More stars file for bankruptcy

More stars file for bankruptcy

Bankruptcy can be declared for any number of reasons, and for the average Australian citizen, the idea of declaring bankruptcy is synonymous with pennilessness, maxed out credit cards and empty bank accounts.

This is not always the case with celebrities with a very high net-worth, who sometimes declare bankruptcy under “Chapter 11” as a way of reorganising their finances after bad business decisions. However, some stars are subject to addictions or circumstances that can financially ruin them.

Whatever the reason, it just goes to show that no one is immune from financial trouble.

Which stars have struggled?

Johnny Depp may be on his way to being the latest star to fall from A-list to ‘B’ by adding himself to the list of famous faces that have filed for bankruptcy in at least one point in their lives.

Though a messy and expensive divorce is partly to blame, the sources indicate that Depp’s reckless spending is the reason for his money troubles. His former management have alleged that Depp “has refused to live within his means, despite … repeated warnings about his financial condition.” And as this is the very same man who once famously  spent $3 million blasting Hunter S. Thomson’s ashes out of a custom-built-cannon, we could be inclined to believe them.

But who will he be joining on the list of financial faux pas? In July 2015, 50 Cent filed for Chapter 11, stating that he had assets and debts of between $10-$50 million. For a star once said to have an estimated net worth of $155 million, 50’s alleged spending and subsequent debt goes beyond most of our comprehension. 

English actress Martine McCutcheon, who hit the big time starring as Hugh Grant’s leading lady in the popular 2003 Christmas-themed romance Love Actually was declared bankrupt in 2013, with the British tax collection department reportedly the largest creditor.

Despite their seemingly successful and lucrative careers, other celebs who’ve filed for bankruptcy include Mike Tyson, Dennis Rodman, Perez Hilton and, of course, President Donald Trump. Despite his self-proclaimed money-making tycoon status, he has previously declared a string of business bankruptcies.

Sports stars go bust

Some of the world’s highest-paid sports stars have come unstuck financially. As reported in a 2009 Sports Illustrated article, 60 per cent of NBA retirees go broke within five years of leaving basketball, and for NFL players, as high as 78 per cent face bankruptcy or financial stress within just two years of retirement (although the NBA claims these figures to be exaggerated). 

Former NBA player Dennis Rodman was declared bankrupt in 2012, owing more than $800,000 in child support to his third wife, TMZ reported.

Mike Tyson may have earned millions during his boxing career, but the former heavyweight champion quickly lost it all by 2003 when he filed for bankruptcy, with about $27 million in unpaid bills.

Meanwhile in the footballing world, ex-Premier league England player Dean Windass went bankrupt in 2016 after amassing £160,000 (AU $292,000) in tax debts, and Aston Villa star Lee Hendrie – who earned £24,000 (over AU $43,000) a week at the peak of his career – hit the B list in 2012.

Irish footballing legend, George Best, once said “I spent 90 percent of my money on women, drink and fast cars. The rest I wasted”. He was declared bankrupt and his financial problems continued throughout his life.

Famous comebacks

Mario Lavandeira was forced to declare bankruptcy during his college years. While at New York University, Lavandeira filed due to unpaid credit card bills. He later changed his name and became successful as celebrity gossip columnist Perez Hilton.

President Donald Trump has filed for corporate bankruptcy a total of six times. The first in 1990, then three in 1992, one in 2004 and finally in 2009. However, Trump publicly claims this as four as he told Washington Post reporters that he “counted the first three bankruptcies as one”. 

He has never filed for personal bankruptcy – which is an important distinction when considering his ability to emerge from the wreckage in his wake relatively unscathed, at least financially.

Even legendary talk-show host Larry King came close to ending his career after amassing huge debts and facing allegations of stealing from a business partner in the early 1970’s. By 1978 he had to file for bankruptcy but went on to have a successful career.

Former Atomic Kitten star, Kerry Katona, made an infamous comeback back in 2013 when, after filing for bankruptcy back in 2008, she became the face of a short term loans company. Katona later came under fire from the public for promoting a company which was reportedly charging interest rates of 2,680 per cent on its loans.

Closer to home, Elle Macpherson’s sister Mimi declared bankruptcy after reportedly failing to pay $116,000 in architecture fees.

But you can be bankrupted for much less, as little as a few thousand dollars, if creditors join forces. In Australia, there were 30,161 total personal insolvencies from between 2016-2017 (an increase of 2.1 per cent from the previous year), while business-related bankruptcy have claimed thousands of Australian firms.

If you’re struggling to meet financial commitments, such as repaying credit card debts or meeting home loan repayments, immediately contact your lender or for further advice talk to a free financial counsellor.

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Learn more about credit cards

What happens if I have a bad credit score?

If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.

Why should I check my credit rating?

There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.

Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.

Why do different credit reporting bureaus use different scores?

The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.

However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.

Can I get a credit card on part-time/casual work?

Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How many numbers are on a credit card?

The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14. 

The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid. 

Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

What is CVV on a credit card?

CVV stands for ‘card verification value’, and is also sometimes referred to as a CVC or card verification code.

A CVV code is usually needed when the card is used online or over the phone as an anti-fraud measure. Without the cardholder being physically present to sign or verify the purchase, the CVV provides an extra layer of protection. 

If you’re using Mastercard or Visa, the CVV is the three digits located on the back of the card. If you’re using an American Express, the CVV is usually four digits and is on the front of the card.

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.