Famous Celebrity Bankruptcies

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People facing financial difficulties often feel like they are the only ones having money troubles. They often feel embarrassed and isolated from the rest of the community. They are reluctant to file for bankruptcy because they are afraid they will be considered failures and irresponsible by the public. They do not realize that many people, including famous celebrities, have faced similar financial difficulties and filed for bankruptcy to discharge their debts. These famous people include actors, athletes, musicians, and even great businessmen who filed for bankruptcy.

Abe Lincoln, the 16th President of the United States sought asset protection in bankruptcy when he declared in 1833. It took him 17 years to pay off friends who had given him money to start his business.

Oscar-winning film producer, animation and theme park pioneer Walt Disney filed for bankruptcy in 1923 after backers for the corporation he started two years earlier pulled out. Disney said he could no longer pay his employees or the rent and had no choice but to file bankruptcy himself. Just a mere five years later he created “Mickey Mouse” and the rest is history.

Milton Snavely Hershey started four candy companies that failed and filed bankruptcy before starting what is now Hershey’s Foods Corporation. Mr. Hershey had only a 4th grade education, but was certain he could make a good product that the public would want to purchase. His fifth attempt was clearly successful.

Last year the H.J. Heinz Company, started by Heinz, his brother and his cousin, made over $10 billion in revenue. All because of the red condiment we call ketchup. His business wasn’t always that rosy colored. Heinz started a company, with two others, to make horseradish. Even though it’s one of the famous 57 varieties, it didn’t agree with everyone’s pallet, and eventually hit Heinz’s wallet. In 1827 the business went bankrupt, and Heinz reorganized with his family in Pittsburgh, Pennsylvania. Somewhere between fries and scrambled eggs, ketchup was created and the rest is history.

Phineas Taylor Barnum the greatest American showman, filed for bankruptcy in 1871 due to losses he incurred in unwise business ventures. After bankruptcy he organized his famous circus, “The Greatest Show On Earth.” In 1881 he merged his circus with his most successful competitor, James A. Bailey, under the name of Barnum and Bailey Circus.

Trailblazer automobile manufacturer Henry Ford went broke almost three times before he sold his first car. Ford proved to be too much of a perfectionist, and his first plant only produced 20 cars as he painstakingly tinkered with designs. His second enterprise went bankrupt in 1901 and reorganized into the Henry Ford Company later that year. Ford eventually left that group and finally got things right in 1903 just two years later when he founded the Ford Motor Company.

Thomas Jefferson was of course a widely respected man BUT he was almost always constantly in debt. Mr. Jefferson filed several bankruptcies in his lifetime, including one after leaving office. His debt was huge in comparison to most individuals’ bankruptcies today.

Donald Trump’s “Trump Entertainment Resorts Inc.” filed for Chapter 11 bankruptcy protection on February 17, 2009. His casino group, Trump Entertainment Resorts Inc. had assets of about $2.1 billion and total debts of about $1.74 billion as of December 31, 2008.

Mark Twain was a pre-eminent American author that lost most of his money investing in a worthless machine called the Paige Compositor, an automatic typesetting machine. He filed for bankruptcy in 1894 and discharged all his debts, but was determined to repay the debts. He knew he could earn money by giving lectures to large audiences, so he traveled to Europe and spent the next four years lecturing in every major city. He used the proceeds from these lectures to repay all his debts. He also wrote several of his more famous books after filing bankruptcy including Pudd’nhead Wilson and Following the Equator.

When MC Hammer sang “Can’t Touch This,” in the 1990s, he wasn’t singing about his money. This famous big-panted rapper maintained a forty-member entourage that cost Hammer $500,000 per month. Plus, he purchased a $30 million mansion. Despite a former $33 million income, this star ended up with $13.7 million in debt and $9.6 million in assets. Hammer filed for bankruptcy in 1996.

After a lifetime of fame, boxer Mike Tyson now lives in a modest rental house in Phoenix, Arizona. He filed bankruptcy (Chapter 11) in 2003 with a debt of $27 million, thanks to a $400,000-per-month lifestyle and $9 million in legal fees in his divorce from his second wife. But, Mike had a particularly long list of creditors, including Uncle Sam, who presented him with a tax bill of $13.3 million.

Famous Rock n’ Roll star Jerry Lee Lewis filed for bankruptcy in 1988 because of huge tax debts. The IRS seized his cars, furniture, baby grand piano and even showed up at his concerts to collect ticket sales. He has since recovered from bankruptcy and still gives live concerts.

Marvin Gaye filed for bankruptcy in 1976 after an expensive divorce, tax problems, and drug addictions. To deal, he moved to Hawaii and lived in a bread van.

Talk-show host and best selling American author Larry King filed bankruptcy in 1978 at which point he was $352,000 in debt, accused of stealing $5,000 from a business partner, and charged with grand larceny.

Recently deceased TV legend Ed McMahon filed for bankruptcy upon learning that he was late $644,000 on a $4.8 million loan for a home in Beverly Hills, California. His lender had filed a notice of default.

Anna Nicole Smith, 1993’s Playboy Magazine “Playmate of the Year,” filed for bankruptcy in California in 1996 as a result of an $850,000 judgment against her in a sexual harassment lawsuit.

Kim Basinger felt wealthy enough to purchase the entire town of Braselton, Georgia for $20 million dollars. However a judge ordered her to pay Main Line Pictures $8.1 million because she backed out of a verbal commitment to star in Boxing Helena in 1993. She had to sell Braselton and file for bankruptcy.

Recently deceased Gary Coleman‘s was well known as Arnold Jackson in the American sitcom Different Strokes (1978-1986). In 1989, Coleman sued his parents and former manager over misappropriation of his $3.8 million trust fund. He won a $1,280,000 ruling on February 23, 1993, but he filed for bankruptcy in 1999; he attributed his financial problems to mismanagement of his trust. Coleman also has had problems with his marriage and assault problems with fans and strangers alike.

Probably best known for his role as Sam in the 1987 vampire movie, The Lost Boys, Corey Haim became a teen idol and was paid well. In 1996 he was sued by Lloyd’s of London after being fired from a film for drug addictions he had failed to disclose to the insurance company, and in 1997 he filed for bankruptcy. His only assets were his 10-year-old BMW, $100 in cash, and royalties and residuals valued at $7,500. In 2001, he slipped into a coma after suffering a drug-induced stroke and, once recovered, he tried to auction a molar on eBay to pay the hospital bills.

This talented Atlanta Falcons quarterback, Michael Vick was sacked upon discovery of the elaborate dog fighting complex he owned in Surry County, Virginia. He’s earning $1 per day from prison work, yet he has been spending $30,000 per month to support his family and in maintaining several luxury homes and vehicles. Current bankruptcy attempts (as recent as February 2009) have been rejected by the judge over financial flow charts. Yet, Vick feels that he can make a comeback with the NFL and “resume his career and be able to earn a substantial living.” However, Vick also has past problems with drugs and he has become a symbol of failure, rather than a role model, among many fans.

The famous baseball player Jose Conseco became the first player in the major league history to hit 42 home runs and steal 40 bases in the same year. Unfortunately, in 2008 he admitted to using anabolic steroids and his house was sold at foreclosure while he filed for Chapter 7 bankruptcy.

In 1979, Tom Petty filed for Chapter 11 bankruptcy with debts of $500,000. He was in the middle of negotiating a ploy against MCA Records which had recently bought Petty’s indie label Shelter Records. Not wanting to go to a new label without debt, Petty viewed bankruptcy as a way for him to negotiate a fresh deal with his new label home.

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