Most of the time when we hear about celebs and their money, it’s what they’re spending their millions of dollars on – new houses, fast cars and glam outfits. But every now and then a celebrity debt scandal rears its ugly head and we see that the A-listers aren’t always as fortunate as we may first assume. Some of the celebrities who have been forced to declare bankruptcy include:
- Meatloaf
- MC Hammer
- Perez Hilton
- Marvin Gaye
- Michael Jackson
- Willie Nelson
- Larry King
- Kim Basinger
So, who’s had money troubles recently, and how can we learn from these celeb debt scandals? Is bankruptcy as terrifying as it first appears, or can it actually be a good option to take?
[Read: Debt Consolidation Loans for Bad Credit]
Donald Trump
When thinking of Donald Trump, there are three things that spring to mind – hair, politics and business. So you’ll be surprised to hear that the business tycoon has filed for bankruptcy an astounding four times! Many astute entrepreneurs will tell you that taking on debt can be justified, if you’re using it to help to further your finances. Sadly, Trump didn’t spend wisely, and, to put it in basic terms, took on too much debt.
However, Donald Trump is now estimated to be worth about $2.7 billion dollars! So how has he managed to come out on top? Well firstly, each time he has filed for corporate bankruptcy, not personal bankruptcy. As a man with a lot of fingers in a lot of pies, this means that the losses on one company or group still allows his to profit elsewhere. Secondly, he’s used financial knowledge to allow him to restructure his companies’ finances rather than allowing them to have all of their possessions liquidated. This all comes under the banner of the legal nuances of different types of bankruptcy. (If you’d like to learn more about the different types of bankruptcy and how they apply to different cases, the United States Courts is a good place to start.) Donald Trump also uses his business acumen to reduce his stake in the bankrupt companies and to distance himself from ‘failure’, allowing him to concentrate on his public image.
The lesson to learn from this celebrity debt scandal is simple: don’t bite off more than you can chew!
Mike Tyson
I’ll avoid the temptation to mention anything about biting off more than you can chew when mentioning this guy! Mike Tyson has had a long and controversial career. This juggernaut should be lauded for his boxing prowess (he won 50 fights out of 58 in his career; 44 through knockout). However, it’ the stories from behind the scenes that have boosted his fame, and not always for the best reasons. At the height of his prominence Tyson had earnt a staggering $400 million, but he blew it all on lavish parties and fancy cars. In fact, it’s been estimated that he’s bought a whopping 110 cars, including Bentleys, Ferraris and Lamborghinis. As for unusual buys, Tyson’s shopping list includes three white Bengal tigers and a bathtub worth $2 million dollars! It’s no surprise, therefore, that Mike Tyson was forced to file for bankruptcy in 2003. From the sad tale of Tyson we can learn several things that apply to many celebrity debt scandals. Firstly, just because we can earn money doesn’t mean we know how to spend it. Secondly, there are people willing to come to us to abuse our name as well as our finances – we need to be able to spot the genuine people from the money-grabbers.
50 Cent
One of the most recent celebrity debt scandals to hit the headlines is that of Mr Curtis Jackson, also known as 50 Cent. The rapper, once reportedly worth $155 million, filed for bankruptcy in 2015 following a lawsuit involving a leaked sex tape. But is this bankruptcy case as bad as it may at first seem? 50 Cent certainly didn’t seem too concerned by the ‘b’ word, describing it as “reorganizing his financial affairs”. The lesson to learn from this particular celebrity debt scandal is that bankruptcy doesn’t necessarily mean losing everything. In this instance, Chapter 11 bankruptcy allowed the ‘In da Club’ rapper to reorganize his finances, rather than having his assets liquidated (as is the case with Chapter 7 bankruptcy.) It’s important to seek financial advice if you feel that bankruptcy may be the only option for you.
[Read: 14 Signs you’re headed For Big Trouble with Debt]
It may be easy to believe that celebrities who make the mega-bucks have it easy. But a poor understanding of finances, the wrong people around you and a penchant for splashing out on unnecessary luxuries can land them in as much hot water as anyone else.