A good friend once told me sometimes you have to take a step back to go forward.
That’s exactly what some famous, successful people did when they filed for bankruptcy. And most made it back to solvency.
Some even went well beyond their previous levels of wealth and fame after filing for bankruptcy.
In fact, for most it ended up being little more than a bump in the road of an otherwise successful life.
The point of this post isn’t to recommend bankruptcy. But it is to show experiencing financial disaster isn’t terminal ! We all need to know this.
Rags-to-Riches-Back-to-Rags-Then-Back-to-Riches (Say That 10x Fast)
That’s the theme I found in researching these nine successful people who surprisingly filed for bankruptcy. Each came from humble beginnings. In fact, most grew up dirt poor and often in dysfunctional family backgrounds.
Three – Walt Disney, Cyndi Lauper and maybe Willie Nelson – marginally qualified as coming from middle-class backgrounds. Or maybe working poor was closer to the truth.
I think there’s a message in that. Coming from nothing may have been the “secret quality” that enabled each to bounce back from crushing financial troubles, and rise up like a phoenix.
Each came from nothing, or something close to it, took a chance – and failed – but got back up and tried again.
That’s the lesson in the lives of these successful people. It may not even be an exaggeration to say their recovery from bankruptcy was found in the poverty of their youth.
See if you can find any other encouraging patterns in the lives of the people on this list. We’ll discuss a few at the very end of this post.
1. Abraham Lincoln
Surprised? I was. Abraham Lincoln is widely considered to be the greatest of American presidents – right up there with George Washington.
He managed to hold the country together during the Civil War, which was the single greatest challenge to the nation’s unity in its history. Uniting the country against foreign enemies can be a tall order. Overseeing a conflict of American-versus-American is a crisis with a dimension all its own. Lincoln succeeded.
But Abraham Lincoln wasn’t always president or even a politician.
Early in his life, he was a storekeeper. It was 1833, Lincoln was in his 20s, and he and a partner opened a general store in new Salem, Illinois. It didn’t go well for the man who wrote and delivered the Gettysburg Address.
Lincoln and his partner purchased inventory from other stores on credit. But the business didn’t do well, and debts mounted. Lincoln sold his stake in the store, but his business partner later died. Lincoln then became liable for $1,000 in obligations, worth about $28,000 today.
There’s a little bit of a glitch in this story. Modern bankruptcy didn’t exist in the 1830s, not the way it does today. Instead of filing for bankruptcy, then moving on with his life, Lincoln was required to repay his creditors over 17 years.
It was actually from the ashes of that business failure that Lincoln began his political career, launching his campaign for the Illinois General Assembly. His bid failed, but he became a lawyer shortly after. And on his second run for office, he then served for successive terms in the Illinois House of Representatives. In 1846 he was elected to the US House of Representatives.
In 1860, he was elected the 16th president of the US – one of the most beloved in history.
2. Dave Ramsey
Let’s fast-forward, oh – about 150 years – right up to our own time.
But his rise to that level was hardlya straight line to pay dirt.
Dave came out of the starting gate like a championship horse. By the age of 26, he built a portfolio of rental real estate worth over $4 million through his brokerage firm, Ramsey Investments, Inc. He had become a superstar in the real estate market of his home state of Tennessee at a very tender age.
But success didn’t last. His real estate holdings were heavily leveraged, and creditors began calling in his debts. This forced him to file for bankruptcy.
Much like Abraham Lincoln, as Ramsey emerged from bankruptcy, he began to move in a different direction. Rather than trying to resurrect his real estate empire, he instead began providing financial counseling for couples at his local church.
At the same time, he began attending workshops and seminars on consumer financial problems. From those seminars and from the teachings of other personal finance counselors – as well as from his own experience – he put together a set of lessons and materials.
On request from many of his clients, he wrote his first book, Financial Peace, in 1992.
That was just the beginning of Dave Ramsey’s post-bankruptcy life. Shortly after, he co-hosted a local financial radio program that eventually grew into The Dave Ramsey Show.
That radio program airs on 550 stations and reaches an estimated 8.5 million listeners.
And Dave Ramsey’s current net worth? How about $55 million!
3. MC Hammer
MC Hammer rose to fame on the song U Can’t Touch This, in 1990. The song wasn’t even fully original. It was largely a remake of Super Freak, released by Rick James in 1981. (For the record, Rick James also participated in the creation of U Can’t Touch This.)
The song wasn’t just popular from an entertainment standpoint alone. It’s been an ongoing commercial success, playing in movies, TV shows, commercials and elsewhere as background music. 27 years after its release, it’s one of the most recognizable songs ever.
Like so many successful celebrities, MC Hammer grew up poor.
