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High-profile bankruptcies from 2013 included actor, comedian

No one is immune to a struggling economy -- not even celebrities. A downturn in the economy or unexpected life changes can make paying debts all but impossible, leading to a need to file for bankruptcy. 2013 saw some celebrities filing for Chapter 7 bankruptcy. Ohio residents who are in a similar financial situation may find it reassuring to know that celebrities get into financial trouble, and that there is no shame in needing legal help in resolving them.

Actor Kelly Rutherford and comedian Sinbad each filed petitions for bankruptcy protection in 2013. Each had different reasons for doing so, but they had one goal in common: to gain relief from their debts. In both cases, a judge granted a discharge.

Legal fees and taxes were drivers for these celebrities to file for bankruptcy. Rutherford owed $250,000 in legal fees for a custody dispute and $358,960 to different government agencies for income taxes, while Sinbad owed $8.26 million to the IRS, making up the bulk of his $10.99 million in financial liabilities.

These celebrities were able to demonstrate clearly that they had no possible way of paying back their debts. Each listed little in the way of assets when compared to their outstanding debts.Their income was also diminished to the point where they simply were never going to be able to pay back their creditors in any amount of time.

Bankruptcy is a financial tool that can be used for maximum debt relief. But it is a complicated process that requires a lot of information and candor. Making the decision to file is only the first step.

Source: MoneyTalksNews, "6 Famous Bankrupticies of 2013," Karla Bowsher, Jan. 6, 2014

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