According to an article in the Washington Post, a bankruptcy judge approved Michael Vick
's bankruptcy plan to repay creditors. Michael Vick's creditors, who are owed more than $20 million in total, ratified the bankruptcy plan to repay them based on his future earnings and the sale of his assets.
The article said:
"Vick signed a contract with the Eagles that pays him $1.6 million this season, with a team option for next season for $5.2 million...a payment plan detailed before Vick signed with the Eagles included provisions for him to pay creditors 10 percent of his first $750,000 in annual income, while allowing him to keep a house in Virginia, a vehicle and other possessions."
As all of us know Michael Vick is a millionaire super-star athlete who has made more money in a short period of time than most people will ever earn, yet he was still unable to manage his finances and needed bankruptcy relief. A bankruptcy judge even ordered him to retain the services of a financial planner because he has proven that he is unable to manage his finances, even with large sums of income.
Michael Vick's bankruptcy is just another example of how debt can destroy anyone's financial position regardless of how much money they earn. Despite an individual's income, debt can and often does become a monster.
Is your debt becoming unbearable? Most of us don't have Michael Vick's salary, yet we try to handle debt that far exceeds a healthy debt to income ratio. What we don't understand is that attempting to repay debt that is too much for our income can often push us deeper into the hole.
What happens? We put all of our cash into debt payments and leave nothing for an emergency. Then when an emergency occurs we need to charge it to a credit card, pushing us deeper into credit card debt . It's a vicious cycle that bankruptcy can help us break.
Source: Washington Post