts reportedly amount to more than $10.5 million.
When we see figures like this, it’s difficult to understand how a professional athlete or other celebrity with a multi-million dollar annual income can find themselves in financial jeopardy. In Lewis’ case, we might assume that drug charges and other legal issues might have had a negative impact and that’s probably at least partially true, since these issues would certainly have had an effect on his income. In fact, at the time of filing, his self employment was bringing in a reported $420,000 annually, a solid income, but a far cry from the lucrative contract of an NFL superstar.
So, given the difference in income, why would Lewis continue to hold all these assets and end up in court? Because he has something in common with other celebrities: a lack of education concerning fiscal responsibility and financial planning. Many professional athletes and other celebrities such as recording artists and movie stars are “discovered” at a young age and groomed for success in their particular fields, with little or no emphasis on how to manage money on their own. The end result is often a person with these traits:
1. No idea how to prepare or balance a budget
2. No business management skills
3. No understanding of ethics in a “normal” work environment
4. No basis for spending limits
5. No recognition of financial warning signs
Please understand that I’m not making excuses for Lewis or any other celebrity who has mismanaged his or her financial affairs, nor am I saying that celebrities in general have these traits. I’m simply saying that the “overnight success” lifestyle that many young stars are thrust into can be a recipe for financial trouble, especially when their careers end. With sound financial planning, the majority of these individuals enjoy a lucrative career followed by a well-funded retirement.
To better understand the concept of legal bankruptcy, it’s important to consider the ratio of debts to income, rather than income alone. When the amount of annual debt approaches the total annual income, that’s when bankruptcy occurs. Any person in any tax bracket can become bankrupt or find themselves in need of debt relief.
If your debt to income ratio isn’t allowing you to live the life you deserve, contact accomplished FALLBROOK BANKRUPTCY LAWYER Jeff Larkin to discuss debt relief options. To seek advice from MENIFEE BANKRUPTCY ATTORNEY Jeffrey Larkin, call 877.25.NEW.HOPE for a free consultation today or visit his BANKRUPTCY LAWYERS IN CARLSBAD CA Google+ Local page.
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By Jeffrey Larkin