New York residents may have read that the hip-hop star Curtis James Jackson III, who is better known by the stage name 50 Cent, filed for bankruptcy on July 13. While stories about wealthy celebrities running into financial problems are not uncommon, some observers are surprised that the famous rapper has chosen to file for Chapter 11 rather than a Chapter 7 bankruptcy. Chapter 11 bankruptcies are usually filed by businesses seeking to reorganize their debt, but they may be filed by individuals in certain situations.
Jackson is believed to have amassed debts of between $10 million and $50 million, and a Chapter 11 bankruptcy filing will allow him to reorganize these debts while he continues to work. Much of the rapper’s fortune came from shrewd investments and judicious business dealings, and he regularly features prominently on lists of the wealthiest hip-hop stars. However, few of 50 Cent’s investments provided immediate income, and the debts that led to his bankruptcy filing are believed to be related to his personal expenses.
Individuals facing unmanageable debt often file a Chapter 7 bankruptcy. This kind of filing sees eligible assets liquidated and debts discharged, but those with extremely high personal debts may be required to file an individual Chapter 11 bankruptcy. A Chapter 11 filing allows large amounts of personal debt to be restructured or reorganized.
Experienced bankruptcy attorneys could point out the differences between a Chapter 7, Chapter 11 and Chapter 13 bankruptcy, and they could also explain the various other debt relief strategies available. Individuals or families struggling to make ends meet are sometimes confused about their options, and an attorney with experience in this area may be able to help them better understand the different paths they could take to secure a financial fresh start.