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College coach completes Chapter 7 after creditors call foul

Football season is here. As sports fans in Massachusetts are cheering the Patriots to move the ball past the goal line, a national football figure recently completed one of his personal goals after a difficult year. John L. Smith, former college football coach for the Razorbacks, just had his Chapter 7 bankruptcy case discharged from federal court.

In 2012, Smith filed for bankruptcy claiming $40.7 million in debt and only $1.3 million in assets. Apparently, the coach lost a significant amount of money in real estate investments that didn't pan out. During his case, however, some of Smith's creditors claimed that his filing was fraudulent. According to those claims, the coach was deceptive in the way he structured compensation in his football contract.

Generally speaking, the bankruptcy court is put in charge of any assets a person has at the time they file. However, any income earned after the filing date isn't included in the filing. As such, the court is often very sensitive to the way people spend and earn income shortly before and during a bankruptcy case.

Creditors claimed that Smith inappropriately backloaded his compensation, so large shares his income from the University of Arkansas wouldn't be put in control of the bankruptcy trustee. However, the court found no malfeasance in this instance, so the case was allowed to proceed.

Bankruptcy law is immensely complicated, so it's often helpful for financially distressed consumers to consult with an experienced attorney to determine how to approach their case. Since creditors may be ready to challenge crucial aspects of a bankruptcy filing, being well-prepared for debt relief can save a lot of time and stress.

Source: USA Today, "Ex-Arkansas coach discharged of debt in bankruptcy deal," Ben Schrotenboer, Sept. 5, 2013

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