Tough times can affect anyone, even celebrities. Bankruptcy protection allows people to restructure or discharge debts when they do not have the income to support all of their payments. Celebrities and other prominent people have filed for bankruptcy protection throughout American history, and many emerged from bankruptcy and found further success. For some, the lavish celebrity lifestyle led to financial troubles, but for many, the same issues that anyone else might face, including taxes, medical expenses, and ordinary bills, overtook their income. Here are few recent celebrities who have filed for bankruptcy, a few well-known celebrity bankruptcies, and some that might not be so well-known.
The multiple Grammy-winning singer filed for Chapter 7 bankruptcy in New Jersey in March 2013. She listed tax debt owed to the IRS and the state of California totaling more than $10 million. Despite monthly income stated at more than $20,000, she valued her assets at less than $3,000. Tax debt is dischargeable in a Chapter 7 or Chapter 13 bankruptcy, although the debtor must meet a strict set of criteria. The IRS has reportedly intervened in Warwick’s case seeking to seize assets held by companies connected to her, in an attempt to satisfy her debt.
David Adkins, known to most as the comedian Sinbad, filed for Chapter 7 bankruptcy protection in a California court in May 2013, citing over $10 million in debt and about $131,000 in assets. He has had a prolific film and television career, including an eponymous television show in the early 1990’s, but taxes owed to the IRS and California, as well as credit card and other debt, have allegedly exceeded his claimed $16,000 monthly income. Adkins previously filed for bankruptcy in 2009.
Leigh Steinberg is less of a household name than the others on this list, but his impact on American culture is well known. The sports agent, commonly regarded as the first “super agent,” inspired the title character played by Tom Cruise in the 1996 film Jerry Maguire. Steinberg filed for Chapter 7 bankruptcy in Santa Ana, California in January 2012. Shortly before his filing, an Orange County judge entered a judgment against him for a $1.4 million debt. He stated that his financial difficulties originated with business problems, including an employee who loaned money to an NFL client in violation of the players’ association rules.
The country singer famously found himself in trouble with the IRS, leading the government to seize nearly all of his assets in 1990 to settle a $32 million debt. Nelson had reportedly invested in a tax shelter in the early 1980’s, which the IRS later ruled to be illegal. Nelson eventually sued the accounting firm that handled his finances, including the tax shelter and tax payments. He also worked out a deal with the IRS in 1991, without needing to file for formal bankruptcy, in which he was able to keep his iconic guitar but lost his home. After releasing a compilation album intended to raise funds to pay the tax bill, he finally settled the debt in 1993.
The author of the Declaration of Independence and third President of the United States fell into financial difficulties towards the end of his life. Unfortunately, he did not have the benefit of a bankruptcy system, as Congress had passed a bankruptcy law in 1800 but repealed it in 1803. Facing overwhelming debt, Jefferson petitioned the Virginia Legislature in February 1826 to create a lottery, offering his Monticello estate and other properties as prizes. The lottery raised about $16,500, which was not enough to cover his debts of over $100,000. Jefferson died on July 4, 1826, and his family and representatives had to sell much of his estate to satisfy the debts.
People in Los Angeles who feel overwhelmed by debt and bills, and whose expenses exceed their income, may be able to seek relief through bankruptcy protection. Since 1997, bankruptcy attorney Devin Sawdayi has represented his clients with dignity and respect, helping them to rebuild their finances and their lives. To schedule a free and confidential consultation, contact us today online or at (310) 475-9399.
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