Bankruptcy can allow a distressed consumer to create a fresh start and put an end to creditor harassment. A Chapter 7 bankruptcy can become contentious, however, when the liquidation process begins and the court decides which personal property will be protected by the bankruptcy.

The Razorbacks’ football coach, who is likely known among Mississippi sports fans, filed for Chapter 7 bankruptcy. As we have previously covered, the college coach is seeking to discharge $40 million worth of debt. Most recently, the bankruptcy trustee requested a 60-day extension to obtain all the necessary financial documentation.

A creditor in this bankruptcy case has also requested that the coach be put under oath to investigate the disposition of his salary from the university. One week before filing for bankruptcy, the coach requested that his employer defer 71 percent of his salary until the end of the current football season.

The creditor believes the purpose of this arrangement was to protect the coach’s salary from the bankruptcy. One legal observer noted that creditors often request an examination in bankruptcy cases when they suspect fraudulent information pertaining to income or assets. He added that the examination could result in the debtor being denied the right to discharge a portion of his or her debt.

Property exemptions often allow the debtor to keep property in a Chapter 7 bankruptcy. Since exemptions directly affect the amount of cash garnered through liquidation to pay off debt, it’s no wonder that creditors may question various aspects of bankruptcy cases. Income earned after a bankruptcy filing is usually divided to satisfy creditors. Money earned prior to the filing, in most cases, is left with the individual who files.

As the football coach’s case demonstrates, the bankruptcy process is confusing and can even become heated. This is why it’s important to fully disclose assets and seek out trustworthy advice when looking for debt relief.

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