It doesn't take long when you're extremely rich to forget what it's like to be responsible. The idea that money will keep coming in or that lavish spending on mansions, cars, jewelry, or an extremely large entourage is a wise way to use that money escapes many celebrities.
Some learn this lesson the hard way. Having to file for bankruptcy in an effort to clear debt, get back on solid ground, or start fresh, isn't often the first option, but it is one that becomes available; and celebrities are no different than others who take advantage of that right. In fact, some celebrities see filing for bankruptcy as a "get out of jail" free card and have used the avenue more than once.
Below is a list of 15 celebrities who have filed for bankruptcy, most of whom did so on purpose instead of paying back their debts. Some of these individuals on the list have made a pattern of it. Our highest ranked offender has used the process four times! The hope is that not everyone intended to go broke. As bad as it is not to have any idea about your financial situation or wherewithal, it's a bit more ethical to have made that mistake than it is to rack up your debt knowing that simply by filing for bankruptcy, you can clear your financial card.
Here's our list of the worst culprits. You might be surprised to learn why these celebrities went broke and used going bankrupt as way out. You might be extra surprised that some of these people didn't seem to learn anything from the embarrassing process.
15 Mekhi Phifer
Mekhi Phifer has a pretty decent resume when it comes to acting gigs. Most recently known for his role on the television show ER, he's made some pretty good bank. However, the actor filed for bankruptcy claiming to have a mere $67,000 in assets, including a leather bed and 12-year-old Segway (odd things to hang onto if you're going broke).
According to the legal documents, Phifer spent approximately $11,600 a month, although he only made $7,500 (sounds pretty unrealistic considering that resume we cited earlier). Phifer had amassed a debt of around $1.2 million in back taxes, $50 thousand in attorney bills, and $4,500 in back child support.
Something doesn't add up here. Clearly, he's not good with money, and it sounds like he's not so good at declaring his income either.
14 Stephen Baldwin
Stephen Baldwin may go down as one of the oddest among Baldwin brothers. Clearly, only Alec seems to have found real and sustained success in Hollywood. But even he himself has had some financial issues. Stephen, however, really hasn't done much besides a breakout role in The Usual Suspects.
This particular Baldwin filed for bankruptcy in July of 2009, one month after he and his wife defaulted on their mortgage and forcing their home to be foreclosed. At the time, he owed more than $2.3 million. It's always amazing to hear about how public celebrities avoid their income taxes (since they seem easy targets for the IRS), but Baldwin pleaded guilty to failing to file income taxes for 2008, 2009, and 2010. As a result, he agreed to pay $300,000 within a year or be sentenced to five years on probation. He's been working steadily, just not on anything anyone's really ever heard of. Hopefully, he's got it paid back by now.
13 MC Hammer
MC Hammer has and will likely be known as one of the most famous financial falls in celebrity history. Worth as much as $33 million per year at one point, he spent millions on employing his friends and people in his community (basically giving them money and calling it a job), and within years of amassing his fortune, it was gone.
He filed for Chapter 11 in 1996 after being $13 million in debt. He claims to have cleared most of his debts. But at one point, he owed the IRS nearly $800,000 in back taxes from 1996 and 1997. MC Hammer learned that while everyone else "Can't Touch This," the IRS apparently can. They say that nothing in life is certain but death and taxes. MC Hammer learned the hard lesson about taxes. He now works as an entrepreneurial coach and hopefully, this is one of the first lessons he teaches.
12 Kim Basinger
If you ever want to get out of doing a movie, just file for bankruptcy. Well, not really, but that's what Kim Basinger did after she decided she didn't want to star in the movie Boxing Helena anymore. She bailed on the movie in 1993 and was subsequently sued by Main Line Pictures who were awarded $8.1 million for Basinger's breach of contract. Basinger claimed she didn't have the assets to pay the studio, so she filed for bankruptcy. She later appealed the ruling and the parties settled out of court for $3.8 million.
This is the same woman who bought an entire small town in Georgia and wanted to make it a tourist attraction. Her bailing on the movie didn't allow her to go through with that either.
