I read that when Michael Jackson died, he was $500 million in debt. How does someone get into that kind of debt?

Question

I read that when Michael Jackson died, he was $500 million in debt. How does someone get into that kind of debt?

In: Economics

Answer 1

You end up in debt when you borrow money. You can borrow as much as people (banks) are willing to lend to you. When you’re very famous, people are always willing to lend you money, because they assume that you will be able to pay them back and they want to be associated with you, for PR.

So basically Michael Jackson, with his immense star power, could easily borrow a ton of money because he was also making a ton of money. It took a fair amount of time before banks started to realise that after his peak in the 80s he wasn’t making the insane amounts of money he once did, he also spent a lot of money frivolously, and was often late on payments.