50 cent filing for bankruptcy is doing the rounds on social media and the news. The news seems strange to many as 50 cent was worth $155 million just two month ago according to Forbes. And the man is considered as one of the smartest and most business savvy rappers out there. So him filing for bankruptcy is a strange one. But if you understand the reasons as to why a millionaire like 50 Cent has filled for bankruptcy than this move seems to make sense.
Why 50 Cent filled for bankruptcy
50 cent is not broke by any sense of imagination as depicted by the Forbes figure above. The Wall Street Journal also states thatIn the bankruptcy filing, Curtis Jackson (50 Cent) says that his debts and assets are worth between $10 million and $50 million. So why the need for bankruptcy filing?
The reason he has filled Chapter 11 bankruptcy is because he is looking to reorganize his debts. This filing will give him more time to pay his debts and give him a chance to come up with a payment plan, an option he might not have without Chapter 11.
50 cent isn’t exactly running out of money as stated above. Instead, the move is an effort to protect his businesses as he deals with his debts. Jackson’s filing comes just days after a jury ordered the rapper to pay $5 million to a Florida woman who sued him for posting a sex tape online without her permission, according to various sources.
It is important to understand that being bankrupt and being broke are two different things.
The filing is a strategic and tactical effort to stay in control of his assets while he deals with the lawsuit.
Millionaires can use bankruptcy as a ‘legal loophole’
In the US, there are different types of bankruptcy. As stated above, 50 Cent filed for this Chapter 11 and this is used for big debts. It lets the filer “reorganise” their finances while putting off debt payments in the meantime.The filer is able to keep their assets and should still be able to get an income from their business interests too.
In the UK, this wouldn’t happen. Put simply, it’s not bankruptcy as we know it and many see it as a legal loophole.
Donald Trump, the american billionaire who has gone bankrupt several times states the following “I never went bankrupt but like many great business people, have used the laws to corporate advantage. Smart”
Basically, millionaires use the law to their advantage and file for bankruptcy because of the following reasons:
- To give them more time to organise their debts
- To keep their assets away from ‘predators.’
What 50 Cent has had to say
50 Cent states
“I’m taking the precautions that any other good businessperson would take in this situation. You know when you’re successful and stuff, you become a target. I don’t want to be a bullseye. I don’t want anybody to pick me as the guy that they just come to with astronomical claims and go through all that.”