11 Burt Reynolds
Reynolds was a huge star; was being the key word. He still worked from time to time but by 1996, he was not just broke, but about $10 million in debt. It was thanks to a nasty divorce from Loni Anderson and a Florida restaurant chain he invested in that flopped. Even though he got his financial situation sorted out by 1998, he decided in 2010 to simply stop paying his mortgage. By 2012, Merrill Lynch filed foreclosure papers on his $1.2 million home.
In an interview with Vanity Fair, Reynolds said, "I’ve lost more money than is possible because I just haven’t watched it. I’ve still done well in terms of owning property and things like that. But I haven’t been somebody who’s been smart about his money." That is definitely an understatement. He ironically conducted that interview from his lovely mansion that he claimed to have done well on. This was just before it was foreclosed on.
10 Drake Bell
You’d think that when you’re young and on a hit television series like Drake and Josh, the sky would be your limit. Apparently, it doesn’t pay as well to a famous young actor as one might think – especially if you get a rotten deal or have a bad agent. Drake Bell, the star of Nickelodeon series Drake & Josh, has filed for bankruptcy. The mid-20’s actor filed legal docs, claiming he was in the hole to the tune of $581,000. That doesn’t come close to topping the list of celebs who have gone bankrupt in terms of the dollar figure, but when Bell says he's only making $2,820 a month, that’s a pretty huge discrepancy between income and expenses. Bell claims his most lucrative year was 2012, a year in which he made $408,000. He claims the next year he made only $14,099. He did a bunch of TV movies in 2012, but in 2013, he did only nine projects (mostly voiceover work). You’d think he’d have made more money considering that amount of employment.
9 Willie Nelson
To hear that Willie Nelson filed for bankruptcy shouldn’t really surprise anyone. It’s not so much that he hasn’t had steady work, but he’s known as much for his recreational smoking habits as he is for being a musician. Perhaps in one of his moments of euphoria he forgot to pay a bill or two. But to “discover” you owe the IRS $16 million in back-taxes is actually quite astonishing. It was one of the largest individual federal income tax bills ever generated by the IRS. The debt, more accurately came to around $16.7 million together with interest and penalty and his lawyer worked the outstanding down to a mere $6 million. Still, Nelson didn’t have the money to pay it.
How this got interesting is that Nelson actually worked out a Producer's arrangement with the IRS to help promote an album that would see sales revenue to pay off the debt. It was called The IRS Tapes: Who’ll Buy My Memories. It was way easier than paying off the debt right away and it actually worked.
8 Francis Ford Coppola
Francis Ford Coppola is one of those people who has learned how to use the system. When he filed for bankruptcy protection in 1992, it was for the second time. His assets were listed at $52 million and liabilities at $98 million. Knowing he could use bankruptcy protection as an option likely led the director to gamble a majority of his finances on the making of One From The Heart, a movie that cost $27 million to film but only earned $4 million. It was not a smart gamble.
This is the same man who thought he was going to get fired as the director of The Godfather, so he canned his entire staff that knew anything about how the movie was being made. He did this thinking the studio wouldn't dare fire the only guy left who knew what was going on. His strategy worked, and The Godfather went on to be a huge success, but it speaks volumes about Coppola as a person. Screw the system, screw other people, and save yourself.
7 Mike Tyson
Despite making more than $300 million in his career, Mike Tyson is notoriously famous for being awful with his money. Fortunately, for a guy like Tyson, he doesn't need to work a normal job to make money. Because he's so famous, and in a way, famous for going so broke, he is working as an entertainer and earning money selling his story. He has done documentaries, talk shows, and has been a guest star in movies and other events. According to the way things once were for the prized boxer, Tyson says he's still broke today, but he's happy with his awesome life.
Tyson filed for bankruptcy in 2003, unable to sustain his lavish lifestyle. The former heavyweight champ was $23 million in debt, owed the U.S. and British governments $17 million in back taxes, nearly $1 million dollars to seven law firms, and $300,000 for limo services. At one point, he owned a Siberian Tiger (something the movie The Hangover parodied.
