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Olympic Families Struggle With Debt, File Bankruptcy

Blogs from August, 2012


Olympic gold medal winner Gabby Douglas’ gymnastic victories have become the pride of the country. Yet‚ her mother‚ Natalie Hawkins‚ has said she isn’t ashamed to admit that she has had to file for bankruptcy.

Meanwhile‚ the parents of Olympic swimmer Ryan Lochte are being sued by the bank for defaulting on their mortgage in Florida.

Our Woodland Hills Chapter 7 bankruptcy lawyers know that this is far from a rare phenomenon‚ though of course their situations are garnering attention because of their children’s spotlight.

However‚ you don’t have to bend over backward – or perfect the backstroke – to free yourself from debt.

While a lot of people have been quick to note that training and other costs associated with investing in a champion are expensive‚ that’s not likely why these families are in financial crisis.

Douglas’ mother is a single mom of four children who earns $30‚000 a year.

We know from reports drafted by the Federal Reserve that the median household net worth plummeted by 40 percent in just three years from 2007 to 2010. When we look at the impact for African American families‚ like Douglas’‚ it’s far worse. An in-depth analysis by CNNMoney reporters shows that black families lost 60 percent of their total net worth during those same three years.

It might be easy to say that Hawkins or the Lochte’s were irresponsible in their spending‚ or at the least‚ it was a choice they made to help their children succeed. But the bottom line is that overspending is rarely the sole root cause of bankruptcy. In fact‚ the two main catalysts are unemployment and medical expenses. Both were factors when it came to Hawkins’ filing‚ and Lochte’s mother had recently lost her job and then got divorced.

Divorced‚ single mothers have far higher rates of filing for bankruptcy than any other sub-group.

Still‚ a lot of people put off filing for bankruptcy because they may see it as a failure. They don’t want others to know. But here’s the truth: About half of U.S. citizens pass away with zero assets. What’s more‚ most working Americans who are approaching retirement have less than $30‚000 in their retirement accounts.

This is not a situation that anyone is enduring alone.

The fact that Hawkins came out to say that she was not embarrassed of her financial woes is a huge step toward bridging the gap with regard to the stigma.

In her case‚ she filed for a Chapter 13 bankruptcy. This is an option that will allow you to pay back a portion of your debts over a number of years. It’s generally regarded as less detrimental to your credit‚ and sometimes it’s your only option if you don’t income-qualify for a Chapter 7. The latter is an option whereby you can completely erase the majority of your debts and start off with a completely blank slate.

If you are facing foreclosure in Woodland Hills‚ contact Cal West Law to schedule your free consultation. Call (800) 568-0707.

Additional Resources:
Gymnast Gabby Douglas’ mom files for bankruptcy‚ By Dan Loumena‚ The Woodland Hills Times

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