Entertainment

10 Rich People Who Went Broke!

rich people who went broke
Written by Oana Schneider

If there’s one thing that business moguls, Hollywood celebrities, music artists and the regular folks have in common, it’s none other than the possibility of going bankrupt. Bankruptcy hits harder the million-dollar earning individuals who seemed to have it all one minute, then managed to lose everything the next.

Here, we will take a look at the top ten individuals who used to be living the good life but are now broke, and what the reasons are for being bankrupt in the first place. Being rich at some point in your life is useless if you don’t learn to save your money. Just ask these celebrities. Rich people only stay rich if they invest their money right and this should be a lesson for all of us! If you want to know which rich people who are now broke are, keep reading! 

Bankruptcy: The Basics 

First, let’s have a quick definition of the term bankrupt. By law, a person, business or organization goes bankrupt because of inability to pay debts. In other words, an individual who files for bankruptcy is legally declared insolvent, impoverished or destitute. Once bankruptcy is declared, it basically means that a person has reached that crucial point beyond the financial danger zone. Read more about these rich people who are now broke!

If you answered yes to all or most of these questions, there is a possibility that you are going bankrupt:

  • Can you only make minimum payments on your humongous credit card bills?
  • Do you frequently get calls from collections agencies?
  • Do you feel that your finances have gotten way out of your control?
  • Do you always exceed your budget and are having problems paying off all your monthly bills?
  • Do you find yourself having to live on a paycheck-to-paycheck basis?
  • Have you considered getting the services of a debt consolidation company?
  • Have you reached that point when you are unsure about how much you actually owe all your creditors?

These rich people who are now broke could be a lesson for everyone. Assessing your overall financial situation is the best way to tip the scales before you actually reach the point of bankruptcy and that’s exactly what happened to some of these rich people. The earlier you look for suitable solutions to work your way out of your debts, the less likely you are to file for bankruptcy. But if you straightened things out at a point when it’s too late to do anything, you have no choice but to throw in the towel and file for bankruptcy. You can either voluntarily file for bankruptcy, or the creditors can ask the court to order you bankrupt.

Reasons for Going Bankrupt

Next, what are the reasons for going bankrupt? Take a quick look:

  • Inadequate money management skills.
    If you’re fresh out of college and you just secured your first job, you really should keep your budget as modest as possible – at least until you’re paying off your student loans and other debts. Those who stumble upon big amounts of cash instantaneously also usually lack proper management skills, thus leading to an accumulation of debts which may later on lead to bankruptcy. Apparently, these rich people who are now broke didn’t take that into consideration.
  • Falling victim to materialism.
    If you’re a woman who buys designer shoes and follows the latest trends in fashion, or if you’re  a family who is guilty of keeping up with the Joneses, you could be falling victim to materialism. There’s nothing wrong with buying things for yourself but if it reaches a point when you are sacrificing the needs just to buy the wants, you could be in the road to bankruptcy. Another important aspect that our rich people who are now broke didn’t think of.
  • Lack of investments.
    Another reason for going bankrupt is not putting your money in good investments. Once you’re earning enough, it does pay to put part of your earnings into investments that will grow over the years.
  • Not preparing for the future.
    Most rich people who are now broke believe that wealth is for ever. Rich people in Hollywood are the guiltiest of this: not preparing for the future. Some who earn a few million dollars in a hit picture might think that the fame, glitz, glamor and money will not end – but it actually does. In fact, being a celebrity is one of the most inconsistent professions out there. If you fail to save while you are earning big money, you just might find it all gone in the blink of an eye.

Top 10 Rich People Who are Now Broke

Finally, here is our list of the top 10 people who went from the Ritz to the rubble as a result of filing for bankruptcy:

1. Anna Nicole Smith

Rich People Who Went Broke

Anna Nicole Smith

Actress Anna Nicole Smith was famously married to 90-year-old J. Howards Marshall, an oil mogul. When her husband died, Smith was left without an inheritance despite the assumption that a trust fund was set up for her. She filed for bankruptcy in 1996 and unfortunately died herself before the case was settled at a US Supreme Court.The most controversial VIP on our list of rich people who are now broke died in misery. 

2. Allen Iverson

Rich People Who Went Broke

Allen Iverson

NBA superstar Allen Iverson seemed to have it all, especially after being named the Rookie of the Year in 1996. From initially earning $154 million and gaining huge fame, it all went downhill when he had to file for bankruptcy in 2012. An overly luxurious lifestyle could also be the culprit behind Iverson’s financial problems because of his love for bling and a huge entourage.

