Stockton Bankruptcy Attorney Discusses Rapper 50 Cent’s Bankruptcy
The famed rapper 50 Cent made national headlines in 2015 when he filed for Chapter 11 Bankruptcy protection, but it looks like those proceedings may now be over!
The rapper had filed back in July of 2015, listing approximately $36 million in debts and a little under $20 million assets, following a lawsuit in which he was ordered to pay a Florida woman almost $7 million. The bankruptcy judge determined that 50 Cent would need to pay $23 million to creditors holding unsecured debt as part of a 5-year plan that was agreed upon in 2016.
Fortunately for 50 Cent, he had some pending litigation of his own, and was recently awarded approximately $14 million related to the settlement of an outstanding malpractice suit against his former lawyers at the firm Garvey Schubert Barer. The suit was related to the firm’s handling of licensing agreements for a failed headphone company and the rapper used the windfall, in addition to $7 million in personal cash, to settle his debts ahead of schedule.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a form of bankruptcy protection that is used when debts exceed a certain threshold. The current thresholds are approximately $1,080,000 of secured debt (meaning the debt is secured by collateral) and $360,000 of unsecured debt. An example of secured debt would be your mortgage, and an example of unsecured debt would be a collateral-free credit card. As you can see, the limits are large, but not so large that it is uncommon for individuals to file for Chapter 11 bankruptcy, in fact, it happens all the time!
Chapter 11 proceedings are sometimes referred to as a debt reorganization. This is because the proceedings involve determining the order in which debts are settled, and the percentage of delinquent debt that a creditor will expect to receive. This is why it can sometimes be a good idea for someone who qualifies for Chapter 13 to instead complete a Chapter 11 filing.
A few reasons individuals could decide to file Chapter 11:
- Extend Pre-petition Mortgage Arrearage Payments – When filing Chapter 13, an individual who wants to keep their home must stay current on payments and pay off all of your mortgage arrears (missed payments and penalties) in equal monthly payments over a 5 year period. This can be incredibly difficult for a family to do, and with a Chapter 11 filing, you can extend that period.
- Fair Market Value Adjustments of Vehicles – A creditor’s lien can be reduced to the fair market value of the property securing it during a bankruptcy, but in Chapter 13, a fair market value adjustment cannot take place on a vehicle financed within the 910 days preceding the filing. This limitation is not present in Chapter 11 bankruptcy
- Recent Discharge in Chapter 7 or 13 Case – Bankruptcy law prevents individuals from bringing a Chapter 13 case within 4 years of the discharge of a Chapter 7 case, or within two years of a Chapter 13 case. This limitation is not present for a Chapter 11 case.
- Non Dischargeable Debts – Chapter 11 stops the accruement of penalties and fees associated with the late payment of non-dischargeable debts
Should I File for Bankruptcy?
If you are even remotely thinking about the idea of filing for bankruptcy, then that likely means you are already experiencing the harassment of creditors. The collection agents will not let up, they will only get worse. The sooner you file, the sooner you can breathe easy. Call our Stockton bankruptcy attorney today if you have significant delinquent debts. Our experienced team will assess your current financial situation and determine the best course of action. Whether it be a Chapter 7, Chapter 13, or even a Chapter 11 filing, our Stockton bankruptcy attorney can help you today!