The truth about bankruptcy
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Money problems can hit anyone. Read our blog about five sports stars that went bankrupt and what you need to do if you think you might have to do the same.
When it comes to the super famous and successful, it’s easy to make assumptions about their financial lives. It’s hard sometimes to think of famous sports stars finding themselves in the position where they need to go bankrupt, but surprisingly, it can work out that way. Today we’re going to tell you about five sports stars that went bankrupt, and what lead to them being in that situation in the first place.
If you read our blog regularly, you’ll know that no financial quandary is hopeless. So, as always, we’re going to give you our best advice about what you should do if you’ve found yourself in a position where you’re insolvent and considering bankruptcy as a solution.
Evander Holyfield. The four-time world heavy-weight boxing champion has seen many notable successes in his career, but, unfortunately, in 2012 found himself bankrupt. This seems to be as a result of poor business decisions, lawsuits and unpaid child maintenance. In order to try and pay off his debts, he had to sell some personal items, including the robe he wore during that infamous match with Mike Tyson.
Mr Holyfield attributes his troubles to lack of experience and education, “I think it was my lack of education […] You make a lot of money but you don’t know how money works, you don’t know how to calculate. I gave more than I should have. […] People talk you into doing things that you’re not accustomed to doing.”
This is a demonstration of how, no matter how successful or rich you are to begin with, it’s very important that you make sound investments, and prioritise your important bills even when you’re trying to help others at the same time. To make sure that you’re making the best decisions, in terms of what payments you should prioritise, have a look at our blog What are Priority and non-priority debts?
Keith Gillespie. It’s not uncommon for people to complain about the salaries that top footballers are paid, but just because you’re involved in the beautiful game doesn’t mean you won’t suffer any money worries. Keith Gillespie broke into Manchester Utd’s first team at the tender age of seventeen, and soon found that he was earning more than he ever dreamed he would. In his own words, he chose to curb boredom and use his disposable income on gambling, which quickly became a habit. Unfortunately, this lead him to waste £7,215,875 during his professional career.
This is a good example of how your mental state can have impact on your finances. For instance, many of the people we help describe how a mental or physical illness was the root cause of their money problems. If gambling has become a problem for you, and you’re worried about where this might lead, Gamcare is a good place to start to look for help. If you’re worried about how a mental or physical illness is disrupting your finances our blogs How to deal with Illness and debt and Debt and depression can help.
David James. Another footballer to add to the list, David James filed for bankruptcy in 2014 and found himself having to sell off lots of memorabilia from his days on the football field. According to The Telegraph, he lost control of his finances due to unpaid tax bills and a costly divorce.
As the article from The Telegraph quite rightly points out, bankruptcy amongst footballers on extremely high wages is not as rare as you would think. While people may be slow to sympathise with those who need to go bankrupt after being paid a huge salary, the whole story often isn’t a simple one. There seem to be common reasons for why this happens to super-rich sports stars: namely being caught out by unexpected life events (often divorce), as well as bad investments, over-spending and unpaid taxes.
This root cause of this may be because they received no, or poor, financial advice, or because they were deliberately lead astray by those wishing to sell dodgy investments, which can happen to any of us. No matter how much money you’re earning, sound financial advice and planning are essential.
Eddie the Eagle. Eddie “The Eagle” Edwards became the first man to represent Britain in Olympic ski jumping in 1988, but four years later had to go through bankruptcy. In an interview for The Telegraph, he said, “Unfortunately, I did have to declare myself bankrupt in 1992, as the men I employed to deal with my trust fund dealt with it quite badly. I had to go into involuntary bankruptcy because they didn't keep enough money aside for my tax.”
He also said that the whole experience opened his eyes to the fact that you have to be careful who you trust to handle your affairs. After the bankruptcy he carried on doing his PR work and was able to maintain an income. He also successfully sued his former advisors for mismanagement and negligence.
Marion Jones. In the year 2000, Marion Jones won five Olympic medals, including three gold medals for track and field events. Unfortunately, this achievement was undermined when it came to light that she had taken performance enhancing drugs. She was stripped of her medals, and because the authorities believed she had lied, was sent to prison for six months. Due to the huge legal bills she had to pay, she was left with no option but to file for bankruptcy. This, again, demonstrates how, when one area of your life hits trouble, it can have serious financial implications.
On a positive note, it seems that she has come back from her past mistakes and has now started a programme called “Take a Break” which aims to encourage young people to think about the potential long-term implications of their decisions. Her advice now is, “Instead of making a rushed decision, take a step back…reach out to someone who has real life experience. Find someone that will give it to you straight. You know, we all have that friend who won’t mince their words!” This is good advice that we can all apply to our finances.
If the list above tells us anything, it’s that, serious money problems can be experienced by anyone and that sound financial thinking and advice is of paramount importance. It also shows that bankruptcy, although serious in nature, is by no means the end of the road for your finances or your career. It is possible to go bankrupt and recover.
Bankruptcy is one of a few debt solutions available and whether it’s right for you will just depend on your personal circumstances. The very best thing you can do is get great advice from experienced professionals who have your best interests at heart. All you have to do is use the options on the left to get in touch with one of our advisors who will be happy to give you all the advice you need.
by Christine WalshBack to blog home