A person typically files for bankruptcy when the debts owed so far exceed income that a payment plan is not an option. There are usually income restrictions on bankruptcy filings, but individual cases may vary. Frequently, bankruptcy is meant to discharge unsecured debt, which occurs when debt is taken out with no property to guarantee it. Credit card debt is an example of unsecured debt.
Mississippi readers may be interested in a recent personal bankruptcy filing that raises questions about appropriate income versus debt considerations. A college football coach filed for bankruptcy last month after amassing more than 40 million dollars in debt, much of it apparently from bad real estate investments.
The coach of the University of Arkansas football team reportedly makes more than $800,000 a year. The Chapter 7 bankruptcy filing will relieve him of a legal obligation to pay the $40 million he owes in debts. The case has raised some eyebrows because of the coach’s large salary, though it is only a percentage of his claimed debts.
This situation exemplifies the complexity of bankruptcy law. Though some would assume that a high-earning college football coach would be ineligible for bankruptcy protection, this is not necessarily the case. When debts become too large to handle, bankruptcy may be an option. Many people find it brings financial relief and the ability to start over.