There are a number of perfectly good reasons why people need to file for bankruptcy. In Florida, we have seen home prices plummet which can lead to a home foreclosure and bankruptcy. Some people develop an illness or are injured in a car accident and are buried under medical bills. Still others lose their jobs and are unable to recover.
Recently it was reported that a college football coach has filed for Chapter 7 bankruptcy for an entirely different reason. The coach made bad real estate investments and has been unable to cover his losses.
The Arkansas Razorbacks’ interim football coach is reported to have $1 million to $10 million in assets, but has $10 million to $50 million in debt. His current 10-month contract with Arkansas is reportedly $850,000; a lot by the standards of many, but not enough to repay his debts.
The coach reported that his debts and financial losses were due to real estate investments he made in Kentucky when he was coach at Louisville beginning in 1998 and continuing through 2002. When real estate prices softened, his investments weren’t worth as much.
A Chapter 7 bankruptcy is also called a liquidation bankruptcy. The coach would be able to keep certain assets, such as his home if he is current on his mortgage, but other assets are sold to pay his creditors. Conceivably, his land investments would be sold and any proceeds used to pay off any lenders involved in the real estate ownership.
Chapter 7 bankruptcy is not right for everyone, but it is an excellent way to get a fresh start for some people. It is a wise idea to consult with a bankruptcy attorney to determine what the best course of action is for each individual.
Source: Associated Press, “COLLEGE FOOTBALL: Smith files Chapter 7 bankruptcy,” Sept. 6, 2012
Source: Yahoo! Sports, “Arkansas coach Smith files for bankruptcy,” Sept. 6, 2012
At our Orlando law office we assist our clients with Chapter 7 bankruptcy filings as well as foreclosure actions and credit card debt.