Personal bankruptcy can help people recover from serious financial distress, when they no longer have enough consistent income to pay their bills. A major concern for people considering bankruptcy is the effect it will have on their credit and their future financial prospects, including homeownership, education, and other large expenses. While bankruptcy will certainly have an effect on a person’s credit, it is by no means a hindrance to one’s future plans. In fact, the purpose of bankruptcy is to help a person overcome financial difficulties so that they can proceed with those plans. While not everybody has the resources or talent of someone like R&B singer Toni Braxton, who completed a Chapter 7 bankruptcy last year and is rumored to have recently purchased a $3 million house, her story demonstrates that people can recover from bankruptcy.
Braxton has a history of entertainment successes and two completed bankruptcies. She became famous in the 1990’s with a string of hit songs leading to about $170 million in worldwide album sales and multiple Grammy awards. She has starred on Broadway, had her own headlining show in Las Vegas for several years, and now has her own reality television program. Her first Chapter 7 bankruptcy, filed in 1998, required her to sell her Grammys and other awards. Her career bounced back relatively quickly, with more hit albums and another starring role on Broadway.
Financial difficulties began again several years after she completed her first bankruptcy case. She sued her former manager in 2007 for alleged mismanagement, claiming that he owed her $10 million. She had to leave her Las Vegas show, which began in 2006, due to health problems, and she said that this caused a significant amount of the financial problems that led to her second bankruptcy filing in 2010. Her insurer reportedly refused to cover the cost of canceling the show, calling her heart problems an undisclosed pre-existing medical condition. This left her responsible for the loss to the hotel.
Prior to both bankruptcy cases, Braxton reportedly tended to spend money rather extravagantly, and she admitted in an interview with ABC News that a “home decor addiction” played a role in her money problems. She claimed up to $50 million in debt in her 2010 Chapter 7 petition. The case settled in July 2013 when she reportedly paid $150,000 to the court-appointed trustee. Since the case was a Chapter 7 proceeding, the trustee had authority to liquidate non-exempt assets to pay creditors. At the end of the case, many of her debts would be subject to discharge by the court.
Since the end of the Chapter 7 case, Braxton appears to have been busy at work, with the release of a new album on February 4, 2014 and the third season of her reality show scheduled to begin airing in March. She was in the news in late January amid rumors that she purchased a 5,300 square foot house in Calabasas, California, in an area known for celebrity homeownership, for about $3 million.
Since 1997, bankruptcy attorney Devin Sawdayi has represented clients in Los Angeles who have found themselves without sufficient income to service their debts. We help people create plans that enable them to pay debts on a manageable schedule in Chapter 13 cases, sell assets to pay off debts in a Chapter 7 cases, and obtain a final discharge of some remaining debts. To schedule a free and confidential consultation to see how we may help you, please contact us today online or at (310) 475-9399.
More Blog Posts:
Art Collection Goes up for Auction as Part of Bankruptcy Liquidation, Los Angeles Bankruptcy Lawyer Blawg, January 21, 2014
Treatment of Artistic Works in Bankruptcy: Can a Musician Lose the Rights to Their Music? Los Angeles Bankruptcy Lawyer Blawg, November 11, 2013
Reality TV Couple Faces Bankruptcy Fraud Allegations Years After Unsuccessful Closure of Chapter 7 Case, Los Angeles Bankruptcy Lawyer Blawg, October 23, 2013