Former Billionaire Files for Bankruptcy

AP News reports that Patricia Kluge, once married to the media mogul John Kluge and who reportedly received a $1 billion divorce settlement package in 1990, has now filed for Chapter 7 Bankruptcy protection with her third husband, William Moses. The two, according to bankruptcy court records dated June 16, 2011, reported assets worth $1 to $10 million and debt of $50 million.

Bankruptcy can happen to anyone and is less about how much money you make and more about how your money is managed. How do you know if you are bankrupt? If your current sustainable income plus any cash reserves will not pay all of your living expenses, pay interest on outstanding loans, and reduce some of your principal on those loans while paying on them for five years.

If you are rich and have a lavish lifestyle and you have the income to sustain it, then you will not go bankrupt. If you spend more than you make, regardless of your income, eventually you will be bankrupt.

Learning to manage money will not necessarily keep you from going bankrupt, but it can help. There are some events, however, including divorce, catastrophic events, sudden loss of income, or medical problems, which can cause severe financial hardships.

Kluge and Moses, although they lived a lavish lifestyle, have the right to file for bankruptcy protection. Extending credit is a two-edged sword. On one edge of the sword lies reward and on the other edge of the sword lies risk. Both debtors and creditors understand the risk and rewards of credit, so did those creditors who extended Kluge and Moses the approximate $50 million.

Whether or not you are a former billionaire facing bankruptcy or you have always lived paycheck to paycheck, U.S. bankruptcy law, under certain conditions, affords you the legal right to file for bankruptcy protection. 

If you determine you need relief from the stress of debt and you live in or around the metropolitan areas of Los Angeles or Long Beach, California, contact us at .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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