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Another tax season is upon us and news of the unpaid taxes of another celebrity has hit the national media. Five-time Grammy award winner, Dionne Warwick, has filed for Chapter 7 bankruptcy due to a $10 million dollar tax debt. Despite making regular payments to resolve her tax debt, she is unable to continue making payments and is seeking bankruptcy relief.

Back taxes are owed to the federal government and the state of California. Before filing for Chapter 7, Warwick sought to modify her payments by making a petition to both the Internal Revenue Service and the California Franchise Tax Board. However, both petitions were rejected. Ms. Warwick owes $7 million to the federal government. She owes another $3 million to the state of California. Her current income includes a $14,000 monthly payment from a Screen Actors Guild pension, plus $1000 in royalties and variable payments for performances.

Chapter 7 bankruptcy differs from Chapter 13 bankruptcy in that there is a complete dissolution of debt in Chapter 7. Alternatively, in Chapter 13 bankruptcy, a manageable payment plan is created to resolve issues of debt. In cases like the singer’s, where her debts far exceed her assets, Chapter 7 may be preferred because the petitioner lacks the funds to make significant payments.

It is important to note that bankruptcy is not just for the rich and famous. The average American can be plunged into financial ruin after a loss of a job or major illness causes major financial issues. In these cases, a bankruptcy attorney can evaluate the case and determine if bankruptcy could help put a stop to creditor harassment.

Source:, “Singer Dionne Warwick declares bankruptcy citing $10M in back taxes,” Victoria St. Martin, 3-27-2013