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Olympians and Bankruptcy

We have said many times that bankruptcy is not just for people who are over their heads in credit card debt or who face underwater mortgages. Even the seemingly financially secure, the most awarded, can find themselves drowning in debt.

Shortly after the Olympics, we heard about gold medal gymnast Gabby Douglas' mom's bankruptcy filing. This week, the news spoke of Olympic gold medal wrestler Rulon Gardner, who recently filed for Chapter 7 bankruptcy.

Gardner has certainly faced more than his fair share of challenges. He survived a plane crash and a motorcycle accident, and he lost a toe to a snowmobile fiasco. Yet, his long-lasting financial challenges may top the list of stressful events. He and his wife face $2.934 million in debt and their combined monthly income is $3,116.

They have chosen to move toward less stress by filing for Chapter 7 bankruptcy.

Liquidation in Chapter 7 bankruptcy

Chapter 7 bankruptcy, known as the "liquidation bankruptcy," allows debtors to liquidate their non-exempt assets in order to pay back creditors. This means that a debtor's assets could be used to pay back debt. In most cases, however, a debtor will not have any non-exempt assets and will be able to discharge most, if not all, of his or her debt without losing any property.

Due to the extent of property that Gardner possesses, he will likely have to liquidate some of it, including his Harley Davidson motorcycle and his Athens Olympic team ring (which is worth $100). His Olympic medals were listed among the items to be confiscated for the auction, but he claims they have been stolen.

As this case shows, people from all walks of life can face bankruptcy. Most people who go through bankruptcy do not have the kind of assets that Gardner has and will not face liquidation. It is possible to keep your home, a car, your clothes, your household goods and much more during bankruptcy. In fact, in many cases, you will be able to keep all of those things.

If you are struggling from debt, no matter what the reason, consider bankruptcy as an option. An experienced bankruptcy lawyer can talk to you about the specifics of your case, what property you will be able to keep, and what the financial future could hold for you.

Source: USA Today, "Rulon Gardner files for bankruptcy," Gary Mihoces, Sep. 18, 2012

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