We’ve talked about celebrity bankruptcies in previous blog posts. Many of our readers like this topic because it illustrates clearly that we all go through hard times in our lives. It normalizes and validates their experience of stress and anxiety as it relates to problem debt that can afflict anyone, even the super-wealthy and exceedingly famous.
By now you should be aware of the fact that scores of famous individuals – people like Larry King, Abraham Lincoln, MC Hammer, Francis Ford Coppola, Walt Disney and Jerry Lee Lewis -- have dealt with serious financial difficulties by using bankruptcy protection. But what caused them to get into the red, and how does that relate to what may have caused your debt problem?
Events that lead to severe debt
Almost every one of us has some debt. But when debt gets out of control, and we can’t afford all the payments while also covering necessities, there is usually a precipitating event or series of events that makes things go south; very often it is something beyond our control or something that did not go according to plan:
- Celebrities (and normal people) can lose jobs and suffer serious reductions in their income.
- Celebrities (and normal people) can get divorced and experience other family problems.
- Celebrities (and normal people) can make investments that end up losing money or even become worthless.
- Celebrities (and normal people) can purchase homes that lose value or become too expensive to keep.
- Celebrities (and normal people) can end up spending more than they earn.
Bankruptcy is not a magic pill or cure-all; it is a time-honored, legal method to deal with creditors. Federal law and Tennessee law have specific guidelines and requirements for those who wish to file for protection. Bankruptcy petitions are made in federal court.
We all need help sometimes
A successful Chapter 7 filing can discharge – get rid of -- debts from credit cards, unsecured loans, medical bills and more, if you qualify. A Chapter 13 payment plan can enable a filer to pay off debt affordably, over time, while keeping important assets like a home or a vehicle.
Bankruptcy isn’t appropriate for every debt problem, celebrity or not; sometimes other debt-relief strategies prove to be more effective. Make sure you understand your options if you are considering bankruptcy.