A bankruptcy doesn’t necessarily mean the loss of all of the filer’s possessions. Although a Chapter 7 liquidation procedure requires that most of a filer’s assets should be sold to pay off the debts accrued, certain assets are safe from loss. Readers in Appleton, Wisconsin, may have heard of the recent bankruptcy filing of major college football coach John L. Smith. The assets preserved in his bankruptcy demonstrate that the amount saved during the bankruptcy process can be considerable.
Smith, who coaches a major program in another state, has accrued about $25.7 million in debt. He filed with a bankruptcy court on Sept. 4 to have the debt wiped erased, but hopes to retain about $1.2 million in personal property and retirement earnings. His debt is the result of real estate investments made prior to the collapse in housing prices.
Smith’s assets include earnings of $115,000 from his coaching contract and another $35,643 from his last coaching position. Two retirement accounts, worth approximately $600,000 each, are exempt from the bankruptcy, as are the furnishings in his home. An endorsement deal with Nike and revenue from a football camp complete his list of declared assets.
Smith’s debts include $20 million owed to Terra Springs LLC, $2 million to Republic Bank and more than $900,000 payable to King Southern Bank. By utilizing the Chapter 7 process, the coach will find himself released from a large proportion of his heavy debt load.
Those considering Chapter 7 debt relief in Wisconsin should know that liquidation could leave the filer with some assets. The process is intended to pay off as much debt as possible, but the available exemptions should allow the filer to retain his or her home.
Source: USA Today Sports, “Arkansas coach Smith bankruptcy shows $25.7M debt,” Chuck Bartels, Sept. 20, 2012