Are you feeling a little glum at the prospect of filing for bankruptcy? In America, we’re taught that we should pay our debts, yet the bankruptcy system exists for a vital reason: To protect our economy. Financial problems happen to the best of us (or at least the most visible of us). Once- rich celebrities sometimes have to file to protect themselves from aggressive creditors or preventing their assets from being liquidated. Here, we’ll discuss some very high-profile bankruptcies and the circumstances that led to them.
Marvin Gaye’s Bankruptcy Began With His Divorce
Marvin Gaye had an estate worth an estimated $5 million. As a Motown legend and one of the most iconic voices of the 1970s, he made millions off his albums and tours. However, when his wife divorced him, Gaye found himself in arrears $600,000 for alimony payments. While alimony payments cannot be discharged in bankruptcy, they can be rolled into a repayment plan. In this case, Gaye was able to negotiate his way out of it by selling his ex-wife the rights to his album ironically entitled. “Here, My Dear”.
Unlike many of my clients, Gaye was never able to recover. Drug problems followed. He found himself in debt to the IRS and moved to Europe to avoid tax arrearages. Eventually, he was shot and killed by his own father trying to break up a fight between his parents.
But like so many folks, Marvin Gaye’s bankruptcy began with a divorce.
A Lawsuit Forced Kim Basinger into Bankruptcy
After reading the script of Boxing Helena, a movie in which a disturbed surgeon removes the arms and legs of his romantic obsession, Basinger pulled out of the project and the studio sued her for $8.1 million. At the time, the entirety of her estate was worth just over $5 million. Basinger would settle the lawsuit for $3.8 million and go on to star in many more films.
Cyndi Lauper Failed in Her First Attempt at Stardom
Before becoming a household name and amassing a net worth of $30 million, Cyndi Lauper was a starving artist performing for a band called “Blue Angel.” The group released an album called Polydor, which never took off, and Lauper was forced to file for bankruptcy, take a job at a Japanese restaurant singing while dressed as a geisha, and working odd jobs to make ends meet.
Bad Investments Forced Curt Schilling into Bankruptcy
The iconic Red Sox pitcher, whose blood-red sock became an icon for the greatest comeback in sports history, filed for bankruptcy after he sunk $50 million into a video game company that itself declared bankruptcy. He was forced to sell many of his prized assets, including his $3M home and the bloody sock to pay off creditors. He now works as an analyst for ESPN.
A Failed Business Forced Abraham Lincoln into Bankruptcy
While bankruptcy, as we know it today, didn’t exist in the 1830s, Lincoln was forced into a kind of bankruptcy after purchasing stock for his general store on credit. The store went under and his business partner died, leaving Honest Abe on the hook for $1,000 in liabilities, no small amount in those days. Lincoln was forced to repay his creditors over the next 17 years. From
there, however, America’s greatest president went on to earn his law degree and begin his career as a politician. The rest, as they say, is history.
A Shady Investor Pushed Walt Disney Into Bankruptcy
Walt Disney is a household name, but the company he began did not have an easy start. Disney formed the Laugh-O-Gram Studio in the 1920s, hiring several animators. When his investor went broke, so did Walt. He found himself unable to pay off his animators and Laugh-O-Gram Studio had to file for bankruptcy in 1921. Two years later, Walt formed another company with the help of a loan from his family. Disney began achieving some success with Mickey Mouse, but the release of the movie Snow White and the Seven Dwarfs went way over budget. He almost found himself filing for bankruptcy a second time. Disney was able to secure a bank loan to fund the completion of the movie which went on to gross $6.5 million. When
Disney died in 1966, he was worth $5 billion.
A Lavish Lifestyle Forced Elton John into Bankruptcy
One of the most successful recording artists of all time, Elton John became used to the good life. He owned properties all over the world and spent an unbelievable $2 million a month. Eventually, reality hit and in 2002, Elton John was forced to declare bankruptcy. His notoriety and continued success provided the means to dig his way out and today, Elton John is worth an estimated $450 million.
Mike Tyson Squandered $400 Million in Career Earnings
One of the most vicious and scariest boxers in recent memory, Mike Tyson went on to earn millions as the Heavyweight Champion. But just because you have a lot of money doesn’t mean you know how to manage it. Tyson found himself embroiled in lawsuits, a bad public image, and he overspent his fortune by an estimated $23 million. He filed for bankruptcy after a hefty divorce settlement coupled with unpaid taxes accounted for the lion’s share of his debts. But today, Iron Mike is still in the spotlight, this time with a sense of humor about himself.
Bankruptcy is a Chance to Begin Again
While many of these celebrities were able to capitalize on their notoriety to rebuild their finances, they also found themselves in debt to the tune of many millions of dollars, unlike regular folk. But we all have skills that we can capitalize on and while bankruptcy may feel like a significant setback, it’s also a chance to start fresh and make better choices, just like Mike Tyson.
In other cases, celebrities found themselves victimized by bad investors, sued by unhappy studios, or otherwise incurring debts that they had no power to prevent. Many Americans struggle with medical debt that they cannot afford to pay. Bankruptcies happen for all manner of reasons and it’s not always bad financial decisions that are to blame.
If you’re struggling with your finances, facing lawsuits from creditors, or you have a debt that you have no idea how you’re going to pay, Butcher Law Office, LLC provides expert legal advice for resolving debts as painlessly as possible. Give us a call at 541.762.1967 or contact us online for a free consultation.