6 Larry King
Larry King currently has an estimated net worth of $150 million. But, he wasn't always rich. At one point, King struggled to make any money, and in 1972, he was arrested on a charge of grand larceny. He was also accused of stealing $5,000 from a business partner.
In 1978, he filed for bankruptcy but got lucky when CNN offered him a late-night talk radio show in Washington, D.C. That talk show turned into the now famous Larry King Live.
With the help of bankruptcy, King was able to successfully get himself removed from his outstanding debt and was able to start again from scratch and get on solid ground. He used that solid ground to build what is now recognized as one of the most famous talk shows in the history of television.
5 Randy Quaid
If you know the vacation movies, you know that Randy Quaid's character, Cousin Eddie, was a boob who basically leeched off Clark Griswold. His heart was in the right place, but his methods were questionable. Funny how the movie isn't too far off from what happened to Randy Quaid himself.
Thanks to a bad investment on a movie he and his wife were trying to make called The Debtors, both wound up somewhere shy of $10 million in debt. Things got so bad that by 2010, the pair was charged with felony vandalism for illegally squatting in a home. At least in the movie, Cousin Eddie was reluctantly invited by Clark and the family to stay there, and Eddie believed he was always doing the right thing.
4 50 Cent
There was a time when 50 Cent was rap music's next big thing. After the huge success of his first album, sales steadily declined. His income dropped dramatically but it didn't stop Curtis Jackson from spending heavily on a lavish lifestyle featuring automobiles and, ironically, the same mansion that Mike Tyson lost a few years earlier.
Like rapper MC Hammer before him, 50 Cent generously supported a small army of friends and family members. To his credit, he also gave freely to worthy charitable causes, such as HIV treatment and prevention in Africa.
Still, in 2015, he declared bankruptcy in an effort to get out from under his obligations (he was some $5 million on the negative side of his accounting), and in the process, he lost much of his fortune. Most recently, he was part of a beef with UFC star Connor McGregor.
3 Toni Braxton
When someone files for bankruptcy once, maybe you assume they goofed up and needed some help. When they do it twice, you have to assume that they understood the drill and racked up all sorts of debts knowing they had a get out of jail free card.
Toni Braxton filed for bankruptcy not once, but twice. In 1996, she was reported to have built $3.9 million in debt even though she was behind some hugely successful music. She actually ended up selling some of her prized possessions, including her Grammys. Apparently, not having learned anything from the first go-around, fourteen years later, Braxton filed for bankruptcy again. This time was a whopper as it was speculated that she might have owed up to as much as $50 million in debt. Can't imagine what she'd rack up if she had to declare bankruptcy a third time.
2 Gary Dourdan
Here's how to tell if an actor is lazy. Pretend for a second that you're a famous actor on a hit television show. Let's say things don't go your way and you get written off a show. What's your first inclination? To go get another job, right? Well, not if your name is Gary Dourdan. Dourdan must have believed that the residuals from CSI would last him the rest of his life because when he had to file for bankruptcy in 2012, he blamed the show for his financial troubles.
Dourdan was surprised to learn that after being killed off, the residual cheques got smaller over time. Instead of going out and finding another job, he defaulted on two mortgages and decided it was better to wipe his financial slate clean. Perhaps he took the same lazy approach to his acting and that's why they wrote him off the show. He seems to have learned that he needs to work. After 2013, he started working more frequently.
1 Donald Trump
The President of the United States of America takes the cake on this list. Every time he seems to do a bad deal, he files for bankruptcy to get out from under it. He cites the fact that the laws were written to give people a fresh start when they make poor choices, so why not take advantage of it?
Trump's businesses have gone broke four times, but instead of admitting that his businesses flopped, he calls the exercise of filing for bankruptcy restructuring debts. His description tells you everything you need to know about how he probably views running the country. He uses the laws to pare debt, he has a company, throws it into a chapter, and renegotiates with the banks to make a better deal. It's not personal; it's just business.
It would be nice to assume everything he did there was legal, but it appears by his limited time in the oval office so far that not everything he does is above board.
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