Dance Mom Digs Out of Debt with Bankruptcy Help

When you’re at the end of your financial rope, bankruptcy can be a safety net. In the case of Grogan v. Garner, 111 S.Ct. 654 (1991), the U.S. Supreme Court said,

The central purpose of the [Bankruptcy] Code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

The federal bankruptcy laws provide different relief for different situations. Sometimes a person needs to start over. A Chapter 7 bankruptcy will discharge financial obligations and give the debtor a needed fresh start. Sometimes a person needs time to reorganize his or her finances, so a Chapter 13 can provide a repayment plan over three to five years. Chapter 13 is a way to dig out of debt under the protection and supervision of the federal bankruptcy court.

Recently, TMZ reported that dance instructor and television reality star Abbey Lee Miller emerged from Chapter 13 bankruptcy on New Years Eve, 2013. Miller is the star of Dance Moms, a popular dance reality television series on Lifetime network. According to TMZ, Miller filed bankruptcy in 2010 owing more than $400,000 and was at risk of losing her home and dance studio.

Chapter 13 provided Miller with protection from her creditors and time to increase her business and personal income, largely due to the success of Dance Moms which premiered in 2011. Lifetime began airing season four of Dance Moms in January, and Miller is also hosting a second show on Lifetime, Abby’s Ultimate Dance Competition. Of course, her dance studio and business is thriving due to her celebrity. TMZ reports that Miller has paid all of her creditors in full.

During Chapter 13, the debtor pays creditors whatever she can afford over three to five years (or sooner under some circumstances). Sometimes, as in Abbey Lee Miller’s case, things get a lot better after a person files bankruptcy. Miller was able to increase her income substantially and rescue her business, she just needed some time. Time provided courtesy of the federal bankruptcy laws.