Chapter 7 Bankruptcy: It can happen to anyone!

Thursday , 19, September 2013 Comments Off on Chapter 7 Bankruptcy: It can happen to anyone!

A New Jersey resident, Dionne Warwick, is bankrupt. The singer and actress who was a regular at the top of the Billboard chart for four decades, has filed bankruptcy. She owes more than $10 million in back taxes and has only $10 left at the end of each month after paying expenses, according to her Chapter 7 bankruptcy petition filed in U.S. Bankruptcy Court in New Jersey on March 21, 2013
Warwick, 72, is a five-time Grammy winner. Warwick took her first in 1968 for “Do You Know the Way to San Jose?” and her second two years later for the album “I’ll Never Fall in Love Again.”

Warwick’s chapter 7 bankruptcy petition shows the Internal Revenue Service has many claims against Warwick. Its first claim (of nine) goes back to 1991 and the last is from 2007; in total, the petition shows that Warwick owes the IRS nearly $7 million. The state of California also has tax claims against Warwick totaling $3.2 million.

Warwick’s chapter 7 bankruptcy petition list her assets at $25,50 including two fur coats, two pairs of diamond earrings, “various gowns and everyday clothing” valued at $5,000, artwork, furniture and a two-year-old laptop. Her debts listed are far greater and approach $11 million.

Warwick’s current income in her chapter 7 bankruptcy petition was listed at $20,950.

The meat of Warwick’s liabilities are years of back taxes, totaling $7 million, to the federal government and $3 million to the state of California, according to the bankruptcy petition.

Statements made by Warwick’s representative stated that she tried to work out payment plans to the Internal Revenue Service and the California Franchise Tax Board for taxes owed. However, they were rejected.

Warwick’s petition is no different than the hundreds of petitions that the Monmouth County Bankruptcy Attorneys Riviere Cresci & Singer LLC prepares for its clients each year. Meaning all petitions are in the same format and only are unique in to the debtor as per their finances. So lets take a look under the hood of a celebrities chapter 7 bankruptcy petition:

Personal Property Value

Artwork $5,000.00
Cash $1,000.00
Furniture, lap top $1,500.00
Two fur coats, two pair of diamond earings $13,000.00
Various gowns and everyday clothing $5,000.00
Total $25,500.00

Monthly Income

Performances, after taxes $3,750.00
Royalties $1,000.00
SAG/AFTRA Pension $14,000.00
Social Security $2,200.00
Total $20,950.00

Monthly Expenditures

Garbage $90.00
Gardener $300.00
Home Maintenence $1,000.00
Housekeeping/sitting $5,000.00
Insurance $1,100.00
Laundry/Dry Cleaning $750.00
Personal Assistant $4,000.00
Rent/Mortgage $5,000.00
Telephone $500.00
Transportation $1,000.00
Water/Sewer $500.00
Total $20,940.00

1991 taxes $395,957.88
1992 taxes $915,628.70
1993 taxes $215,646.84
1994 taxes $1,184,994.30
1995 taxes $718,288.42
1997 taxes $1,646,225.95
1998 taxes $1,744,240.36
1999 taxes $96,457.29
2007 taxes $37,752.29
Business taxes 1990-1998 $3,246,500.46
Credit card purchases $20,000.00
Levy $268,224.97
Service fees to prior manager $237,512.97

The actual petition can be seen here.

After looking at Warwick’s petition her large amount of tax debt stands out. I would bet that this was what caused her to file chapter 7 bankruptcy. The good new for Warwick is that personal income taxes are dischargeable in a chapter 7 bankruptcy. As long as she meets the bankruptcy codes statutory requirements she won’t be singing the blues in the future.

The New Jersey personal bankruptcy attorneys at Riviere Cresci & Singer LLC can answer any questions you may have concerning filing Bankruptcy, or any general bankruptcy questions. If you live in New Jersey, including Howell, Jackson, Monroe, Manalapan and Toms River call us for a free consultation to find out how we can help you.