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New Jersey debtors, like sports stars, find relief in bankruptcy

New Jersey residents may be among many who imagine that someone in the public eye, such as an athlete or actor, must be rolling in the money and well away from financial trouble. While this may be the case for some who are actively working in the public eye, when a celebrity falls out of this popularity their finances can decline quickly. When these individuals are often unable to adjust to new financial situations and changes in how much they can spend, they can find themselves facing debt and even the need for bankruptcy relief.

For former baseball star Jose Canseco, this is a reality. Canseco was American League rookie of the year in 1986 and league MVP with the A's in 1988. He was also a six-time All Star and World Series winner two times during his 16 years in the major leagues. In his time after the major leagues, he seems to have accumulated significant debt and has been unable to pay it off on his own.

Canseco now owes over $500,000 to the Internal Revenue Service, part of nearly $1.7 million in liabilities. His current assets consist of less than $21,000. With such significant debts, and so few assets, Chapter 7 liquidation is the most effective way to address his financial circumstances and obtain significant debt relief.

A successful Chapter 7 filing is what is often referred to as a liquidation bankruptcy. The court appoints a trustee to marshal the filer's assets and then arrange for a liquidation sale, with the balance applied to outstanding financial obligations. While certain debts -- taxes, child support, and most student loans -- may not usually be discharged, relief from other obligations may allow the filer the breathing space they need to address these other obligations. Simply by filing the petition with the court, all creditors are restrained from attempting to collect a debt while the proceedings are pending, typically offering filers in New Jersey and elsewhere the opportunity to conquer their financial obligations once and for all.

Source: USA Today, "Jose Canseco files Chapter 7 bankruptcy in Nevada," Aug. 1, 2012

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