Toni Braxton has sold more than 40 million albums during her music career, but has racked up a staggering $50 million in debts. She first filed for bankruptcy back in 1998. Then in 2010, the IRS filed a $396,000 tax lien against the singer, making a second bankruptcy necessary.
Now Braxton has hit another financial bump in the road. The trustee in Braxton’s bankruptcy case had accused the singer of fraudulently transferring money to her estranged husband, Keri Lewis, in order to keep the cash away from her creditors, TMZ reports.
According to her 2010 filing, Braxton has somewhere between $1 million and $10 million in assets. You’d think she’s worth more, considering the number of albums she’s sold.
Health problems are partly to blame for that. Braxton, along with members of her family, suffers from an auto-immune disease that’s led to serious health issues and hefty hospital bills, according to Examiner.com.
In bankruptcy cases, trustees are appointed to oversee the process. In a Chapter 7 bankruptcy, that usually involves seizing the debtor’s property, selling it, and distributing the proceeds to creditors. In certain circumstances, the trustee has to rein in any money that the debtor may have inappropriately paid out, in order to return it to the bankruptcy estate.
Braxton’s trustee claims that the singer transferred $53,490 to Lewis in order to keep the money out of the bankruptcy estate. The money reportedly had been earmarked for Braxton’s creditors. The trustee has filed a suit against Lewis to reclaim the cash.
If a judge suspects fraudulent behavior, he can revoke your debt discharge. That’s why debtors have to be careful about selling, transferring, or concealing property before or during their bankruptcy case.
Braxton’s rep denies any wrongdoing on the singer’s part. “All of the payments made to Lewis prior to Toni’s bankruptcy filing were appropriate transfers for reasonable and necessary personal and business expenses in the ordinary course of her business,” the rep told TMZ.
- Toni Braxton — Bankrupt Again, May Owe $50 Mil (TMZ)
- Chapter 7: How it Works (FindLaw)
- Debt Discharge and Property (FindLaw)
- Parents, Grandparents on the Hook for Student Loan Debt (FindLaw’s Phoenix Bankruptcy Law Blog)