When the news breaks that a celebrity has filed for bankruptcy, the initial reaction can be that the person was irresponsible with the millions they made from their fame. But, like with most news stories, there is usually more to it than what the headlines read.
That seems to be the case for musician Aaron Carter, who recently filed for Chapter 7 bankruptcy. According to the reports, Carter, who was famous several years ago for the hit song "I Want Candy," may have been the victim of mismanagement, although there is probably no doubt that his youth and inexperience with financial and business matters did not help his situation. Carter is 25-years-old, and the reports indicate that his bankruptcy filings showed less than $10,000 in assets.
Unfortunately for Carter, it appears that he owes nearly $2 million in liabilities, the largest portion of which is tax debt to the Internal Revenue Service. This actually makes Carter's case more interesting because getting tax debts eliminated through a bankruptcy filing is not an easy task. As some of our Escondido readers may know from reading previous posts here, a Chapter 7 filing is most useful for discharging debts related to credit cards and medical bills.
It is never an easy decision to file for bankruptcy. Oftentimes there are significant emotional roadblocks that hold people back. Some people feel ashamed that they get into such distressed financial situations, while others may feel like they have violated their obligation to pay back the creditors who loaned them the money in the first place. Coming to terms with these emotions is part of the process, but for millions of Americans, and hopefully for Carter, filing for bankruptcy is the first step toward a fresh start.
Source: Forbes, "Not Too Young, Not Too Old: Aaron Carter Hopes For Fresh Start Following Chapter 7 Bankruptcy Filing," Kelly Phillips Erb, Nov. 22, 2013