50 Cent filed for chapter 11 reorganization in 2015, with debts of $ 36 million and assets of less than $ 20 million. The “ Get Rich or Die Tryin ‘ ” artist, whose very name is Curtis Jackson, paid off a five-year plan early with $ 8.7 million of his own money and $ 13.65 million he received in a colonization of a legal malpractice lawsuit .
Jackson ’ s bankruptcy case started when a woman won a $ 7 million village against him in 2015 for posting a sexual activity tape. soon after, he filed for bankruptcy to help with that debt, deoxyadenosine monophosphate well as his fail business ventures .
But late final year, Jackson closely was in hot water when he posed with stacks of cash on Instagram. A evaluate questioned if he was truly declaring all his assets, but Jackson said he was merely living up to his sensed visualize — a celebrated rapper with loads of money around him — and that the cash was a prop up.
In his response to the evaluator, 50 penny said : “ Just because I am photographed in or following to a certain vehicle, wearing an article of clothe, holding a intersection, sitting future to what appears to be bombastic sums of money or modeling expensive pieces of jewelry does not mean that I own everything in those photos. ”
here are four things everyday consumers can learn from 50 Cent ’ s high-profile bankruptcy event .
1. Chapter 11 Isn’t Just for Companies — People Can File, Too
Let ’ s face it — none of us are like 50 penny. We ’ ra not celebrities and we don ’ t have his life, grandioses or not. But what lessons can we take away from his identical public proceedings ?
For most of us, it ’ sulfur to know your bankruptcy and the rules, inside out .
chapter 11 of the Bankruptcy Code normally involves a corporation or partnership, reorganizing to keep the business alert and pay creditors over time. But people in businesses or individuals besides can seek easing in chapter 11 .
For individuals, chapter 11 has some similarities to Chapter 13 bankruptcy, which is a reorganization of a consumer ’ second finances to pay creditors over 3-5 years. With the aid of a bankruptcy lawyer, chapter 13 filers work out a requital design that allocates their disposable income into monthly payments .
about anyone can file for chapter 11, whereas many modest businesses are ineligible for chapter 13. chapter 13 besides is alone available to debtors with regular income and subject to debt limitations — which, as of April 2016, were no more than $ 394,725 in unbarred debt ( debt not backed by collateral, such as credit poster debt ) and $ 1,184,200 in guarantee debt ( like mortgages and car loans ) .
2. Your Bankruptcy Case Can Last a Few Years, or a Few Months
A typical timeframe for a bankruptcy release varies depending on which chapter you file. For 50 cent, he filed for bankruptcy in 2015 and had five years to pay off his debt, but paid up earlier this year .
Under chapter 7, the debtor broadly doesn ’ metric ton give back his or her creditors. Most people prefer to file under chapter 7, with common debts eliminated like medical bills or personal loans. chapter 7 besides is quicker than other bankruptcy proceedings, and typically lasts 4-5 months .
chapter 13 filers who earn income that ’ s less than the state average for their syndicate size record a 3-year payment plan. Those who exceed the state average are bumped up to five years. The requital plan allocates consumers ’ disposable income to make monthly, consolidate payments to creditors .
chapter 11 can be a little more complex and expensive than chapter 13, and fewer types of debt are dischargeable. special provisions do streamline these cases for humble clientele debtors, though. Furthermore, Chapter 11 besides does not require debtors to turn over their disposable income to a trustee, but the sum measure of his or her disposable income over a five-year period .
3. You Need to Be Honest with the Court
If you try to crippled the system, as it initially appeared 50 Cent had when he posed with stacks of fudge cash, you could be in large trouble. fortunately, he was in the clear .
however, people enter bankruptcy motor hotel to receive a discharge, and the biggest way to screw that up is to be dishonest. early than having your bankruptcy encase dismissed, you could be fined big time or end up in jail .
section 727 of the Bankruptcy Code lists the versatile grounds for objecting to a bankruptcy discharge, including :
—lying under oath ;
—destroying records or failing to keep adequate records ;
—no good explanation for a loss of assets ; and
—concealing or transferring place within one year before filing in an undertake to defraud a creditor .
You must tell the motor hotel about everything you own, plain and elementary. If a bankruptcy trustee expects you may have left out assets, they ’ ll agenda a 2004 examination and ask questions under oath .
It probably goes without saying, but sociable media can ruin your chances at a successful bankruptcy if a bankruptcy regent looks through your accounts and finds something unsavory. That includes posing on Facebook with assets, like a car that you own but haven ’ t told the court about .
ultimately, if it ’ s found you have concealed or intentionally transferred property before your bankruptcy case, you can be sued. You can besides lose all non-exempt assets without any debt relief .
4. You Can Recover After Bankruptcy
Say you ’ ve made it safely through your bankruptcy proceedings. You breathe a sigh of relief. ( If you ’ re 50 Cent, you posted on social media immediately subsequently. )
What adjacent ?
Outside of the shock of bankruptcy felt during proceedings, bankruptcy and debt solutions can impact your credit sexual conquest, but not angstrom largely as you might think. so don ’ t put off filing for bankruptcy. The preferably you get help with your debt, the better your credit grade will be in the hanker run — which will help you be more likely to get a future loanword for a house, car, or rebuild citation with a credit menu .
Make sure to review your credit reports, as all credit circuit board accounts should have zero balances after a bankruptcy fire. When opening a fresh credit rating menu score, put small balances on it and pay them off immediately. besides, make certain to live within your means .
And beware : those annoying collectors may inactive call. however, collectors who ignore the discharge order are violating federal police, under section 524 of Title 11 of the United States Code. A discharge efficaciously operates as an injunction against continuing to collect or recover from the debt .
How to Get Help
If you ’ rhenium remember of filing for bankruptcy, we have respective resources here that can guide you through the process. You can besides use our site to find a lawyer near you for a free reference .
Walter Metzen is a Board Certified Specialist in Consumer Bankruptcy with over 28 years of experience. He ’ mho represented more than 20,000 bankruptcy clients in and around Detroit where his firm is located. View his profile here .