In this economic climate it is not that unusual to learn of people in Pulaski County who are struggling with debt. Sadly, there are many people who have tried to invest wisely, but those investments have fallen through, leaving them facing insurmountable debt. It has happened to all kinds of people, even the former University of Arkansas interim head football coach, John Smith.
When he decided to file Chapter 7 bankruptcy he claimed approximately $40.7 million owed to creditors and only $1.3 million in assets. Unless he was getting a huge raise, that kind of debt would be impossible to pay off, so Smith did what many people in Arkansas have had to do recently: file for bankruptcy.
While the idea of filing for bankruptcy still has a negative connotation to many people, no one should feel ashamed that they need to discharge debts. Bankruptcy is merely a tool of handling extreme debt, but it does not mean that an individual is a failure or is an irresponsible spender. Sometimes debt is entirely out of our control.
According to Smith’s settlement, he will lose approximately $400,000 in real estate and have to pay $265,000. In exchange, however, he will also discharge millions of dollars of debt. He was even able to structure his contract with the University of Arkansas so that he was able to keep 71 percent of his salary from last year. This contract was a point of contention in his bankruptcy proceedings, but the bankruptcy trustee ultimately ruled that it was not fraudulent to keep part of his salary.
Source: USA Today, “Ex-Arkansas coach discharged of debt in bankruptcy deal,” Brent Schrotenboer, Sept. 5, 2013