3. Courtney Love

Rich People Who Went Broke

Courtney Love

When Nirvana singer Kurt Cobain, Courtney Love’s husband, passed away in 1994, she discovered that she was neck-deep in debt. She lost her rented home and had to sell 25% of the famous band’s music catalogue in 2006. She filed for bankruptcy the same year. Is anybody shocked by the fact that rich people who are now broke rarely invested their money?

4. Donald Trump

Rich People Who Went Broke

Donald Trump

Donald Trump filed for bankruptcy four times. The first was in 1991 then the next year; and again in 2004 and 2009. However, these are not personal but corporate bankruptcies. This is probably a unique case because despite the fact that he had to give up a mega yacht, stakes in a hotel and Trump Airlines, he still is worth $2.7 billion.

The best lesson to take away from Trump’s story is that your business and personal funds should be kept separately so that if one stumbles and you have to file for bankruptcy, your personal funds are still kept intact. Most rich people who are now broke don’t find ways to bounce back, but Donald did. 

5. Gary Busey

Rich People Who Went Broke

Gary Busey

American actor Gary Busey has more than 160 film credits but had to file for bankruptcy in 2012. He claimed that his $50,000 asset is not enough to offset his debts which are worth one million dollars.

6. Jack Whitaker

Rich People Who Went Broke

Jack Whitaker

Jack Whitaker won the West Virginia state lottery in 2002. The amount? A staggering $314 million. Whitaker took out his lottery winnings as a one-time payment, which after taxes, amounted to $113 million. That still seems to be a lot of money but with his lifestyle of going to strip clubs, casinos and similar establishments, he eventually had to pay for the hard and fast lifestyle.

After going through a messy divorce and dealing with bouncing check issues, he had to file for bankruptcy and even had to pay for more than one and a half million dollars in gambling losses. Jack is now part of the rich people who are now broke club, it seems. 

7. Michael Jackson

Rich People Who Went Broke

Michael Jackson

King of Pop Michael Jackson had to file for bankruptcy in 2007, when he was unable to pay back a $25 million for Neverland ranch. In the course of his career, Jackson sold more than 750 million records but still had to file for bankruptcy because he overextended his finances by living a literally grand lifestyle as a pop superstar, which turned out to be more than what he can actually afford.

Who knew rich people who are now broke could waste so much money on simple things? 

8. Mike Tyson

Rich People Who Went Broke

Mike Tyson

Boxing superstar Mike Tyson earned over $400 million during his career but had to file for bankruptcy eventually. The reason? His luxurious lifestyle, a messy divorce and a large entourage. The athlete filed for bankruptcy in 2003, when he also claimed to have accumulated a total debt of $27 million.

9. Nadya Suleman

Rich People Who Went Broke

Nadya Suleman

Also known as the Octomom, Nadya Suleman had to file for bankruptcy. In a television interview, she said that she had to do it for her kids because they all needed a fresh start. Suleman filed for bankruptcy in Los Angeles, where she claimed that she had less than $50,000 in assets and has anywhere between half to a million dollars in liabilities. Of all the rich people who are now broke, Nadya has the saddest story.

10. Toni Braxton

Rich People Who Went Broke

Toni Braxton

R&B singer Toni Braxton had to file for bankruptcy twice. When she was producing one hit song after another, the singer hit one financial hurdle after another. She accumulated around $50 million of debt. Her list of creditors includes Flamingo Las Vegas, Tiffany Jewelers, Orkin Pest Control, AT&T and Four Seasons Hotel.

Her first bankruptcy filing was in 1998 and because of health problems and a divorce, she again filed for bankruptcy in 2010. Toni bounced bank from our list of rich people who are now broke and made a fortune within the next few years.

So what can we take away from all of these bankruptcy stories? Even we do not live in an economically uncertain time, it still pays to manage your money properly. Ensuring your future by investing your money, especially if you’re a celebrity and your job is not that secure, is the best way to stay away from the possibility of having to file for bankruptcy.

In the end, it does pay to follow the maxim that you should live below or within your means, so that you would not have to deal with serious financial problems later on – such as dealing with mountains of debt and eventually having to file for bankruptcy. Generally, rich people like keeping their money together, not spending it away. If you want to be able to spend big tomorrow, invest wise today!

About the author

Oana Schneider

Oana Schneider is a published author located in Chicago, Illinois, who currently works for DontPayFull.com as a communication specialist and blog editor. She writes about lifestyle, family budget, has a degree in Communications and advocates for women’s rights. Her future plans include getting a Labrador and losing a few pounds.

17 Comments

  • Really go to show how personal finance is important. For example because Donald Trump was able to still have some money left, he was able to make a comeback. Bankruptcy is useful but it better not to end up in that kind of situation in the first place.

