As reports surface that wealthy socialite Patricia Kluge has filed for Chapter 7 bankruptcy protection, many have wondered: how can you file for bankruptcy when you are a billionaire?
When United State bankruptcy laws were drafted, the focus was pro-debtor. The idea was to provide a fresh start for people who had suffered under the weight of heavy debts. Rather than be forced to struggle the rest of their lives with the debt, filers in bankruptcy could liquidate and sell their assets to pay creditors what they could, and then walk away.
The idea was not limited to the extremely poor. Thomas Jefferson reportedly filed for multiple bankruptcies over the course of his lifetime, along will thousands of other wealthy Americans. Whenever an individual’s debt exceeds their assets, bankruptcy may be worth consideration.
For Patricia Kluge, bankruptcy was a good option. With over $50 million in debts, but somewhere between $1 to $10 million in assets, bankruptcy is a winning proposition.
Read the rest of the article at National Bankruptcy Forum
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