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 is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

Does ING increase credit card limits?

You may want to increase your credit card limit for many reasons, such as having access to more spending money. However, if you are using the Orange One credit card issued by ING, you may not be able to do so. 

ING customers can choose a credit limit of their preference when applying for the Orange One credit card. Depending on your financial situation, this limit can be anywhere between $1,000 and $30,000. If you qualify for a Rewards Platinum card, the minimum credit card limit will likely be $6,000. 

Ideally, you should set your credit card limit knowing how much you can afford to repay each month and keep your expenses lower than this level. With most credit cards, you should have the option of requesting a credit card limit increase at a later time, although you will need to qualify for any increase. With an ING credit card, limit increases are out of the question (at the time this was published), which means you may want to apply for a higher credit card limit from the beginning. Remember that you have the option of decreasing your ING credit card limit at a later time.

How do I apply for a BOQ credit card limit increase?

If you’re an existing BOQ customer, you can request a BOQ credit card limit increase over a phone call. However, you should remember that owning and using a credit card is a matter of financial responsibility, so it might be worth thinking this decision through. 

When requesting a credit card limit increase, you’ll need to be just as responsible in terms of how much you earn and can set aside to repay the outstanding card balance. A credit card company may approve a credit limit increase only if you can show that you have either the income or the disposable income, which is the amount you have left after all expenses have been paid out.

For this purpose, you may need to submit your latest income documents and bank statements for an increase. You may want to estimate how much you usually have left after deducting your expenses, and then use this amount to try and convince the credit card company. Also, you may prefer to pay off the card balance in full each month and thus avoid paying interest on the card, helping you back up any claims of financial responsibility, as well. 

Remember that you may not be able to apply for a credit card limit increase beyond any limitations on the type of card you own. For instance, if you own a card whose ceiling is $10,000, and your current limit is $5,000, you won't likely be able to apply for a $10,000 credit card limit increase.

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

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 do I increase my Virgin credit card limit?

If you’re a Virgin Money cardholder and you’re looking at increasing your credit card limit, the first step is to get in touch with Virgin’s credit team on 13 37 39. 

Once you request a Virgin Money credit card limit increase, the lender will do an assessment of your current financial position to make sure you can repay the credit. Virgin Money will typically take 7 to 10 working days to complete this process.

Virgin Money has strict terms around credit increases. To be eligible, you must have opened your account no less than nine months before making the application. Also, at least six months must have passed since your last credit limit increase. The maximum increase you can expect will be 50 per cent of your existing credit limit.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

How to get a free credit card

There's no such thing as a free lunch. All credit cards come with associated costs when used to make purchases, even if it’s simply the cost of making repayments.

However, many lenders offer incentives for customers such as a $0 annual fee or 0 per cent interest on purchases during an introductory period. Additionally, paying off your balance in full during an interest-free period means you could only have to pay back the cost of purchases without interest. You could also be eligible for additional rewards such as cashback during that time, saving you more money.

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.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

Where can I get a credit card?

Looking to get your first credit card? You might be confused as to exactly where to go to apply for one. Here’s where to go when you are ready to put in that application.

The bank: Your bank is a great place to start, provided that you have a good banking history. Since you already have a financial history, you have more chance of your application being approved.

Credit card provider: Another option is to apply for a credit card directly from the issuer, such as Visa, Mastercard or Amex. This will most likely be an online application, so do your research and apply for a suitable card for your circumstances.

Major retailers: Coles, Woolworths, Myer and David Jones all have credit cards available. But watch out for the interest rate and annual fees – these cards are designed to help you spend more in store.

What can I do about my Commonwealth Bank expired credit card?

You’ll typically receive your replacement Commonwealth Bank credit card before your current one expires. 

Once you receive the replacement card, you may need to update the new card with all the direct debits that you had set up on your expired Commonwealth Bank credit card. These could include insurance payments, electricity or gas bills, and monthly entertainment subscriptions.

To see a list of all your regular payments in NetBank, follow these steps:

  1. Log on to NetBank
  2. Click on ‘settings’
  3. Go to ‘product requests’, and select ‘credit card regular payments’. 

If you don’t use NetBank, you can see the list of your regular payments on your most recent credit card statement. Keep in mind, this list may not be complete and you should also check your past statements or your transaction history. 

If you haven’t received your replacement card before your current card expires, call 13 22 21 and the bank will send a new card to you. 

It is important that you safely discard your expired credit card. This often means cutting it up with scissors and throwing it out. 

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.