Even rich girls get the blues. That’s the lesson Tori Spelling shares in her new memoir, sTori Telling (CBS) when she describes an out-of-control shopping habit that racked up hundreds of thousands of dollars of debt, and almost led her to file bankruptcy. “I grew up a certain way. I never had to worry about money. That was my reality,” she recalled recently on ABC’s (DIS) 20/20. “I would sit and watch my mom order stuff online, or in a catalogue, see a sweater and order it in 10 different colors. I thought, ‘I have my own money -- that's what I should do.’” But once the actress who played Donna Martin graduated from her family’s 56,000 square-foot mansion, and no longer had her late media mogul father Aaron Spelling – worth nearly $500 million – to foot her bills, Spelling nearly hit financial rock bottom.
Do you have excessive consumer debts? Considering filing for protection? Even if your comfort with numbers does not extend far beyond 90210, it is important to understand your options. Filing bankruptcy requires a lot more deliberation than just acknowledging you’re drowning in credit card debt. One of the most significant decisions is whether to file for Chapter 7 or Chapter 13. Both types of bankruptcy remain on your credit history for 10 years, but they can each have a unique effect on your financial health (or lack there of). In simple terms, “under Chapter 7 your assets are sold to pay off your debts and the remaining debt is discharged,” says Michael Eisenberg, spokesperson for the American Institute of Certified Public Accountants. In other words your slate is wiped clean. “Under Chapter 13, you’re not required to sell assets, but you can rearrange your debt based on your income and pay it off in three to five years.” Meaning less debt is forgiven, but that you also get to keep more of your stuff.