Being a celebrity who has millions of dollars does not guarantee that you will never experience bankruptcy. If you are not critical about how your finances are spent, you might find yourself one day sitting on a chair thinking what went wrong and your savings all but gone.

In the U.S, bankruptcy filings between 2008 and 2009 became prevalent for those people with over $1 million in assets rising to 73%. Commercial collection agency The Collection Law Group told us that many of the past NFL athletes (78% of them) went bankrupt after a couple of years into their retirement. Which is a phenomenal number, and is a poignant example of this type of problem.

Some lottery winners also have stories of misfortune after amassing millions of dollars. What could be the reasons that so many millionaires have experienced going to court to file their bankruptcy? Each has their own unique story. For those who have gone broke, we can only learn from their mistakes.

MJ Mug Shot Broke

Michael Jackson

Prior to the King of Pop’s farewell in 2009, he was known as the most popular entertainer of all time by the Guinness Book of World Records. With his inability to payback his $25 million home loan for Neverland Ranch in 2007, Jackson filed for bankruptcy.

In 1988, Neverland was bought for $17 million. It featured a zoo, amusement park, movie theatre, rail-road line, helicopter pads and fire department. Maintaining this elegant place is very costly amounting to more than $10 million dollars annually. The ultimate entertainer was recognized for his shopping sprees, which include a $6 million trip as documented in Living With Michael Jackson.

Even after he has signed in 1991 an almost $1 billion recording contract and having over 750 million records, Jackson only had 0.05% of his net worth in accessible cash, giving no option but file for bankruptcy. The moral of the Jackson’s story was that no matter how much your income or personal net worth, you cannot overstretch yourself by getting more debt or financing a lavish lifestyle than you can have.

Trump Bankrupt

Donald Trump

Donald Trump, an American business magnate and republican presidential hopeful has a colourful history of filing for bankruptcy. They filed in 1991, 1992, 2004, and 2009. Every case was a corporate issue and not a personal bankruptcy, different to many celebs. This was best described as debt restructuring and not actually going broke. Even established businesses owned by filthy rich personalities were not exempt from seeking financial assistance to survive. In the case of Trump, he sought assistance four times in the past 20 years.

To get approval of some bankruptcies filed, the business magnate had to let go of Trump Airlines, his mega-yacht, and about half of his stake in the Grand Hyatt Hotel. Despite all those filings, Trump still has an estimated net worth over $2.7 billion as he separated his personal income from his business transactions.

What we can learn from Trump’s story was establishing yourself as a corporation to separate your fund sources from personal to business. This limits potential liability in case the business suffers from major setbacks.

MC Hammer Collection of Debt

M.C. Hammer

Known for his 1990 record-seller “U Can’t Touch This,” M.C. Hammer filed bankruptcy in 1996 owing $13 million. The singer earned over $30 million in the early 1990s. After buying a $12 million mansion with 200 employed staff, along with over 40- person entourage, he soon realized he could not sustain such luxurious living.

Making things worse were two infringement complaints of copyright filed against him. Both were settled out of court for undisclosed amount. When interviewed by Ebony magazine, he cited his priorities were out of order. Currently, he is a pastor living in a Californian ranch house.

Finding a fortune and losing it somewhere is not the end of the road. M.C. Hammer’s story showcased that you can bring your life back together if you learn from your mistakes and make better decisions if you’re lucky enough to be given another chance.

Broke Iron Mike

Mike Tyson

Mike Tyson, one the fiercest boxers in the world, has accumulated more than $400 million in his entire career. His expensive lifestyle featured mansions, tigers, and a huge entourage, along with mismanaged funds and a high-profile divorce which pushed him in 2003 to file for bankruptcy. He had to pay off debts amounting to $27 million.

Tyson could have prepared a prenuptial agreement so he could have saved his wealth for himself. A prenup can safeguard your assets or business from being subdivided in court during divorce. Considering the current divorce rate, this is not the path you want to take for sure.

Gary Coleman

Broke Gary Coleman

In 1999, Gary Coleman, star of the TV hit series “Diff’rent Strokes,” filed for bankruptcy after his parents and manager misused his money. Coleman had $8 million in trust funds during his younger years as an actor, but later found he had only $200K in cash under his name. His ongoing medical conditions contributed to his poor financial situation also. In 2010, the actor died, still overburdened by several financial difficulties.

Coleman’s story was unique having earned his money as a young actor and entrusted his funds to his parents and manager. It’s a risk to let others manage your finances. When he became adult, he could have consulted other financial advisors outside of his immediate family for proper guidance. It’s quite a tricky issue thinking your family members may be cheating you when it comes to money matters. When money is involved, it’s best advised to be careful and trust yourself the most.

Broke WillieWillie Nelson

Willie Nelson, an American country musician, declared bankruptcy in 1990. He owed the IRS $16.7 million in unpaid taxes and fees. There were two sides of his story. It was either his accountants did not pay his taxes in the years they controlled his fortune or invested his funds in illegal tax shelters.

To remedy his tax evasion debt, he released an album in 1991 titled, “The IRS Tapes: Who’ll Buy My Memories,” and gave all proceeds to the government. He also had an auction of some of his memorabilia. By 1993, he completed settling the IRS taxes.

Paying your debt takes some creativity at times to ensure they will be paid in due time. The IRS is always lenient to coordinate with debtors to ensure they can recover the debt. Before hiding in a cave to get rid of a tax issue, check first if you can set up an IRS plan. Be innovative!

If your aiming to reach the big time, keep in mind all the big stars that have fallen by the wayside before you and consider what you can do differently. So when the time comes that the spotlight goes out and your 15 minutes of fame is over, you’re left with more than just a hangover and some memories of the glory days!