Canseco, who is currently playing minor league ball at age 48, listed only $21,000 in assets. Most famous in recent years for admitting to steroid use and blowing the whistle on the drug’s prevalence in Major League Baseball, he says he has racked up huge piles of penalties and interest on his back taxes.
Canseco is just one of many former professional athletes who have let their finances get out of control. A few recent examples:
As one of the lucky few in America paid millions to play a game, Canseco might think himself unique, but it turns out he has something in common with over 11 million other Americans this year: making the call to a bankruptcy attorney. “Typically an individual is going to see a bankruptcy attorney when they’re unable to pay their bills and when their assets are less than the value of their liabilities,” says Brian Shapiro, an attorney in Las Vegas who serves as a bankruptcy trustee.
In Chapter 7 bankruptcy, Canseco will have to liquidate his non-exempt assets to satisfy his creditors. When he emerges from the process, any remaining debts will be discharged, with certain exceptions like any child support and alimony payments.
Canseco’s financial health being done in by a tax bill is something of a rarity in Vegas, where unwieldy mortgages have been the biggest culprit in causing bankruptcies. The gaming mecca was one of the worst-hit cities in the housing crisis and home values have dropped precipitously, joining forces with high unemployment to send many homeowners over the edge. “Currently, a lot of individuals need attorneys because they are unable to make payments on their mortgage, or the value of their home has significantly decreased,” Shapiro says.
It’s still unclear how much of the tax debt the ballplayer will be able to jettison once he’s done selling off his belongings. Typically tax debts must be at least three years old, and not based on fraud or evasion to be eligible for discharge. “What will be interesting in that case is whether those taxes will be dischargeable or not,” Shapiro says.
The slugger himself spoke out on a blog entry at Vice.com. “If you’ve got friends and family, the more money you make the more you spend on them. So let’s say you spend half your money on them and the rest on yourself and the cost of living,” Canseco writes. “It may so happen that during all of that you forget to pay your taxes.”
There’s a lesson for consumers: Don’t neglect to pay your taxes when you make a lot of money, or the good times could come abruptly to a halt. “The government has drained my bank accounts, and the way they hit you with penalties and interest makes it almost impossible to pay anything back,” says the former Bash Brother. “And it’s my duty to warn you: It can happen to anyone.”
Unfortunately for Canseco, if he really “forgot” to pay taxes for so many years, the debt might not go away when he emerges from Chapter 7. “Let me tell you from first-hand experience, the IRS are a bunch of thirsty piranhas,” he says. “They bled me dry.”
Visit Lawyers.com to learn more about personal bankruptcy and to locate an attorney in your area who can answer your questions and help you evaluate your options.
Photo Credit: (AP Photo/Susan Walsh, File)