The bankruptcy claim for Masterson's Nevada-based limited liability company Bellalily LLC stems from a lawsuit filed against the star in March by TomatoBank, reports Radar Online.
TomatoBank is suing Masterson for $2.9m (£1.9m).
However, Masterson's lawyer said that he is not at fault for the lawsuit or the bankruptcy.
Attorney Darvy M. Cohan added: "As I see it, it is not all my client's fault and the matter will be litigated.
"It (the company) had to file bankruptcy because it had a falling out with its major lender."