But he developed an entrepreneurial streak in childhood. Living near the Oakland Coliseum, home to the Oakland A’s, he made money selling stray baseballs and dancing to a beatboxer. As a teenager, he worked as a bat boy for the A’s. It was there Reggie Jackson gave him the name “Hammer”, because of his resemblance to Hank Aaron.
His baseball experience set the stage for his entertainment career. At the peak of that career, he had an estimated net worth of over $33 million.
But as is often the case with celebrities, money management wasn’t his strong suit. He spent too much on luxuries and on supporting family and friends. By 1996, and $13 million in debt, he filed for Chapter 11 bankruptcy.
But MC Hammer’s money troubles continued to follow him even after bankruptcy. In 2011, the IRS filed a lawsuit for nearly $800,000 in back taxes.
But Hammer handled it all, and has recently been reported to be worth $1.5 million. That’s not close to what he had at his financial peak. But this is the guy who’s shown the ability (and talent) to roll with the punches, and rise to new heights.
4. Walt Disney
Another famous person from humble beginnings, Walt Disney showed entrepreneurial drive at an early age. But he also filed for bankruptcy, while still barely more than a teenager. And it almost happened a few years later, just before one of his greatest successes.
Born in 1901, Disney formed Laugh-O-Gram Studio in 1920, making animated fairytales. He got a financial backer, and began building a staff of animators. But the financial backer went broke, leaving Disney unable to pay his animators or his debts. The company filed bankruptcy in 1921.
Using a loan from family, he started a new company in 1923.
It was in 1928 that he created Mickey Mouse, causing his career to take off. But when he began to make his first full-length animated movie – Snow White and the Seven Dwarfs (1937) – costs outstripped available financial resources. Production costs reached $1.5 million, three times more than the original budget. The movie almost wasn’t released.
Close to bankruptcy once again, Disney was able to get a bank loan to complete the film and release the movie.
That was the event that set Disney on a roll that would last the rest of his life. The film grossed $6.5 million – more than four times the production budget.
It became the most successful motion picture of 1938, and the most successful sound film made up to that point. It was followed by other Disney classics, including Pinocchio and Fantasia.
When he died in 1966, Walt Disney was estimated to be worth an incredible $5 billion.
How much would that be in today’s dollars? Wow!
Imagine what we wouldn’t have today if Walt Disney gave up and quit after he filed bankruptcy back in the 1920s?
5. P.T. Barnum
This one is a trip back to the days of Abraham Lincoln, but it has a contemporary link through the movie, The Greatest Showman. The movie is well worth seeing. Phineas Taylor Barnum literally rose up from street poverty (and an orphan to boot), to become quite possibly – as the movie title suggests – the greatest showman ever.
He was the founder of Barnum & Bailey Circus (more recently known as Ringling Brothers and Barnum & Bailey Circus), which lasted from 1871 to 2017.
But like other entrepreneurs and self-made millionaires on the celebrity bankruptcy list, P.T. Barnum’s rise to the top was hardly a straight line.
Born in 1810 (one year after Abraham Lincoln), he started his career as a showman at the age of 25. By 1841 he purchased Scudder’s American Museum in New York City, upgrading the building and adding exhibits. He turned it into one of the most popular show places in the city.
But the building burned down five times, after which Barnum built it into a city of its own. The cost was enormous, and not supported by the revenue it generated. Barnum was forced into bankruptcy.
His recovery came when he began lecturing on “The Art of Money Getting”, which might’ve been his greatest talent. The income he earned on those lectures enabled him to repay his debts.
That set the stage for the venture P.T. Barnum became best known for – the three-ring circus. That came about when he was 64 years old (proof age was never a barrier to success – even way back in 1873!).
Barnum was one of the first circus owners to create a moving circus and believed to be THE first to buy his own train to make it happen.
6. George Foreman
George Foreman is a former boxer and current entrepreneur. He won the gold medal in the heavyweight division of the 1968 Olympics. Shortly after, he turned professional and won the world heavyweight title in 1973.
He retired from boxing, moved back to his hometown, and became an ordained Christian minister. He started a youth center for troubled children, where they could participate in sports. But the declining income led him to file for bankruptcy in 1983.
The bankruptcy aside, Foreman continued his ministry, as well as the operation of the youth center. He also launched a boxing comeback. In 1994 – at the age of 45 – he regained a portion of the heavyweight championship. To date, he’s the oldest world heavyweight champion in history.
Foreman finally retired from boxing in 1997, at the age of 48. But by the time he did, he had a record 76 wins – including 68 knockouts – against just five losses.
During his second boxing career, he began lending his name to advertise various products on TV. He also reinvented his public personality. Once a menacing boxer, he adopted a friendly personality that was warmly received by the public – and a critical component of his success as an entrepreneur.
Following his active boxing career, he spent 12 years as a ringside analyst for HBO. Along the way, he launched the George Foreman Grill, which sold over 100 million units worldwide. He sold the naming rights to the grill in 1999 for a whopping $138 million.
