Bankruptcy has been used by many well-known entrepreneurs and celebrities over the years, including some from Arkansas. The fact is that even the rich and famous may be vulnerable to falling into bad economic times or making hugely unwise business decisions or investments. Bankruptcy law is flexible enough to accommodate a wide variety of personal and business financial crises.
Actors and entertainers are not immune to falling into hard times. Recently, singer and entertainer David Cassidy filed for bankruptcy relief. He filed a petition listing assets and debt of up to $10 million. Some of the debts listed were Wells Fargo for $290 million, American Express for $21,000, and Citi Bank for $17,000.
The debt to Wells Fargo appears to represent a mortgage balance due on real estate that Cassidy has defaulted on, or for real estate that he now inhabits. He may be deciding to turn over the real estate to the bank, and is listing the loan to extinguish the remaining debt. Alternatively, he may be reaffirming the Wells Fargo mortgage in the bankruptcy, which mainly tells the bank that he will keep the real estate and continue to make the payments on time.
Cassidy’s debts to American Express and Citi Bank are most likely unsecured credit cards or cash advances. Unsecured debt is totally wiped out in a Chapter 7 bankruptcy, which is the likely chapter under which Cassidy filed. In one possible scenario, Cassidy could keep his home by continuing to pay on his mortgage while at the same time eliminating all unsecured debt in the form of credit cards, medical bills, and other miscellaneous loans.
Cassidy has a history of alcohol abuse and DUI arrests. He issued a statement saying he was in a divorce and was reorganizing his life and financial affairs. In fact, divorce and bankruptcy are sometimes companion remedies for wiping the past clean and starting a fresh life. Bankruptcy can sometimes mark a person’s transition from a life of confronting intensive, persistent obstacles to one where all of those burdens are removed and new goals can be realistically pursued. These principles generally apply if you live in Arkansas or in any other jurisdiction.
Source: New York Daily News, “David Cassidy files for bankruptcy protection“, Kirthana Ramisetti, Feb. 12, 2015