Last week, singer Dionne Warwick -- who has won five Grammy Awards in her lifetime -- filed for Chapter 7 bankruptcy. Although the 72-year-old makes at least $15,000 a month, her bankruptcy filing shows that she spends almost as much as she earns. In addition, she is nine years behind on taxes.
Nine years of unpaid taxes has totaled to $10 million that Warwick owes to the Internal Revenue Service and her state. Although her manager says she has been working to pay it down, the interest rate and penalties that apply to late taxes have made it difficult to even make a dent. In addition, her monthly expenses for housekeeping, a personal assistant and other needs total more than $20,000. After expenses, all that remains each month is $10. In her bankruptcy filing, she listed $10.7 million in liabilities but just $25,500 in assets.
As Warwick's situation clearly shows, sometimes your finances can simply get out of hand. Maybe you are used to living with more disposable income, but retirement or a divorce left you with less. Being forced into a new lifestyle is not always easy if you feel like you are moving backwards, and sticking to a budget can challenging. However, Warwick's situation can provide a lesson for Oregon residents.
Warwick went nine years without paying taxes, allowing her debt to be compounded by interest and penalties. Oregon residents who are buried in debt should know that it is better to get out sooner rather than later. As soon as you know that you won't be able to make ends meet, speak to an attorney about bankruptcy options.
Source: NJ.com, "Singer Dionne Warwick declares bankruptcy citing $10M in back taxes," Victoria St. Martin, March 26, 2013