Incredibly, George Foreman’s current net worth has been estimated at $300 million.
7. Cyndi Lauper
Much like Walt Disney, Lauper’s bankruptcy came before she had success. She spent several years singing and writing songs for a group called Blue Angel. The group’s first album was launched in 1980, but never caught on with the public. This forced Lauper to file for bankruptcy in 1981.
From there, she worked in restaurants and retail to keep herself afloat. Success came with the 1983 release of her She’s So Unusual album, that included Cyndi Lauper classics, like Money Changes Everything, Time After Time, She Bop, All Through the Night and Girls Just Want to Have Fun.
That’s a virtual career’s worth of big hits!
But that was just the beginning of her run of superstardom. Other albums followed, including True Colors, as well as several industry awards. In 1985, she released The Goonies ‘R’ Good Enough, as part of the soundtrack to the movie The Goonies.
Lauper’s dramatic recovery from bankruptcy wasn’t her first “rebirth”. In 1977, she damaged her vocal chords and was told by doctors she would never sing again. Six years later, she released She’s So Unusual, and became a modern music legend.
As the saying goes, it’s hard to hold a good man down. Or in this case, a good woman.
Today, Cyndi Lauper has an estimated net worth of $30 million.
8. Willie Nelson
One of the most prolific country singers ever, Willie Nelson was born to a struggling family at the height of the Great Depression. His music career was motivated by – if you can believe it – his hatred of picking cotton.
It was a common local occupation in his Arkansas hometown, and one his family participated in. He chose instead to earn money by singing in local dance halls and taverns, beginning at age 13.
After high school, he held a variety of odd jobs, one of which was a disc jockey at a radio station in Texas. It was a major break. He was able to use the equipment at the radio station to launch his first recordings, and begin his professional music career.
It was the beginning of a career that would last decades, enabling him to reach legend status.
Nelson didn’t file for bankruptcy but faced something perhaps much worse. In 1990, the IRS claimed he owed $32 million, and seized his assets. The debt had largely been created by his former manager, who failed to pay taxes for a number of years.
Nelson turned to his music and fame to ultimately settle the debt, which was subsequently reduced to $16 million. He released an album called The IRS Tapes: Who’ll Buy My Memories? All profits went to the IRS. As well, many of his assets were auctioned off.
Ultimately his tax debt was paid by a settlement from his previous accounting firm, whom he claimed had put his money into illegal tax shelters. Nelson was financially in the clear by 1993.
After that, he released several albums and continued to tour.
Today he has an estimated net worth of $15 million.
9. Elton John
One of the most successful artists of all time, Elton John sold more than 300 million records. He produced more than 50 Top 40 hits, and seven consecutive number one albums in the US.
His tribute to Princess Diana Candle in the Wind 1997 – originally written as a tribute to Marilyn Monroe – sold over 33 million copies. It was the biggest selling song in history in both the US and Britain. He was even knighted by Queen Elizabeth II.
Elton John is also one of the longest lasting musical talents in history. He first achieved fame in 1970 with the release of the single Your Song, which reach number seven in the UK, and number eight in the US.
It was an elevator ride up from there. Hit albums were being churned out almost annually, and he reached superstar status with the release of the Goodbye Yellow Brick Road album in 1973, and Caribou in 1974.
But like so many celebrities, Elton John enjoyed a lavish lifestyle. In 2002, he declared bankruptcy after incurring huge debts on properties he owned all over the world. Wikipedia also confirms he went on a two-year spending spree – around 2000 – in which he spent about 1.5 million British pounds per month (well over $2 million per month).
The episode proved to be only a temporary setback for the music icon. Beginning in 2003, he entered an agreement to perform 75 shows over three years at Caesars Palace in Las Vegas.
He contributed productions for Walt Disney movies and did concert tours on a regular basis. No doubt royalties from previous songs and performances also provided a steady cash flow.
As of 2018, Elton John’s wealth has been estimated at $450 million.
The Take-aways From Successful People Who Filed for Bankruptcy and Made it Back
What can we learn from the lives of these nine people? Here’s what I came up with:
Poverty early in life wasn’t an obstacle. As I wrote at the very beginning, it may have been poverty early in life that enabled them to survive a financial disaster, then rebuild.
Bankruptcy didn’t stop them. Each not only rebuilt their lives but most went on to greater heights after bankruptcy.
Financial troubles were often caused by mismanagement. What we see in these nine is a pattern of:
- Going deep into debt to launch a business venture
- Financial mismanagement, including nonpayment of income tax
- Trusting in, or providing for, people close in their lives (managers, friends, family, etc.)
- Excessive spending
The last three are common causes of bankruptcy. The first happens when you start a business venture. That has to be considered as a possibility for anyone who does – think of it as an occupational hazard.
