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Celebrity Bankruptcies: How Fallen Stars Rise Again

Tuesday, March 29th, 2011

Celebrity Bankruptcies

It’s quite amazing to look back in history and see the wide variety of famous individuals that have declared bankruptcy. Although they may be rockstars, actors, or athletes, they have had financial hard times just like the rest of us. After a few too many nights of partying, overspending, bad investments, or one bad business decision, they were prompted to pull the BK card.

To start, MC Hammer’s famous song “You Can’t Touch This” was exactly what he was singing towards his creditors. In 1996 he filed for bankruptcy after reportedly spending $500,000 a month on his entourage and was in debt $13 million. One of his debts was to an interior decorator for $110,000! Along with the interior decorator, he owed an attorney over $500,000. It sounds like MC Hammer’s spending habits might have been even bigger than his hit songs.

While we’re talking about major music types, Cyndi Lauper has to be mentioned. Cyndi wasn’t always just having fun in the 80’s. “Time after time” in her early years she couldn’t pay her bills. Before her hit album she was in another band, Blue Angel, which broke up due to managerial issues. In 1980 Cyndi filed for bankruptcy and picked up a job in retail to just get by. Now you know Cyndi’s “true colors,” she may have landed at the top of the music charts, but not always the financial ones!

Along with the individuals who pushed us to blast our stereos, we have quite a few actors earning their stars in bankruptcy. While we were watching them for entertainment, creditors were watching them for their debts. Burt Reynolds had many “boogie nights” with his lavish lifestyle. He had a helicopter, two mansions, and a ranch. His life was extraordinary. Too bad he had to receive his “burn notice.” He received a pricey divorce settlement from his wife. This, along with a series of bad movie choices, led Burt to declare bankruptcy in 1996. He filed a Chapter 11, reorganizing his $10 million debt, and was allowed to keep his mansion in Florida. Hopefully Mr. Reynolds continues to make smart movie choices and stays away from those wild but beautiful women.

Speaking of beautiful women, Kim Basinger has always melted us with her dazzling beauty. Too bad her career choices aren’t as impressive as her looks. The blonde bombshell decided to back out of the movie “Boxing Helena,” leaving her with a law suit. Along with the poor movie decision, she decided to buy a small town in Georgia with the plans of turning it into a mini Hollywood. When the bills flooded in, Kim was drowning in money problems. The beauty didn’t plan for the financial difficulties that the town renovation brought.  She filed for bankruptcy in the early 1990’s. Kim may fail at entrepreneurial decisions, but she never fails at looking good!

We couldn’t mention the topic of entrepreneurial decisions and not mention Donald Trump. Trump, a man known universally for his business ventures, tv show, and interesting hair style, is one of the most successful entrepreneurs of all time. He has made some brilliant real estate moves, allowing him to build his empire. Unfortunately, not all of his moves are equally beneficial. In an attempt to expand, he entered into the area of casinos. This has not produced the outcome he was hoping for. Donald filed for bankruptcy in 1992, again in 2004, and then again in 2009. That’s three times in less than twenty years that he has declared bankruptcy, yet he is still an entrepreneur idol.  Trump has used this financial tool to help him maintain his empire and venture into new areas without great liability. Too bad filing bankruptcy couldn’t fix both his financial situation and his hair.

Well, we’ve discussed some singers, actors, and entrepreneurs, but what about athletes? Do those tough guys go through financial hard times too? Sure do! Those powerful muscles don’t protect them from hits of debt. Mike Tyson, to name one, had a lucrative career of $30 million. He reportedly made millions per fight. Sadly, his spending habits were as big as his ear biting incident. Tyson’s $400,000 in monthly expenses, including a pair of exotic tigers, earned him an outstanding $27 million in debt. Both he and his company, Mike Tyson Enterprises, filed for bankruptcy in 2003. Looks like Tyson’s bankruptcy helped him bite off a lot of debt.

As we hoped you have learned from this article, bankruptcy is shared by a wide variety of people. It is nothing to be ashamed or afraid of. In fact, as you can see, it is even a beneficial tool for those who want a fresh start. The figures we named above were confronted with the same challenge that we are all faced with, finances. Luckily, they chose the right path and solved their problems. This brilliant choice to get a fresh start is why they can remain stars in our eyes.

Nicolas Cage facing foreclosure?

Friday, February 4th, 2011

Star status won’t pay the mortgage or eliminate the need for bankruptcy!

In today’s economy it shouldn’t come as much of a surprise to find celebrities facing financial problems and bankruptcy. But you have to wonder, just how does Nicolas Cage get behind on his mortgage payments? I suppose he does it the same way most Americans do it…just on a larger scale.

According to John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures, “There are many among the rich and famous who couldn’t keep up when the rates on their adjustable rate mortgages shot up. Price drops at the high end of the market were so steep that a sale wouldn’t cover the debt. In other words, high-end homeowners face the same problems that plague the rest of us. “

And what can they do about it? They could consider short selling their home(s), and depending upon circumstances, they may consider bankruptcy. Since a Chapter 13 limits secured debt at $1,081,400, some high roller debtors need to consider a Chapter 11, which sometimes referred to as a jumbo 13. Using a Chapter 11, the debtor may be able to keep the house(s) but could conceivably eliminate second, third and even fourth mortgages which is not an option in Chapter 7 cases.

So, what is Mr. Cage’s situation? According to www.money.msn.com in November 2009, Cage lost two New Orleans homes — one in the French Quarter, the other in the Garden District — worth a combined $6.8 million, according to a CNNMoney.com report. Cage was behind $5.5 million in mortgage payments, and he owed $151,730 in property taxes to the city of New Orleans. Regions Bank paid $4.5 million for the properties.

I don’t know about you but it sure makes me feel better about spending $10 to $15 for a movie ticket knowing I can help keep these guys’ homes out of foreclosure. You think we should start a special fund for them? 

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