Nowadays, when we hear the word “celebrity”, wealth and fame are among the most commonly associated words. But here’s the thing: often you will hear about celebrities filing for bankruptcy. But why?
The answer is to free oneself of debt. In situations where one does not have the ability to repay the debt, filing for bankruptcy is the last resort. It allows the debtor to dismiss debt repayments and avoid losing credit in the long run. While the act of declaring bankruptcy does harm the debtor’s credit within the immediate future, it is still the go-to option for most people, including celebrities.
Now for another question: How did celebrities burn through their money to the point of being in the red in the first place? The most common answers to this question include splurging and mismanagement. A prime example of financial mismanagement involved Gary Coleman‘s advisor and even his parents.
For this article, we will look at 25 celebrities who have become empty-handed at least once in their lives. Perhaps from these examples, you can learn a thing or two about proper financial management to avoid following in their footsteps.
#1 50 Cent
Source: Jared C. Tilton/Getty Images
Despite owning a diverse business empire, 50 Cent filed for bankruptcy in 2016. One year before the filing, the rapper was $32.5 million in the red.
#2 Aaron Carter
Source: Alana Yzola/INSIDER
Aaron Carter filed for bankruptcy in 2013 to rid himself of $2 million worth of debt. This debt is the result of a series of mismanagements coming from both himself and his parents.
#3 Burt Reynolds
Source: Jack Plunkett/AP
Burt Reynolds‘ career was on the decline in the 1980s. Combined with his dwindling income and unchanging lavish lifestyle, he finally filed for bankruptcy in 1996.
#4 Cyndi Lauper
Source: Getty Images / Noam Galai
Cyndi used to be part of a band called Blue Angel. The band only produced one album which did not sell well, resulting in the band breaking up. Not only that, but sometime after the band broke up, the manager sued them for $80 thousand, forcing Lauper into bankruptcy.
#5 David Cassidy
Source: Getty Images/Rick Diamond
Late star David Cassidy had a history of DUIs (driving under the influence). Three DUIs resulted in his wife filing for divorce and David for bankruptcy. Both events took place in 2014.
#6 Dennis Rodman
Source: Kim Kwang Hyon/AP
Back in 2012, the retired NBA player owed up to $800.000 in child support. Even in 2022, Rodman is still not free from his debts.
#7 Floyd Mayweather Jr.
Source: Reuters
One of Mayweather Jr.’s nicknames was “Money”. This nickname was a reflection of his net worth in 2018, which is $285 million. Despite this, he wasn’t paying his taxes, and the Internal Revenue Service (IRS) kept tabs on him.
#8 Gary Coleman
Source: AP
As mentioned in the introduction, it was Gary Coleman’s adoptive parents and financial advisor who messed with his earnings. In 1989, the young actor accused them of helping themselves to a whopping $1.28 million of his fortune from 1982 to 1987.
Coleman said that a lot of people were responsible for his 1999 bankruptcy, “from me, to accountants, to my adoptive parents, to agents, to lawyers, and back to me again”. At the time of Coleman’s death in 2010, the debt was still not fully repaid.
#9 Isaac Hayes
Source: Michael Putland/Getty Images
In an interview with Ebony magazine in 1977, Isaac blamed his bankruptcy in the previous year on his lavish lifestyle, his putting too much trust in people and mismanagement of his record label. He then went on to make more music until he died in 2008.
#10 Kim Basinger
Source: Jordan Strauss/AP
In 1993, Basinger spent $20 million on the town of Braselton, Georgia in hopes of turning it into a tourist attraction. However, four years later, she declared bankruptcy. A piece of financial advice would have helped with her plan.
#11 Larry King
Source: Getty Images / Moses Robinson
In 1978, Larry King filed for bankruptcy due to charges of grand larceny which were later dropped. Within that same year, he was invited to a talk show in DC. That talk show went on to define Larry King’s career with a new name: Larry King Live.
#12 Mark Twain
Source: Major J.B. Pond/Wikimedia
Mark Twain may have been a brilliant writer, but he was never the smartest when it comes to business. His own publishing company failed hard, and Mark Twain himself was also a lavish spender, ultimately resulting in his filing for bankruptcy in 1894.
