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Chapter 13 provides golden opportunity for Olympian's mom

In the wake of the Summer Olympics, many in Massachusetts are undoubtedly proud of the way our country's athletes performed in London. One of the biggest standouts this year's games is 16-year-old Gabby Douglas, who took home the all-around individual gold medal.

Though Douglas will likely receive major endorsement deals in the near future, her family was going through financial difficulty not long before the Olympics began. At the beginning of this year, her mother filed for Chapter 13 bankruptcy in order to reorganize and settle her outstanding debts.

When she filed, Douglas' mother indicated that she has about $80,000 in liabilities and assets amounting to nearly $164,000. Her car and townhouse account for the largest share of her assets, but her home mortgage is her biggest debt. For the last few years, Douglas' mother, who raises four children on her own, has been receiving child support and Social Security disability benefits as her only income. She has been dealing with a medical disability since 2009.

One of the distinguishing features of Chapter 13 bankruptcy is that it allows individuals to pay off their debts over a three- to five-year period according to a repayment plan enforced by the bankruptcy court. Douglas' mother will spend the next five years paying $400 per month to clear her debt.

For quite some time, bankruptcy has held a stigma, but that perception is beginning to change. As this case demonstrates, a person's financial circumstances can change quite suddenly, but their obligations may not. This can place them in a precarious situation. As the gymnast's mom explained, she is not at all ashamed of filing for bankruptcy, since it was what she had to do to protect herself and her children. By filing for Chapter 13 protection, the family was allowed to stay in their home.

During times of economic struggle, anyone can become overwhelmed by their debts. Weighing all available debt relief options, including Chapter 13 bankruptcy, can provide a path to reclaiming a sense of financial security.

Source:

  • NBC News, "Gymnast Gabby Douglas' mom filed for bankruptcy," Aug. 6, 2012
  • Our firm has the tools to explore a variety of debt relief options available to Massachusetts residents. To find out more about personal bankruptcy, please see our North Shore Chapter 13 page.

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