Why Celebrities File for Bankruptcy

Actors, singers, filmmakers, professional athletes, fashion designers, and multinational business owners are considered as the richest people around the globe. Nonetheless, the majority of bankruptcy filings sprout from the elite society. Almost 80% of NFL players declare bankruptcy shortly after retirement. Big names in the entertainment industry, such as Walt Disney, Mike Tyson, Nicholas Cage, and 50 Cent have filed bankruptcy in the past. None other than Donald Trump has filed bankruptcy four times, prior to being elected as the President of United States. It is truly hard to believe that people and businesses worth millions or billions of dollars could go broke. Personal Injury Lawyer in NY conveys that even though a lot of celebrities do go from riches to rags, being poor is seldom the reason for filing bankruptcy.

Celebrities have utterly lavish lifestyles; flaunting their wealth and getting noticed by the media is part of the job description. There is no doubt that they receive exceptional paychecks, but their daily expenses are also off the rails. From branded attire that costs more than the annual income of a construction worker to mansions that are the size of a small town, one can imagine where all the money goes. The revenue generated by famous people in the entertainment industry is often subjected to massive fluctuations. Some singers become one hit wonders, many actors never get to star in a second blockbuster, and others just get old or out of demand. However, the one thing that remains constant is the extravagant spending habit, which becomes a death sentence.

Many celebrities become indebted because of gambling and drug addiction, among other ill financial decisions. The filthy rich are surrounded by fewer people who help earn money and more people who assist in spending the money. Majority of financial advisors in the industry are only concerned with their own gains rather than the long-term welfare of their celebrity client. Similarly, friends and family may often play the role of parasites, instead of being supportive. Divorces in the showbiz are typically spicy, if not messy; stars encounter a major setback when they have to give away half of their wealth to an ex-spouse.

While Chapter 7 is the common form of bankruptcy filed by the masses, the majority of celebrities opt for Chapter 11 or Chapter 13 Bankruptcy. Popular personalities may have several creditors on their tail because they owe them millions; sometimes the debt is the accumulation of unpaid taxes. Many celebrities are far from broke and own substantial assets at the time of bankruptcy. For example, an actor who has property worth $25 million is still eligible to file bankruptcy if he owes $32 million in debt.

Celebrities who file a Chapter 11 or Chapter 13 bankruptcy aim to buy themselves time for paying off the debt. They want to prevent liquidation of assets, so this is how they get to hold on to their belongings. These people either have a steady income (in the form of concerts, T.V/movie projects, ad campaigns, endorsements, etc.) and are looking for a lenient payment plan, or depend upon their brand name to generate the required cash within a given time period. Most of them are able to come out debt free after three to five years, while others are left with no other choice than to sell their assets.

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