The Irish singer had gone from being a multi-millionaire star in one of the world's biggest boybands to becoming "worse than destitute" after investing in a series of ill-fated property developments.
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Westlife star Shane Filan has opened up about his bankruptcy
Now, Shane has opened up about the impact of that time in his new autobiography, My Side of Life, which is being serialised in the Mirror.
Recalling the moment his bankruptcy was made official, the star said, "I just broke down and sobbed. My world was crumbling around me.
"My three small children were upstairs in bed thinking everything was grand because Daddy was a pop star.
"It was the most horrendous time of my life. I was wallowing in despair and could have gone under if not for (wife) Gillian. She saved my sanity and she saved us."
Shane Filan on his wife Gillian: 'She saved us'
He added, "Every day she'd say, 'You've still got me, we've got the kids. We'll be fine. You can still sing and you'll have a career. It will be enough."
Shane's financial trouble began when the property company he had set up with his brother was hit by the crash in the economy.
As things spiralled out of control, Shane became too embarrassed to reveal the truth to his band mates. "For the previous five years I'd been living a double life," he said. "In reality I was worse than destitute – heading for skid row."
The 35-year-old had to sell off everything he owned worth £500 or more, and was ordered to hand over half his income for the next three years.
Shane Filan pictured with his Westlife bandmates
Now, halfway through his repayment plan, things are starting to get back on track for the Irish musician. Thanks to his loyal manager Louis Walsh, Shane has a new record deal as a solo artist and a sell-out tour.
"I'm afraid to dream now," he admitted to the newspaper. "I'm afraid of disappointing people. Mentally I've been beaten up," before adding with a smile, "I don't mean to sound gloomy.
"My life is starting to turn in the right direction for the first time in five years. I've got so much to be thankful for, and I hope my book might help other people out there in financial trouble."