Bankruptcy sounds like a long, terrifying, and devastating process, but bankruptcy is actually a legal way to consolidate or relieve debt. In fact, more people have gone through the bankruptcy process than you’d expect.
Let’s take a look at some notable bankruptcy cases:
Get ready to put on your parachute pants – it’s hammer time. Whether you remember when “U Can’t Touch This” came out or not, M.C. Hammer is the artist behind one of the most recognizable songs of all time. However, his success wouldn’t come easy. At his career height, M.C. Hammer was worth over $33 million but a few short years after his rise to fame, he went into Chapter 7 bankruptcy.
Essentially, Chapter 7 “liquidates” nonexempt property and uses the money from the sale to pay off debt. It is important to speak with an experienced attorney who can guide you through the bankruptcy process and advise which assets the bankruptcy court will consider exempt and nonexempt.
M.C. Hammer has since recovered from his financial troubles and is bouncing back. In his case, Chapter 7 not only helped to remove many of his debts, but it allowed him to build a strong foundation for a new financial future.
The man behind the mouse, Walt Disney wasn’t always successful. After his investor went broke in 1921, Disney’s company had no choice but to file for bankruptcy. It’s likely that the animation studio, Laugh-O-Grams, filed for Chapter 11 bankruptcy.
Chapter 11 is for businesses, and it offers debt relief through a payment plan. Essentially, the business comes up with a payment plan that satisfies the creditors and the court. The payment plan must be realistic, meaning the plan can’t be too ambitious or too conservative – it should allow the business to make payments in a reasonable amount of time and satisfy the creditors.
While Chapter 11 is for businesses, individuals can file for a similar type of bankruptcy: Chapter 13. Debtors must draft a repayment plan scheduled over three or five years and get court approval. This allows individuals to avoid liquidation and pay off their debt over an extended amount of time.
Girls just want to have fun(ds), and in 1981, Cyndi Lauper was in desperate need of a debt relief solution. Between filing and experiencing her first real success, Lauper worked at restaurants and retail stores to keep her head above water. Only two years later, Lauper went on to release the ‘She’s So Unusual’ album and was immediately a breakout star.
Bankruptcy in a Nutshell
What we can learn from these cases, is that debt is a problem most of us can understand. Most people have had money troubles at one point or another, including celebrities. While all the aforementioned celebs have moved on from their debt, it’s important to note the role bankruptcy played in their financial recovery. Bankruptcy is simply a debt relief option to help debtors and businesses reorganize or liquidate their debts.
If you are struggling to take care of your debt, you’re not alone. Schedule a consultation with Buchalter & Pelphrey Attorneys At Law today.