#13 Marvin Gaye
Source: AP
In 1976, Marvin Gaye was ordered to pay his first wife, Anna Gordy, $600.000 in alimony, which made him go bankrupt. While still repaying the alimony, he was killed by his own father in 1984 at the very young age of 27.
#14 MC Hammer
Source: MC Hammer/Youtube
Being successful doesn’t equal being rich. MC Hammer may have seen major success with U Can’t Touch This, but his spending got out of hand and he ended up declaring bankruptcy in 1996.
#15 Meat Loaf
Source: REUTERS/Arnd Wiegmann
1983 was the year Meat Loaf declared bankruptcy. Why? In his own words: “I had 45 lawsuits totaling $80 million thrown at me, it was a game. And the only way to stop them playing their game was to declare a chapter 11 bankruptcy,”
“Because every time we’d get one case dismissed, they’d throw another one at me. And everybody thinks I had all this money but I didn’t, because CBS did not pay my royalties until 1997.
#16 Michael Jackson
Source: Cliff Schiappa/AP
MJ borrowed a lot of money throughout his career, most of which was not paid back until after his death. Combined with numerous lawsuits and MJ owed between $400 and $500 million at the moment of his death in 2009. The debt was eventually settled in 2012 by his estate.
#17 Mike Tyson
Source: Kevin Winter/Getty Images
Before filing for bankruptcy in 2003, Mike Tyson had an astounding fortune of $400 million. How he blew through all that money and ended up in prison is still a mystery.
#18 Nicholas Cage
Source: Reed Saxon/AP
From 1996 to 2011, Nic Cage earned a total of $150 million from acting. But Cage spent all that hard-earned money on various luxuries, to the point where not a single penny of that money went to his taxes. Then he had to sell some of them to settle his 2009 tax bill.
#19 Stephen Baldwin
Source: Anna Webber/Getty
Stephen Baldwin was hit by the 2008 recession and had to file for bankruptcy just a year later. He had not paid his taxes for 3 years straight from 2008 to 2010, and he faced potential jail time for failing to pay the taxes.
#20 Teresa Giudice
Source: Mike Coppola/Getty Images
Not only was Teresa bankrupt in 2009, she was also charged with various counts, including bankrupt fraud, as her creditors suspected she was hiding assets. This whole shebang landed Teresa 15 months in a correctional facility.
#21 Toni Braxton
Source: Frazer Harrison/Getty Images
Braxton filed for bankruptcy twice. The first one came from her label contract, in which Toni said she received $2.000 in royalties, nowhere close to being enough to cover living expenses. The second one resulted from her heart disease in 2010, which prevented Toni from performing in her self-financed show.
#22 T-Pain
Source: YouTube
T-Pain used to have a lot of money on him, $40 million to be exact. But his excessive spending and “bad business choices” eventually led to a bankruptcy declaration in 2019. Thankfully, he managed to bounce back and is now relatively stable.
“I’ve been mega-rich, I’ve been super broke, right in the middle of thinking I was mega-rich, and then got rich again, and you know learned how to really give a shit about money.”
#23 Ulysses S. Grant
Source: AP
Not even the 18th U.S. president is free from bankruptcy. In 1884, Grant partnered with Ferdinand Ward who later turned out to be operating a pyramid scheme.
This left him penniless because even though Grant still has a military pension, he also suffered from throat cancer.
#24 Wayne Newton
Source: Matt York/AP
Newton declared bankruptcy in 1992 over a $20 million debt. While the debt was eventually settled, Wayne Newton’s money troubles had only begun. In the next two decades, Mr. Las Vegas found himself caught in numerous lawsuits, most of which involved his new debts.
#25 Willie Nelson
Source: Amy Sussman/AP
The IRS raided Nelson’s home in 1990 in search of a $16.7 million tax bill. A negotiation lowered the required payment down to $6 million, but Nelson still wasn’t able to pay it back.
In addition to the massive tax bill, the IRS also found and seized all his properties and musical instruments. It was thanks to “The IRS Tapes: Who’ll Buy My Memories” and fan donations that Nelson was finally clear of all debts.
