Famous Celebrity Bankruptcies of 2013

Some of America’s seemingly wealthy celebrities were brought into the spotlight for declaring personal bankruptcy in 2013. The two most notable “A-listers” who declared chapter 7 bankruptcy were the famous comedian and actor, Sinbad and infamous female vocalist, Dionne Warwick.

The source for Sinbad’s personal bankruptcy came from unfortunate business circumstances. Sinbad is an entrepreneur who found himself using his own personal funds to aid his business. For example, Sinbad personally financed his own comedy special in early 2013 hoping to re-skyrocket his career and land him a movie deal. However, an offer for a motion picture was never offered and Sinbad’s pricey production and staff crew and ultimately left $11 million in debt while only accruing a monthly income of $16,000.

In Dionne Warwick’s case, the root of her bankruptcy came from owed taxes. The former diva owed $7 million in federal taxes dating back to 1991 and an additional $3 million to the California Franchise Board. Although Ms. Warwick made the effort to pay back her owed taxes over the years, her financial advisor suggests that the staggering interest made the task ultimately impossible. Her bankruptcy paperwork claims that Ms. Warwick owes $10,525,737 government and private entities, where her income and expenses were recorded at $20,950 and $20,940 respectively, leaving her $10 a month.

These two cases have some important similarities and distinctions to point out. Without getting into the weeds of each case, we understand both personal bankruptcy cases through their personal bankruptcy petition’s income versus expense section. A federal form entitled ‘Schedule J’ or ‘Income vs. Expense’ measures the monthly income and expenses of an individual wanting to file chapter 7 bankruptcy. It is clear that Sinbad and Ms. Warwick’s expenses far outweighed the amount of capital they were earning each month, and they needed to take action.

Neither Sinbad’s nor Ms. Warwick’s cases have been resolved completely. Both are still in process.