Football fans in Colorado may be interested to learn that college coach John L. Smith filed for Chapter 7 bankruptcy in early September. Smith is now the coach for the Arkansas Razorbacks after that team's former coach, Bobby Petrino, was fired in the spring.
Smith's case is interesting because his debt problems stem in part from several properties he purchased between 1998 and 2002. Once the real estate market worsened, he and other investors lost money on those properties, which are in Kentucky.
As readers in Colorado may be aware, a debtor can file for personal bankruptcy under Chapter 7 or Chapter 13, depending on the outcome of a means test. Chapter 7 bankruptcy is liquidation bankruptcy, whereby a person may sell off assets to repay the debt. If a means test determines that a person isn't eligible for Chapter 7, then he or she can file for Chapter 13, which is instead used for the reorganization of assets.
According to media sources, Smith's bankruptcy petition shows that he has between $1 million and $10 million in assets and between $10 million and $50 million in debt. His current coaching contract is for 10 months with a salary of $850,000. Smith's filing is only preliminary, so it will be left to the court to decide whether he qualifies for Chapter 7. If he doesn't, then he may have to switch to Chapter 13.
The coach had concerns that his bankruptcy might embarrass his new employer. "From a personal standpoint," he said, "I don't want the university being embarrassed, but I'm not embarrassed. It's something that happened. I made some mistakes, and to be honest with you, I'm a football coach, not a businessman."
Many Coloradans with debt problems may appreciate that measured and optimistic approach to finding debt relief.
Source: Yahoo! News, "Arkansas' Smith files Chapter 7 bankruptcy," Charles Bartels, Sept. 6, 2012