Gawker, the website known for its attention-grabbing headlines and conversational take on tabloid news, filed for bankruptcy earlier this month.
The announcement came after a $140 million legal judgment in an invasion-of-privacy lawsuit by the former wrestler Hulk Hogan.
Gawker is filing Chapter 11, which is specifically designed for businesses, but there are a lot of things anyone in debt could learn from this story:
1. Bankruptcy can be caused by one terrible event.
In this case it would be Hulk Hogan’s lawsuit, but for many American families it’s a job loss or medical emergency. Fortunately, Chapter 13 bankruptcy can help with this. It’s designed for people to pay off debt using an affordable payment plan, so that one tragedy doesn’t have to turn into another (like foreclosure or loss of your car).
Do you need to get out of debt?
2. Bankruptcy stops lawsuits against you.
Some people are upset that Gawker filed for bankruptcy, because it means they’ll have some time to reorganize their finances and sell property if they need to before they ever have to pay a penny of the $140 million settlement.
This may seem unfair, but it’s set up that way by law so that one event doesn’t necessarily ruin a family (in personal bankruptcy) or a whole industry (in corporate bankruptcy).
In fact, stopping the lawsuit can often help a company or person actually pay back what they owe, because it gives them a chance to figure out how to pay it. In Gawker’s case, creditors will likely set up a committee to make sure they get paid. But this gives the company a little breathing room as it makes some very important decisions about how to proceed.
3. Debt affects poor America differently than rich America.
We somehow allow major media companies, car companies, and even a presidential candidate’s companies to declare bankruptcy, but when it’s a private individual, we are quick to judge – even ourselves.
I see it every day at my Memphis bankruptcy office: debt affects poor Americans more than it affects the rich. For example, if a normal American has debt on a car and it’s repossessed, they have no way to get to work, and they lose even more money.
That’s not the case with these corporations’ owners – their personal assets are protected. No one’s coming after their house, or car, or even their credit.
But they might be coming after yours. And if they are, we can help. Contact me today to speak with a Memphis bankruptcy lawyer about your situation for free.