The Forces of Bankruptcy & Eventually Foreclosure:

Not Even the Rich & Famous Are Immune

by Bargain Network

* The savings represented are estimates based on current market trends and cannot be guaranteed for all users.

May 14, 2007

The current foreclosure market began as cocktail party gossip or rumors around the water cooler at work, but has now reached star power status, stealing headlines from the real celebrities. The news has recently been totally dominated not by Britney Spears, Paris Hilton, or the hottest contender on American Idol, but by the fact that the foreclosure market is spreading, even to luxurious neighborhoods.

Evidence that foreclosure markets are not limited to one part of the country or a particular demographic has been around for years. Abe Lincoln is said to have bailed out of a failed grocery store business investment before he became President of the United States. Even Donald Trump declared bankruptcy, at the beginning of his climb to the top of a vast real estate empire.

Some Foreclosures are Scandal-Induced
Of course foreclosures are often avoidable and some of the most famous foreclosures happen as the result of blatant mismanagement or flagrant misbehavior. Many of the celebrities who find themselves in foreclosure do so after a run-in with the police, and O.J. Simpson lost a home valued at around $3 Million after missing a mortgage payment of approximately $86,000. Similar financial problems have plagued former heavyweight boxing champion Mike Tyson ? who spent several years in prison on a felony conviction ? and his fortune has dwindled along with his reputation. Last year the news media reported that pop icon and frequent courtroom defendant Michael Jackson received ? on more than one occasion ? legal notice of a pending foreclosure for the home where his parents live in Encino, California because he allegedly missed payments on a $2 million mortgage.

Grammy Award winning singer and admitted drug abuser Whitney Houston saw the Georgia home she used to share with Bobby Brown fall into foreclosure after their bitter divorce. While it was auctioned off in a court-ordered sale, she has apparently managed to hold onto a 10-acre estate and multi-million dollar mansion in New Jersey, despite sometimes falling behind on mortgage and tax payments.

And last summer, actor and comedian Dustin Diamond ? best known for his role as Samuel "Screech" Powers on the television show Saved by the Bell ? appeared on TV and radio shows in a media blitz focused on the fact that he was facing foreclosure. He appealed to fans to help bail him out of debt by buying fundraiser tee shirts with his picture on them. CBS News reported that he needed to raise $250,000 to save his two-story residence near Milwaukee, so he printed 30,000 shirts ? emblazoned with the slogan "Save My House" ? and attempted to sell them for $15-$20 each.

Even Mortgage Industry Executives Fell Prey to the Current Foreclosure Market

But foreclosures also affect other high-flying homeowners whose names may not be known in the tabloids. Although not famous and recognizable, many of the nation´s wealthiest citizens ? who enjoy lavish and glamorous jet-set lifestyles ? have stumbled into foreclosure proceedings during this latest real estate bear market. This month the New York Times reported that affluent executives living in the wealthy neighborhoods around Los Angeles ? who are experts in the mortgage industry ? are falling prey to a plummeting housing market and high-risk mortgage loans. While it is ironic that the leaders of the housing credit industry can wind up facing foreclosure, it seems to be happening at a rather alarming pace.

Gigantic and hugely powerful companies like New Century ? a mortgage lender that issued around $50 billion in loans last year ? are watching their stock prices plummet, as foreclosures and defaults on loans grow at a phenomenal pace. Mortgage industry veterans Robert K. Cole, Brad A. Morrice and Edward F. Gotschall founded New Century in 1995. The firm quickly expanded to 216 sales offices in 35 states and the three partners, along with many of their sales staff, grew fabulously rich.

But within the past 12 months alone, each of the executives has lost around $50 million. The dramatic implosion of their finances is due to the fact that last year New Century´s shares traded at $50 each, but last week the New York Stock Exchange delisted the company after its share price fell below $1.

* The savings represented are estimates based on current market trends and cannot be guaranteed for all users.

The Silver Lining for Investors Seeking Sterling Properties

The bigger they are, the harder they fall. But for those who like to "bottom fish" for bargains, the current foreclosure market offers a shot at investment stardom, even for ordinary folks. While celebrities and aristocrats jettison their assets in order to stay afloat in a sea of debt, ordinary investors have an opportunity to buy entrance into the lifestyles of the rich and famous for a song and a dance.

In the end it may be those prudent buyers who wind up on top as the markets shift and provide easy profits to those who have been patient enough to wait for the shooting stars to burn out and bring real estate prices with them, back down to earth.

Financial Calamity Happens So Don´t Despair: Get Help with Credit Repair

Legal authority and author Nora Raum, who wrote the book "Surviving Personal Bankruptcy: Your Guide to the Personal, Legal, and Financial Issues", reminds readers at the beginning of most of her chapters that if they face financial crisis such as bankruptcy or foreclosure, they are not alone in the world. She lists celebrities including actor Burt Reynolds, chocolate candy company founder Milton S. Hershey, TV host Larry King, and country singing legends Willie Nelson and Tammy Wynette among those who filed for bankruptcy.

The Web site for the Bankruptcy Law Network adds other names to the roster, including everyone from classical composer Wolfgang Mozart and American writer Mark Twain to Dutch master painter Rembrandt and patriotic president Thomas Jefferson.

Financial duress does not necessarily translate into failure, by any means. Sometimes, in fact, it is a precursor to grand success. P.T. Barnum ? who gave us the tree-ring circus ? and Walt Disney, who gave us Mickey and Minnie ? are included in the list of those who underwent a bankruptcy, alongside contemporary celebrities and artists like MC Hammer, Willie Nelson, and child actor Gary Coleman.

Charles Goodyear´s name is there, along with Henry Ford´s, helping to remind us that having a financial flat tire can happen to anybody. What matters is whether we are able to patch the treads, regain our traction, and get back on the road to normalcy. Judging from the illustrious role models who have shown that recovery is not only possible, but that it sometimes precedes world-class prosperity, we have no reason to despair.

There are plenty of people and organizations ready to help, there is hope, and there is life after foreclosure. If you find yourself getting into the red over your head, communicate with your lenders and creditors and avail yourself of community-based debt counselors and programs designed to give support to those in financial crisis. They can help you work out a budget or payment plan and regain your footing, so that soon you will be back in the black, free of debt.