In 2008, at the end of his 13-year basketball career, Antoine Walker had amassed $108 million.
Two years later, he had nothing.
"I came into the league at 19 years old," he said. "I came from humble beginnings, so I was not used to having money at all."
When he started making money, he didn't understand the concept of a dollar, he said. He also picked up some aggressive spending habits – spending on cars, clothes and jewelry as well as helping family and friends. The rest of his money was lost in real estate investing when the market tanked after the Great Recession.
That led him to declare bankruptcy in 2010. Two and a half years later, he had bounced back.
Today, he helps others avoid the money issues he's overcome. He's a consultant with Edyoucore, a financial literacy company that focuses on teaching athletes how to manage their money.
Before you file
There are a few things people should keep in mind before filing for bankruptcy. The timing of when to file – if it makes sense to do so – is important.
"If you are faced with the loss of either your home, your car or garnishment, any of those events is an emergency and it could make sense to file for bankruptcy immediately," said Sarah Bolling Mancini, an attorney for the National Consumer Law Center.
Beyond an emergency, it may make sense to file if you have an overwhelming amount of debt that you won't be able to repay and that it's peaked – meaning that you're not still incurring more debt.
Generally, in this case it makes sense to already be working your way out of debt.
"If you don't see your financial situation improving after bankruptcy it's not a good time to file," said Robert Lawless, a professor at the University of Illinois College of Law. "Bankruptcy won't put money in your pocket, it forgives past debts."
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Chapter 7 versus Chapter 13 bankruptcy
Before filing for bankruptcy, people need to be aware that there are two different types for consumers – chapter 7 and chapter 13.
Walker was able to file for Chapter 7 bankruptcy, he said, which is also referred to as a liquidation or straight bankruptcy.
In this process, all unsecured debt – think personal loans, credit cards and some medical expenses – is wiped away, but a court will take possession of your assets such as property. A court-appointed trustee will handle your case and may sell some of your assets to cover your debts.
In chapter 13 bankruptcy, you generally get to keep ownership of your assets and get a more affordable payment plan from your creditors. However, you must fit certain requirements – you need to have enough income to afford your monthly payments, and your debt must be under a certain amount.
The limits for chapter 13 bankruptcy in 2020 were nearly $420,000 in unsecured debt and roughly $1.25 million in secured debt.
Because everyone's situation is different, it makes sense to work with a bankruptcy lawyer to determine the best course.
Walker puts it this way. "You are the CEO of your company," he said. "You have to take responsibility of what you do, and you have to be on top of it."
This means surrounding yourself with professionals that can help you be successful.
"You need to have a CPA, financial advisor, agent, lawyer – these need to be separate but work together," he said.
Regardless of what kind of bankruptcy you choose, the process takes a few years before you're off the hook. Then, you must begin to rebuild your finances.
An important part is having a workable budget and sticking to it, according to Lawless. In addition, after bankruptcy people should be cautious about taking on more debt – while it's important to rebuild credit, it should be done carefully.
"There are types of credit you can get, and the key thing is to not immediately take the offers," said Mancini. "It's important to be cautious and take things on slowly and carefully."
For Walker, rebuilding also meant accepting that his life might look different than it did when he was in the NBA.
"I may never again make $108 million but I can have a comfortable lifestyle," he said. "That's been my mindset as I got back on my feet."
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.