    • Trump didn’t necessarily need to file for bankruptcy. Some people said that he was gaming the system in doing so. Either way, he’s not and never will be hurting for money because there’s a point at which it’s really hard to squander a fortune. He’s a billionaire, and he’s going to do everything in his power to stay one. He’s doing a good job of it right now.

  • Goes to show how much frugal living and planning ahead can have an effect even when you seem to have it all. The lesson here is, if and when your windfall comes, don’t let it change your lifestyle, keep your finances in check, allow yourself the finer things but don’t forget about the bigger picture. Everyone wants instant gratification. The problem is, after that instant is gone you’re left holding the bill.

    • Everyone lets a fortune clout their judgement and change their spending habits somewhat. That’s just part of human nature, but some people take it to the extreme and spend their money like an idiot with no regard for tomorrow. A strong financial foundation requires thinking about more than just what we’re purchasing today, of course.

    • This is the same thing I got out of the article. I completely agree with the article’s point that everyone should, to some degree, be wise about their money. All the wealthy people who are now broke are extreme examples, but it is also something that everyone should think about, as it can happen to anyone.

  • There is also a shockingly high percentage of multimillion dollar lottery winners who go broke very shortly after winning. It is important to develop financial literacy so that responsible money habits can be formed (while ideally done at a young age, anyone can decide to do it at any stage of their lives). A person with these skills will be well-equipped to deal with any money circumstances that come their way.

    • Unsurprisingly, a lot of people who come into money have a hard time of keeping it. They have a hard time learning the basics of financial responsibility because of their former lifestyle. Oftentimes, people that are not well-to-do ‘live for the day.’ They don’t really have enough experience in dealing with money to be able to think far ahead in their lives.

    • Thanks, Jason! Yes, we wanted to show people that fame and money go away if you don’t know how to manage them. Especially money. Generally, people think all celebs are rich. well, this proves the opposite. And yes, I agree with what you said about lottery winners. Due to poor management, they get broke within a couple of years and have to live off the social aid.

  • To be fair, most people that lose so much money do something to deserve that result. They either mismanage their funds or waste the money altogether. When you have that kind of wealth, it’s really not that difficult to manage it responsibly by restricting expenditures or maximizing investments. I don’t feel bad for MOST of these people, but some do have tragic stories.

    • If they lost it as a result from living lavishly or the like then I do not feel too bad either. However, I think with that amount of money it can be easier than we realize to mismanage. A person has to be prepared for it psychologically too. It is not unnatural for someone to be caught up in an expensive life style. When the source of income seems everlasting, careful spending is often the last thing on the individual’s mind. I am not justifying it, rather, I can see how easy it could be to lose that much cash.

  • It is so important to look at things that have happened to other people, and then try to solve your own personal situations based on what you have learned from others. Because you should always ensure that you manage your money properly. If you learn lessons, you should find that you are able to make it so that you can organise things meaning that you would never have to declare yourself bankrupt like a lot of other people (including those in this blog post) have had to do. Money is very important, and if you look after it, it will then be able to look after you. It’s absolutely essential that you learn these lessons, and taking the time to do so can be very valuable.

  • Interesting. I guess that if you’re going to live the grand life, you should still at least hire someone to make sure that you’ve got your butt covered — investing and having special savings.

    I am still not clear on bankruptcy though. They had debts and then they filed for bankruptcy… What happens then though? They get their stuff taken? They just fall in status? What about the debt? Interests grow? It gets settled different ways? It is “forgiven”?

  • I find it so funny how any of those people could of went broke. I mean I get it, they got famous so of course they wanted a lifestyle change. If I ever had a large lump sum of money I would pay off debt, buy a country house, have a farm, and buy stuff on sale food and clothing wise. Beyond that I don’t really need anything to be happy unless I planned a trip. Living frugal goes a long way.

  • It doesn’t surprise me that a lot of rich people go bankrupt, especially athletes. People think that once they strike it big, that they can get anything they want. They spend so much money and put so little away that eventually they lose it all.

  • Wasteful. All these people had buckets of money and they just blew it on crap. I’m not really surprised though…time and time again these sort of people are generally shallow, superficial , selfish and instead of using their wealth to make their community a better place, funding a charity or two…anything other than the wasteful, useless throwing away of their wealth while people are losing their homes, livelihood and families being made destitute by the greed of big corporations moving all the jobs to countries where they can get slave labor. I don’t feel a bit sorry for any of them.

  • Can’t believe Allen Iverson and Mike Tyson were once declared bankrupt. I mean these guys were once on top of their game. And earning megabucks while at it. I guess living within your means is an education class that everybody should take and practice the teachings daily.

  • Controversy may have in Trump’s business, personal life and speech, but his heroic return in US politics are magnificent.

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