I know, it was a big surprise to me too. Today, 50 cent filed bankruptcy. All most of us can do is flash back to the MTV Cribs episode showing his gigantic home and estate several years back and wonder what happened. People are laughing about how 50 Cent now is really worth 50 cents. The comedians are going to be writing new jokes and David Letterman might even be kicking himself for retiring before he could put together a top 10 list based on the 50 cent bankruptcy. So, is 50 broke? Nope.
50 Cent filed a Chapter 11 bankruptcy and he is far from broke. In fact, even though he filed bankruptcy, 50 Cent still probably has more assets than all of the families on your block put together. Reports are saying that 50 Cent’s bankruptcy petition listed his assets to be in the range of 10 to 50 Million Dollars. However, 50 Cent’s debts are also in the range of 10 to 50 Million Dollars. The apparent reason that 50 Cent needed to file for bankruptcy protection is that he has a lot of debt. Just like most of the people who file, bankruptcy, debt is the issue. 50 Cent has assets, but he likely needed to protect those assets from attachment through Chapter 11 bankruptcy.
While most people who file bankruptcy with Halcomb Singler, LLP, don’t have nearly 10 million dollars, they are similar to 50 cent in that they have income and assets that they need to protect from their creditors. The fact remains that if a person is completely broke there is likely no need for them to file bankruptcy because there is nothing to protect. Specifically, people often file bankruptcy to protect their home equity, their income so that their paycheck is not garnished, their bank accounts so that they are not attached, and their personal property from being attached.
In Indiana, an individual is allowed to have $350.00 (in accounts, cash, in stock/bonds), $9350.00 in personal property (equity in cars, furniture, jewelry, etc), $17,600.00 in home equity and a virtually unlimited amount in their retirement accounts that can’t be touched by creditors. If a married couple files bankruptcy then these amounts are doubled. This means that no one who owes a bunch of money will be penniless as a result of a lawsuit or a Chapter 7 or Chapter 13 bankruptcy.
However, outside of bankruptcy in Indiana, there is a lot that creditors can do to collect money that is owed. Creditors can garnish up to 25% of take-home pay after they obtain a judgment, they can freeze/levy bank accounts, they might be able to obtain a judgment lien on your home and foreclose on the lien. A judgment creditor can require you to appear (with the Court’s order) at a hearing to answer questions regarding your earnings and assets and, in some cases, if you fail to appear the creditor may be able to obtain a body attachment (warrant for your arrest) if you fail to appear for the hearing.
Neither 50 Cent nor the working Hoosier who files bankruptcy in Indiana is doing so because they are penniless. Bankruptcy is of no use to those without income and assets. Bankruptcy, however, can be a very effective tool for those who do have assets that they would like to protect from creditors. In Chapter 7 bankruptcy, most debt will be discharged and the debtor will obtain a fresh start, while in Chapters 11 and 13 the debtor will reorganize their debt to allow them time to pay some or all of it back. Either way, don’t be surprised that someone with assets needed to file bankruptcy because without assets bankruptcy doesn’t make sense.
If you need to protect your assets through bankruptcy and you live in central Indiana/Indianapolis, or the surrounding cities/towns call Halcomb Singler, LLP, for your free initial consultation at (317) 575-8222.