Celebrity lifestyle no guarantee for avoiding Bankruptcy
As new figures released by the Ministry of Justice reveal that more than 15,000 Britons succeeded in making themselves bankrupt in the three months to September, it may bring you some comfort to know that even celebrities are vulnerable to debt debt problems.
Last month, former Eastenders star and winner of last year's I'm a Celebrity... Get me out of here, Joe Swash was declared bankrupt after failing to pay his tax bill. While a similar fate became of the show's 2004 winner, Kerry Katona, who was made bankrupt by the High Court after owing £82,000 of a £417,000 tax bill.
Some of the biggest names from the world of music and movies have also been declared bankrupt over the years, supporting the adage 'the bigger they are, the harder they fall'.
Hollywood actress Kim Basinger found herself in financial peril in 1993, after she was sued for pulling out of the movie Boxing Helena. The lawsuit coincided with her ill-fated decision to buy a small town in Georgia, which she hoped would become a Hollywood hangout with movie festivals and studios. Sadly, her plans failed and the former Bond-girl was forced to file for bankruptcy.
In the 1970s and early 80s, moustachioed actor Burt Reynolds was at the height of his fame after movies such as Smokey and the Bandit. However, in 1996, after a series of less successful film choices, the movie star filed for bankruptcy, owing more than £5million in debt.
In 1998, R&B singer-songwriter Toni Braxton filed for bankruptcy after amassing debts believed to be in excess of £2million. All of Braxton's personal household possessions, including her collection of awards, were put up for sale to pay her creditors.
One report claimed that Braxton squandered more than £1m on make-up, hair, clothing and other expenses. It's such indulgences that are reportedly to blame for the high numbers of young women that succumb to debt. A study by The Insolvency Service earlier this year revealed that women aged 18-24 were being lured into financial difficulty by attempting to achieve a celebrity lifestyle.
The research identified that last year, 55% of young bankruptcies were women, compared to 48% five years ago. In total, 1,560 women aged below 24 were declared bankrupt in 2008, compared to 1,250 men in the same age group.
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Debt charity Credit Action's latest figures revealed that 362 people are declared insolvent or bankrupt in the UK every day, with KPMG predicting that figure will rise to 411 by the end of 2009. The Ministry of Justice's figures, meanwhile, show that the number of people petitioning for their own bankruptcy, rather than being forced into the measure, has risen 50% year-on-year.
Other UK celebrities to have been declared bankrupt include Coronation Street stalwart Bill Roach; former MP Neil Hamilton; ex-Fantasy Football number-cruncher Angus 'Statto' Loughran; and one half of chef duo Two Fat Ladies, Clarissa Dickson Wright.
However, one option for avoiding bankruptcy is an Individual Voluntary Arrangement (IVA) - a legally-binding agreement between the debtor and their creditors. In August, Men Behaving Badly funnyman Neil Morrissey avoided bankruptcy by entering into an IVA to repay debts thought to be in the region of £2.5million, following a failed business venture.
In Scotland, people with high levels of debt may have the option of entering into a Protected Trust Deed to repay debts over a period of three years, while debt management plans have proven to be a popular choice for people looking to achieve financial stability.
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