Can Bankruptcy Actually Help You?

I know everyone is pretty confused on the news of 50 Cent filing bankruptcy after he was just named one of Forbes’ richest men in hip hop, but listen: filing bankruptcy does not mean that you are broke, depending on your situation, it can do a lot more help than hurt.

50 Cent filed chapter 11 bankruptcy on Monday while court documents show that 50’s reported assets and debts each range in $10 million to $50 million. Although 50 Cent’s net worth is $155 million, he can clearly pay off his debt, but why do so if there is a loophole?

Chapter 11 bankruptcy is used by small business holders to create a plan of reorganization to keep their business alive and pay creditors back over time. Sometimes, a business owner can also seek relief from all or many of their debts.

Are you following me?

Yes a bankruptcy of any sort will ruin your credit, but if your credit is already shot, what more can filing bankruptcy do? 50 already has a long list of debts including $17 million for allegedly stealing a headphone design, $6 million to Rick Ross’ baby momma for posting her sex tape online and numerous other debts that added up quickly. Filing bankruptcy may seem like a good move for 50.

Here is how Chapter 11 bankruptcy can help a business owner:

Under Chapter 11, a debtor can create a plan of reorganization and restructure their finances approved by the bankruptcy court. This way the debtor can get a hold of their finances, figure out what they owe to who, sometimes reduce amounts and interest and create a repayment plan. In 50’s case, this would be a great move for him and his business. This way he can try to consolidate and maybe relieve some of what he owes so he’s not shoving out millions all at once. Under Chapter 11, a debtor can also sell some of their assets to reduce debt. Cars, homes jewelry, and personal items are all up for grabs when it comes to bankruptcy.

As you can see, bankruptcy does not always mean broke, sometimes it can mean smart, a clean slate, and a way to build up your credit. Don’t let the word ‘Bankruptcy’ fool you. 50 Cent isn’t on Forbes’ richest in hip hop list for no reason.