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DWI arrest, back child support push rapper DMX into Chapter 11

Rapper DMX, whose real name is Earl Simmons, filed for Chapter 11 bankruptcy in New York last week, just days after being arrested in South Carolina on alleged drunk driving and driving without a license. DMX is a resident of South Carolina, but it seems the Bankruptcy Court in Manhattan was the best option for the performer, who hopes to use Chapter 11 to resolve perhaps $10 million in personal and business debts.

While Chapter 11 is typically used for business reorganizations, it can also be used by individuals with too much debt to qualify for a personal debt repayment plan under Chapter 13.

On his bankruptcy schedule, the rapper lists assets worth less than $50,000 -- primarily a 50-percent ownership stake in a New York property. For debts, he listed a range -- $1 million to $10 million, including $1.24 million in unpaid child support and a $21,000 car lease. He attributed the child support arrears to poor management. On his bankruptcy form, he merely stated that he needed to reorganize his finances.

After his bankruptcy was first announced, DMX had not yet prepared to comment. Later, however, his representative contacted reporters explaining that the unpaid child support has made him ineligible for a passport, meaning the rapper cannot do overseas tours until it is resolved. If his passport has been affected, it’s almost certain that he has also lost his driver’s license due to the unpaid child support, as well.

“DMX’s financial strains have been inhibiting his career for several years….The purpose of this bankruptcy filing is for reorganization so he can perform for his fans oversees [sic],” his representative wrote. “We are currently planning a tour in Europe and Africa for the fall of 2013.”

While in most circumstances, unpaid child support is not dischargeable in bankruptcy, DMX may be able to work out a court-ordered repayment plan that could repay the debt in full over time while freeing him from some of the harsher consequences of failure to pay child support. At the very least, he may be able to discharge some of his other debts, making it easier to keep up with his child support obligations.

Source: The Wall Street Journal's Bankruptcy Beat blog, “Rapper DMX Files for Bankruptcy,” Jacqueline Palank, July 30, 2013

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