Even celebrities have their share of financial downturns, and when they do, they want the same thing as everybody else, a fresh start. New Yorkers who have followed Aaron Carter's career may be saddened to hear that he is one of the most recent celebrities to file for personal bankruptcy.
According to Carter's publicist, he filed for Chapter 7 bankruptcy because he owed more than $2 million. Most of the debt is back taxes, with his IRS bill totaling $1.3 million.
Although Carter earned fame as a teenager, produced an album that went platinum and made the bulk of his fortune a decade ago, little remains of that money. His publicist says the singer did not have a grasp on his own finances.
He is currently on a 75-city tour around the United States, but his $2,000 per month salary does little more than cover monthly expenses.
When he filed the bankruptcy petition in October, he had less than $1,000 in his checking account and $60 in his wallet. His assets totaled just $8,200. His publicist additionally stated that his bankruptcy filing is not a bad move. Rather, the filing proves that he is on the right track.
Filing for Chapter 7 bankruptcy requires the petitioner to pay off as many debts as possible by selling off property and liquidating assets. A court will only approve a debt-relief petition if certain restriction and eligibility requirements are met. This option only eliminates some debt; certain taxes are not dischargeable through bankruptcy.
Although a person can owe money to family and friends, overwhelming debt, as in Carter's case, can be difficult to overcome. Filing for bankruptcy is helpful in such cases, and a person can be free of debt that might be impossible to repay. For some people, Chapter 7 bankruptcy is a good path toward a fresh financial start.
Source: CNN, "Bankruptcy Filing 'Very Positive' for Aaron Carter, Publicist Says," Alan Duke, Nov. 21, 2013