UNDERSTANDING BANKRUPTCY: Why Did Papper DMX File?

BY MICHAEL CIBIK, ESQ., American Bankruptcy Board Certified/ Question: Why did rapper DMX file bankruptcy?

Answer: When someone can’t get a passport due to child-support arrears, bankruptcy may be an option. Just ask rapper DMX.

This summer, DMX filed for Chapter 11 bankruptcy because his child-support arrearage exceeded $2,500, and the State Dept. will not issue passports for people who owe more than that amount.

Not infrequently, the celebrity was still making plenty of bucks, but his/her manager/accountant had not been paying the bills … usually, siphoning the money to their own use.

His Chapter 11 bankruptcy filing shows 1.24 million in back child support. Hopefully, he can earn more than that on his overseas tour, now that he can get a passport.

Child support is not dischargeable in bankruptcy, so it still has to be paid. But the automatic stay allows him to get the passport. Filing bankruptcy was just another event in a bad week for Mr. DMX, as he was arrested for drunk driving just a few days earlier.

Usually we hear of big companies, like GM and Chrysler, filing Chapter 11 bankruptcy, but individuals can file too. In fact, if you owe more than a certain amount of debt, you CANNOT file Chapter 13 payment-plan bankruptcy, and so, you would have to file Chapter 11 to repay the debts.

Being that the vast majority of his debt is child support that he has to pay anyway, looks like DMX made the right move. Also the right move to get new management.

Next Week’s Question: Should I file a Chapter 7 or a Chapter 13 bankruptcy? Why consider Chapter 7 bankruptcy?

   Send article as PDF