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Drake Bell, a former child star on Nickelodeon's "Drake and Josh," filed for Chapter 7 bankruptcy last May. The 27-year-old actor is seeking relief from debts reaching into seven figures.
The young star has been struggling with an erratic income and racked up around $2.166 million in debts since the hit Nickelodeon show ended, New York Daily News reports.
Bell certainly isn't alone when it comes to former child stars in dire financial straits. Last November, Aaron Carter filed for Chapter 7 bankruptcy for debts mirroring Bell's figure: $2.2 million.
Although Bell has debts to the tune of $2.166 million, he owns $1.575 million in real estate and $10,500 in personal property, which will certainly come in handy for paying off creditors.
Chapter 7 bankruptcy, also known as liquidation, allows Bell's assets -- including his personal property, real estate, and cars -- to be sold and divvied up to pay off his creditors. Chapter 7 requires a bankruptcy trustee to meet with creditors to discuss liquidation, usually within 40 days of filing. That's likely the next step in Bell's case.
In return for liquidating his assets, most of Bell's 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. Debts that cannot be discharged include: taxes, student loans, unlisted debts or creditors, child support and alimony, court fees, and debts associated with fraud.
In this case, Bell will likely have to pay the $46,000 in taxes he owes to Uncle Sam. That debt will most likely not be discharged.
Bell reportedly makes an average income of $2,820, but has monthly expenses that total more than $18,000. Given Bell's unpredictable income -- $408,000 in 2012 to $14,099 in 2013 -- his bankruptcy attorney will likely advise him to make some lifestyle changes to pare down his expenses going forward.
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.