Most have a strong entrepreneurial drive. They fail at one business venture, but get back up and try another. With the exception of Abraham Lincoln, each was or is an entrepreneur at heart. Business failure comes with the territory. It didn’t scare them away, and it shouldn’t scare us either.
They’re all risk-takers. I think it’s safe to say each of these individuals ended up in bankruptcy because they were taking chances. Failure is always a possibility when you do.
Bankruptcy isn’t life ending. In each of the nine cases, financial failure wasn’t the end of the road. Each got back up, made another charge, and hit pay dirt. Most of them even had their best days after filing for bankruptcy.
I think that’s the biggest lesson of all – failure is only the end if we let it be. And we don’t have to.
1. Michael Jackson. The King of Pop reportedly died $400 million in debt. Selling more than 61 million albums in the U.S. didn't stop the singer from borrowing, and spending, huge sums of money over his career.How do rich people become bankrupt? ›
If a millionaire doesn't budget properly and starts spending on personal chefs, expensive cars, and other luxury amenities, they will quickly run out of money. Sometimes millionaires — especially new millionaires — feel they have so much money, that they lose perspective on what they can afford.Who is the cheapest celebrity? ›
- 1 / 10. Mila Kunis. When Mila Kunis married Ashton Kutcher, she definitely did not go overboard when it came to her wedding ring. ...
- 2 / 10. Michael Jordan. ...
- 3 / 10. Tiffany Haddish. ...
- 4 / 10. Ed Sheeran. ...
- 5 / 10. Keira Knightley. ...
- 6 / 10. Hilary Swank. ...
- 7 / 10. Dave Grohl. ...
- 8 / 10. Kristen Bell.
Japan, with its population of 127,185,332, has the highest national debt in the world at 234.18% of its GDP, followed by Greece at 181.78%. Japan's national debt currently sits at ¥1,028 trillion ($9.087 trillion USD).Has any billionaire went broke? ›
researched reports of wealthy individuals who lost their fortune. We found more than a dozen billionaires who have gone broke. Typically, the billionaires on this list lost their money either because of bad investments or criminal activity.Why do people go broke? ›
People are usually driven to bankruptcy by a combination of financial setbacks, most of them unexpected. Job loss is one major reason, with medical expenses and unaffordable mortgages also high on the list.Why do people go bankrupt? ›
Since 2005, commonly reported causes of bankruptcy include reduced income, job loss, credit debt, illness/injury, unexpected expenses and preparing for divorce.Who lost the most money? ›
Amazon founder Jeff Bezos has lost $27.8 billion, Google founders Larry Page and Sergey Brin have both each lost more than $12 billion and Facebook boss Mark Zuckerberg is down $15.2 billion.What famous person went broke? ›
Many celebrities go from being rich and famous to being involved in lawsuits or spending sprees that trigger bankruptcy. United States President Ulysses S. Grant was broke after leaving the Oval Office. Michael Jackson, MC Hammer, and 50 Cent all went from being top musicians with great wealth to bankruptcy and debt.Which actor is a billionaire? ›
|Richest Actors in the World 2022||Net Worth (2022)||Nationality|
|Arnold Schwarzenegger||$450 million||Austria, United States|
|Amitabh Bachchan||$430 million||India|
|Mel Gibson||$425 million||United States|
|Adam Sandler||$420 million||United States|
Sometimes they go above and beyond to show their appreciation for a restaurant's waitstaff by leaving a jaw-dropping tip behind. While tipping between 18 and 20 percent is considered “normal,” a handful of celebrities have developed the generous habit of tipping 100 percent or more when they dine out.Where do most famous people live? ›
Celebrities can be found in all kinds of places in the US and abroad, but the highest concentration of famous people is still in Hollywood Hills.Are the Kardashians in debt? ›
Members of the Kardashian-Jenner family are desperately trying to plot their next moves as money woes continue to mount. “They have massive debt,” says one source. (It's said they are in the hole for $400 million.) To blame: Their beyond-lavish lifestyles.Do celebrities use debit cards? ›
They go shopping, they eat ice cream and they have jury duty – among many other things. And how do they pay for it all? Having lots of money certainly doesn't hurt, but like the rest of us, famous people pay for their purchases with a combination of credit cards, debit cards, gift cards and cash.Do celebrities have mortgages? ›
Mortgages are not bad; that is probably the most obvious takeaway from how celebrities go about their business of homeownership. However, one thing that celebrities compulsorily have is a qualified mortgage planner to help them make the right decisions. It goes without saying that if they need one, we probably do too.How old is Kim Basinger and what is her net worth? ›
|Net Worth:||$20 Million|
|Date of Birth:||Dec 8, 1953 (68 years old)|
|Height:||5 ft 7 in (1.71 m)|
|Profession:||Actor, Fashion Model, Singer, Film Producer|