People often assume celebrities, with their lavish lifestyles and multiple properties, are financially stable people. And while that’s usually true, in the wise words of the late Notorious BIG: mo money mo problems.
Unexpected medical bills, legal bills or simply becoming accustomed to a lifestyle that makes it difficult to pull back when times get tough are some of the biggest factors that lead high-profile figures to declare bankruptcy.
It is worth noting, however, that bankruptcy does not mean someone is completely broke. Often, it’s used as a legal protection against total financial insolvency, by “providing financial relief in the form of a restructured debt repayment plan or a liquidation of certain assets to pay off a portion of your debt,” according to Experian.
In 2004, years before Michael Jackson’s untimely death at age 50, his financial advisers had declared that he was all but broke and would be unable to repay a $70m loan to the Bank of America.
Despite his poor financial state, Jackson was said to have remained flippant about his luxurious lifestyle, continuing to rack up monthly bills of $2m on new cars and other items.
At the time of his death in 2009, the “Thriller” singer owed more than $500m to various creditors, court documents revealed.
In 2003, The New York Times reported that heavyweight superstar Mike Tyson had officially filed for bankruptcy after years of financial struggles.
Despite earning $400m over the course of 20 years, court documents revealed he spent $400,000 a month to maintain his lifestyle. From 1995 to 1997, he spent $9m in legal fees. In total, the former heavyweight champion had $27m of debt in his bankruptcy filing.
“I have been in financial distress since 1998, when I was burdened with substantial debt to Showtime, taxing authorities, and parties to litigation,” Tyson said in an affidavit. “Since that time, although my fight income, various asset sales, and litigation recoveries have enabled me to pay a lot of my debt, I am still unable to pay my bills.”
Speaking about his financial issues at the SALT Conference in 2017, Tyson said: “I didn’t think I’d make it through my 30s.”
Before he turned 18, Aaron Carter had already made a reported $200m sum from his music career and various acting jobs on TV and Broadway.
However, he later claimed that his parents had mismanaged his finances and left him with only $2m in his bank account. He also owed $4m in taxes. In 2013, he declared bankruptcy in the hope of getting a clean slate.
At the time of Carter’s tragic death in 2022 aged 34, he had not set up a will, so all of his assets likely went to his son, Prince. His net worth was reportedly $400,000 at the time of his death.
Cyndi Lauper is among the industry’s real-life rags-to-riches stories. In the years before she burst onto the music scene as a solo artist, the “True Colors” hitmaker was part of a band named Blue Angel.
Their debut album was a flop and Lauper filed for bankruptcy in 1981.
She then turned to restaurant and retail jobs to sustain herself while she continued making music. Lauper finally found prosperity with her 1983 album, She’s So Unusual, which included classics such as “Time After Time,” “Girls Just Want to Have Fun” and “All Through the Night.”
15 years ago, Gossip Girl’s Kelly Rutherford was embroiled in a tumultuous – and expensive – custody battle with her ex-husband, German entrepreneur Daniel Giersch, over their two children, Hermes and Helena.
In 2013, she declared bankruptcy after spending nearly $2m in legal fees.
Reflecting on that difficult period years later, Rutherford told People: “Sometimes we just need to retreat and be with our kids and just heal and take time for ourselves.”
Legendary “Walk on By” singer Dionne Warwick filed for bankruptcy in 2013, citing tax debt that dated back to 1991 and equated to more than $10m.
“Due to several consecutive years (the late ’80s through the mid-’90s) of negligent and gross financial mismanagement, Dionne Warwick has realized the current necessity to file personal bankruptcy,” her publicist, Kevin Sasaki, said in a statement at the time.
In the petition, Warwick, the cousin of the late Whitney Houston, claimed her monthly income was $20,950, while her monthly expenses were $20,940. Sasaki said that the singer had already paid back the taxes and that, at that point, it was just the interest and penalties that had accrued. The case was dismissed in 2019.
