Bankruptcy -- especially Chapter 11 bankruptcy -- is never a simple part of a person's life. But it is certainly easier if during the process you earn a six-year, $100 million contract.
San Diego area football fans may be more familiar with Michael Vick's legal and financial troubles than non-football fans. Essentially, Vick was arrested a few years ago for running a dog fighting ring and ultimately sentenced to time in federal prison. As a result of his legal trouble, he filed for bankruptcy as the unexpected turn of events in his life left him behind on many of his financial obligations. A lot of people thought his days of playing football and living the good life were over when he traded in his cleats for a prisoner number. But that hasn't been the case.
When Vick's career collapsed, he handled his associated financial troubles by filing for Chapter 11 bankruptcy. Under Chapter 11, individuals and businesses submit reorganization plans in order to stabilize their financial situations and pay their creditors back gradually. When Vick filed, he owed nearly $20 million to 45 different creditors.
Vick set out to prove his doubters wrong, earning a second chance at an NFL career and leading the Philadelphia Eagles to the playoffs. His revitalized playing career led to a large contract, and much of the money he has earned so far has been applied to his creditors.
Now that he has revived both his football career and his earning potential, he owes less than $400,000. While Vick may appear fortunate due to his high salary as an NFL star, it is important to note that he carried a rather sizeable debt that may be in tune with what many typical Americans face.
Chapter 11 bankruptcy is one of many tools that can be used to right a wayward financial situation. The process can last for a few years or more, but the filer has a chance to come out in a much better financial position. As Vick's case shows, bankruptcy has the potential to offer debtors a new beginning.
Source: Forbes, "Disgraced NFL star Michael Vick nearly free of $20 million bankruptcy," Brian Solomon, March 14, 2012