Sometimes, personal bankruptcy cases may become more complicated than they first appear. The football coach of a large university that may be familiar to readers in California filed for a personal bankruptcy last fall. At the time, the coach told the court that he had only $107.66 left each month after paying his expenses. The personal bankruptcy listed the Coach's income as $19,800 per month gross pay.
The income declaration is at the center of a claim made by one of the creditors in the personal bankruptcy case. In that claim, the creditor noted that the coach arranged to have his annual income paid mostly after the personal bankruptcy filing. This, the creditor says, may have been so that the income did not have to be disclosed to the bankruptcy court at the time of filing.
Under the bankruptcy code, income that is earned prior to the filing of a personal bankruptcy is subject to use for repayment to creditors. That which is earned after the filing is, in most cases, not subject to use by the bankruptcy trustee. Now the court must review the documents provided by the coach to determine if he acted inappropriately by agreeing to have most of his income paid to him after he filed for a personal bankruptcy.
Every bankruptcy filing in California and elsewhere requires that the debtor disclose all of their assets. This is true even though many are not subject to being used by the trustee to repay creditors. Using bankruptcy exemptions, some people find that they are able to keep many, if not all of their assets. Whatever the case, personal bankruptcy can help some consumers liquidate or re-organize their debts as they seek to get a fresh financial start.
Source: USA Today, "Arkansas coach's bankruptcy case turns contentious," Brent Schrotenboer, Nov. 14, 2012