Often people choose to invest their hard earned money in other companies and real estate. Sometimes these investments pay off, literally. But what happens when the investment does not work as planned and the investor ends up in debt?
When in debt, one can choose to file for Chapter 7 bankruptcy. Here in Memphis, many people who find themselves with more personal debt than they can handle turn to Chapter 7 bankruptcy for debt relief. For instance, John Smith, coach of the Razorbacks college football team, recently filed for Chapter 7. Smith invested heavily in real estate. According to his recent filings, Smith owes money to more than two dozen creditors, and as much as $20 million to one creditor, alone.
While Smith owes money to creditors, he is still making money from his job and various sponsorship deals. Smith also has two retirement accounts worth about $600,000. The retirement accounts are listed as exempt from the Chapter 7 proceedings, along with Smith’s home furnishings.
Like Smith, many people in Memphis who are struggling with debt choose to file for Chapter 7. When filing for Chapter 7, debtors can be released from much of their personal debt. Also, certain exemptions from other sources of income, such as retirement accounts, may be available. While most people are able to successfully discharge their debt after filing for Chapter 7, in some cases Chapter 7 relief is denied. This typically happens when a debtor has failed to keep adequate records.
While many people face debt and feel helpless, Chapter 7 bankruptcy often provides an alternative way out. As long as adequate financial records are provided, Chapter 7 can offer debt relief for those whose good faith investments went south, or who otherwise face overwhelming debt.
Source: WKRN.com, “Arkansas coach Smith bankruptcy shows $25.7M debt,” Chuck Bartles, Sept. 20, 2012