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Aaron Carter, the youngest brother of Backstreet Boy Nick Carter, has filed for bankruptcy. The pop star, who is currently on tour, recently filed Chapter 7 bankruptcy.
Using a process called liquidation, a Chapter 7 bankruptcy involves the debtor's assets being sold and divvied up to pay off creditors.
As for Carter's assets, he lists a 61" flat screen worth $500. He also lists 2 MacBooks, 2 Headset Mics, a Mini Keyboard, Portable Beats, a speaker, a guitar, $60 in cash, a Louis Vuitton backpack, a duffle bag, and a printer worth a total of $2,500. And he owns a Brietling watch worth $3,750, reports TMZ.
Carter's assets total $8,232.16, but his liabilities total $2,204,854, which include a $31,166 American Express bill. In return for liquidating his assets, many of those debts will be discharged -- but not all of them.
Even if you file for bankruptcy under Chapter 7, some debts remain even after the bankruptcy process is complete. Some non-dischargeable debts include: student loans, taxes, unlisted debts or creditors, child support and alimony, court fees, and debts associated with fraud.
In this case, Carter will have a very difficult time getting out of the $1 million he owes to the IRS. That debt will most likely not be discharged.
It will be interesting to see how Carter's bankruptcy case shakes out because, according to Carter's spokesman, the majority of the debt he's seeking to get discharged is from more than 10 years ago when he was a minor and not in control of his finances, reports TMZ.
Carter's rep Steve Honig told TMZ the singer filed for bankruptcy to move forward with his life and career. Chapter 7 bankruptcy is designed to give debtors a "fresh start," so here's hoping Carter's filing does the trick.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.