Celebrities who went from millionaires to bankrupt

Fame and fortune naturally go hand in hand, but they do not always make it to the end of the aisle together. Many celebrities have travelled down the road of poor financial management – whether due to lack of experience, a too-lavish lifestyle, or failure to pay taxes. It happens to everybody – athletes, musicians, actors, reality stars, and other media personalities.

Celebrities often tend to bite off more than they can chew in managing their hard-earned fortune. Sometimes the situation gets so bad that the only option is to declare bankruptcy. For some, such as Toni Braxton, Young Buck, and Gary Dourdan, this has happened more than once. But who are the greatest financial losers? How did they go from riches to rags and is there a way out?

TradingPedia‘s study gives the answers and states the main causes of celebrities going into bankruptcy. All figures are calculated based on data collected from public resources such as court papers and media interviews, as well as the CelebrityNetWorth database.

Key Moments From The Report

  • Toni Braxton is the celebrity with the highest-ever debt amount – $55 million
  • The sports star who has lost the most is Mike Tyson – a $10 million current fortune vs $430 million all-time career earnings
  • Paul Kemsley and Don Johnson are the richest popular personalities who have gone bankrupt in the past – current net worth of $50 million (each)
  • A former baseball star, Lenny Dykstra, is the poorest sports celebrity – a negative balance of -$25 million 14 years after his bankruptcy (1999)
  • Sinbad is the only actor among the top 20 celebrities ranked by liabilities amount in the report – $10,99 million

Big Spenders and Their Issues with Tax Authorities

Undoubtedly, the first celebrity that springs to mind when it comes to non-payment of taxes and/or hiding assets is Boris Becker. The youngest-ever winner of the gentlemen’s singles Wimbledon Championship (17 years of age in 1985) earned around $50 million throughout his tremendous career. In 2017, a British judge initiated bankruptcy proceedings against Becker due to failure to service a $5 million loan from a private bank and about $1.6 million borrowed from a British businessman. On April 28, 2022, Becker was sentenced to 2.5 years (later reduced to 8 months) for violating the bankruptcy terms.

There are quite a few big spenders among the celebrities in our study, but not many can rival MC Hammer. He had his peak in the 1990s when his fortune jumped to around $70 million. Known for his flamboyant dance techniques but also for his insane personal expenditures, the rapper blew everything on real estate, luxury sports cars, aeroplanes, a record company, and his huge entourage. He filed for bankruptcy in 1996 with his liabilities amounting to $10 million. To date, all debts have been repaid and his personal fortune is estimated at $1 to $2 million.

Millions of Dollars on Child Support

Whatever we say about DMX would not be enough, so here are some cold hard numbers – 70 million albums sold worldwide, 8 movie roles, 17 children from 11 women, and 30 imprisonments. With such a turbulent life, his bankruptcy filing in 2013 is anything but a surprise. At the time, he owed approximately $10 million to various creditors with $1.24 million due for child support. Four years later he was charged with 14 counts of tax fraud amounting to about $1.7 million. At the time of his death in 2021, DMX had a net worth of negative $1 million.

We could have included Mike Tyson in the first part of our study. Still, the competition for the most lavish celebrity is so fierce that we decided to mention the boxer in relation to his two expensive divorces. The first came in 1999 when he paid a $10 million settlement to Robin Givens. Tyson’s second divorce (Monica Turner) was in 2003 and cost him $6 million. The same year, Mike Tyson filed for bankruptcy, with debts amounting to $23 million.

Top Causes for Celebrities Going into Bankruptcy

The above cases are just a drop in the ocean of celebrities with financial difficulties that have led to bankruptcy. These unfortunate circumstances result from a wide variety of adverse events, so here is a list of the most common causes of celebrity bankruptcy:

  1. A lavish lifestyle where expenditures far surpass income
  2. Expensive divorce settlements
  3. Excessive child support payments
  4. Troubles with the law – drugs, sexual assault, etc.
  5. Bad investments
  6. Unprofitable contracts
  7. Careless fortune management and failure to pay taxes
  8. A short earnings period
  9. Misappropriation by producers, agents, or entourage members
  10. Fame coming too early (lack of experience)
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.