Celebrities Gone Broke: How Stars Go From Riches to Rags

We all hear about broke celebrities going belly-up in a pile of debt — but is it purely lavish spending that’s to blame, or are there special costs that get between celebrities and their earnings?

Let’s take a look at society’s most egregious (and now broke!) celebrities. Who lives like a rock star — and declares bankruptcy soon afterward?

Lindsey Lohan

This paparazzi darling can’t seem to stay out of the headlines: thanks to a series of drunk driving arrests and visits to rehab, the once sought-after child star hasn’t been able to land a movie role (read: she’s unemployed) since 2007, when she was fired from the aptly-named Poor Things after her DUI arrests caused the filming to be delayed not once, but twice.

Yet Lohan needs to foot the bill not just for her legal defense, but also for a pricey rehab clinic catering to the well-heeled — the Cirque Lodge Treatment Center in Sundance, Utah is reported to cost $30,000 per month.

So how has she been hustling for a few extra bucks on the side?

  • Filing Lawsuits. In March 2010, Lohan sued E-Trade for a whopping $100 million, claiming the financial services firm used her likeness without her permission.
  • Alleged Theft. A celebrity still has to look beautiful, right? In February 2011 Lohan was arrested for allegedly stealing a $2,500 necklace from a jewelry store. She pled not guilty and the case is pending.
  • Sponsored Tweets. For only $2,985, @lindsaylohan will tweet your company’s ad. Embarrassingly for her, Lohan’s on-again, off-again girlfriend, DJ Samantha Ronson, earns more than double: $7,000 to $10,000 per tweet.
  • Launching a New Career. Her attempts to land acting gigs are falling flat — according to many reports, insurance companies won’t grant coverage to any movie that casts her. So she’s trying her hand at other jobs. She launched a clothes line, released a self-tanning spray and became an adviser to a French fashion house … until the fashion collection under her guidance received such “disastrous” reviews that she ultimately exited that business, as well, departing the fashion house in March 2010.


T-Boz, Left Eye and Chilli — remember the trio who rose to fame in the 1990’s with the lyrics “Don’t Go Chasin’ Waterfalls” and “I Don’t Want No Scrub”? A lack of sales was never their problem: the Grammy-winning group rose to fame BEFORE the days of Napster, when fans eagerly spent $15 – $18 on their CD’s. In fact, TLC sold more than 11 million copies of their sophomore album, CrazySexyCool. And yet in 1995, at the peak of their career — I repeat, at the PEAK of their career — this chart-topping trio declared bankruptcy, claiming more than $3.5 million in debt.

What happened?

  • Legal trouble, for starters. Lisa “Left Eye” Lopez stood trial for suspected arson after she allegedly burned her boyfriend’s Atlanta mansion to the ground. Her lawyers claimed that she had a drinking problem; the defense both kept her out of jail and forced her into rehab. Nonetheless, the insurance payments took a big bite out of her wallet.
  • Pay disputes and troubles with management also hounded the group, as they hired and fired a series of producers — including one producer who fathered the baby of one of the members of the trio.
  • Health issues also took center stage — or rather, took them OFF the center stage — as T-Boz’s sickle cell anemia often left her too sick to perform, costing the group an untold amount in opportunity cost.

MC Hammer

Perhaps the most famous celebrity-going-broke cases, M.C. Hammer almost single-handedly defined the 1990’s with his Hammer pants, Hammer style and Hammer time. Yet where he failed was in Hammer restraint: he reportedly splurged his wealth on a lavish lifestyle that included a $12 million California mansion, enormous stables housing 19 Throughbred racehorses, and a paid staff of around 200, according to Jet magazine. He declared bankruptcy in 1996 with $13 million in debt.

Yet for all the talk that M.C. Hammer lost his wealth to lavish spending, his choices were relatively modest when compared to his income. That $12 million home represented a little more than one-third of the $33 million he earned from his third album alone.

Far worse for his balance sheet may have been the lawsuits, of which there were many:

  • Singer Rick James sued him for copyright infringement on the song “U Can’t Touch This.” Hammer settled by naming James as a co-creator, which entitled James to a massive cut of the proceeds.
  • Composer Kevin Christian sued him for $16 million for copyright infringement on the song “Oh-Oh, You Got the Shing.” Hammer settled for an undisclosed sum.
  • Publishers Simon and Schuster sued him for allegedly taking an advance for a book, but never writing it.

When M.C. Hammer ultimately declared bankruptcy, he discharged half a million dollars in debt that he owed his lawyers.

He must have learned what rappers mean when they say “Mo’ Money, Mo’ Problems” … now that I’m rich, everyone wants to sue me!

MC Hammer photo courtesy virginmedia.com, Lindsay Lohan photo courtesy gossipcheck.com, TLC photo courtesy wikimusicguide.com


  1. says

    Thanks for linking our site :).

    It’s sad to see celebs fall from grace like this and you would think people would learn by now. However in 10 years another splurge of celebs would join this group.

    MC Hammer seems to be a little bit back on his feet now days so maybe he did learn.

  2. says

    Toni Braxton filed for bankruptcy twice. The first time was due mostly to getting ripped-off by people who were supposed to have her best interests at heart and poor contracts. The second time was the result of getting sued and a heart ailment, which impacted her ability to perform on stage. And let’s not forget about poor Bobby Brown.

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