The Big Brother star, who died in 2009, made over £5m during her career and left a total of £2,220,512 in her will.
However, Goody's debts amounted to £1,825,820, meaning trust funds couldn't be set up for sons Bobby and Freddie with the £400,000 cash that was left, according to The Sun.
She hadn't paid income tax for four years, resulting in a £585,000 bill from Inland Revenue. Other debts included £170,000 in mortgage arrears on her three properties in Essex and over £1m in outstanding loans, payments on luxury cars and fees owed to lawyers, accountants and agents.
A source said: "This is the final tragedy. When Jade died, the lawyers and accountants took a quick view of her wealth but they didn't realise that she had no accounts done. Sadly, because she lived her life in such an erratic, chaotic way, she never thought about her accounts, like a lot of celebrities.
"They have had to go through all her receipts for the past four years of her life and it has wiped out the boys' inheritance. The whole scenario of there being £3m put away for the boys was a fairy tale.
"We think there is enough there to pay their school fees. But there is no trust fund left for them. What the boys have is about £400,000 in cash, plus three properties worth about £1.1m - two of which are in negative equity."
Previous reports had indicated that Goody's finances were complicated when she died and predicted that her sons would receive around £1.1m from her will.
Meanwhile, her mother Jackiey Budden is allegedly planning to sue News International over claims Goody's phone was hacked during her battle with cancer.