Arkansas Football Coach John Smith Files Chapter 7 Bankruptcy – Avoids Bankruptcy Means Test?

I am a College Football Fan. No, really I’m just a Pac-12 College Football Fan, and I check in on the other razorback-thumb-375x189-49391conferences when Bowl Season comes around or when ASU is playing out of conference. I don’t care enough about other conferences to know the names of Coaches as a result.

But…if any major college football Coach files for bankruptcy, it would catch my eye.

John Smith, Arkansas Football Coach has done just that. He filed a Chapter 7 Bankruptcy on Sept 6 of this year. If the article I found about his bankruptcy is accurate (See it at the Washington Post) I think my suspicion that major College Football Coaches live in a different world than the rest of us has been confirmed.

Coach Smith has 26 unsecured creditors and more than 25 million in debt. His largest Creditor is Terra Springs LLC of Louisville. He paid his Chapter 7 Bankruptcy Attorney $20,000.00 up front. He has a ten-month contract with Arkansas for $850,000.00 of which he has earned $115,000.00.

Since his bankruptcy filing, Arkansas has lost to Louisiana-Monroe in what I think many would call a really big upset and was completely shutout by Alabama 52-0, this after being ranked #8 in the Nation at the beginning of the season.

Some of you that are familiar with bankruptcy may be asking how a guy that makes close to a million dollars per year is able to file a chapter 7 and dislodge himself from the obligation to pay at least some of his debt.

What you may not know is that in many Bankruptcy Courts, if a bankruptcy filer has business or other non consumer debt that is greater than all other debt, the filer qualifies to file a chapter 7 bankruptcy even if they could afford to pay some if it back in a chapter 13 case.

That person doesn’t have to subject himself to the bankruptcy means test.

I assume this is the case in Arkansas and if so, Coach Smith will likely keep his salary or whatever portion of it is exempt in Arkansas and get rid of most of his obligations.

Another item to take note of:

Lots of people use bankruptcy to deal with those times when life takes a serious twist or a turn: actors, politicians, coaches, doctors, big companies, roofing contractors and homemakers.

For many that file, it really can’t be avoided and in the end, if handled correctly, it can be a tremendous relief and a fresh start.

Making Sure Your Tax Return is Filed – For Some, The “Devil is in the Detail”

“The Devil is in the detail”. At least that is the way I think the old idiom goes. This is especially true when dealing 1237866_76328534-thumb-300x417-49231with the IRS. The mega sized IRS administration is so loaded down with Rules and Regulations it is a wonder it can stay afloat.

This makes it especially fun for taxpayers who are trying to prove they did something in the past that will help their case now.

A common problem that I see is the taxpayer who “knows” that he or she filed a tax return for a particular year and the IRS is claiming that it was never filed. The problems associated with this are numerous. Just a few of the common problems are listed here.

1. The taxpayer often has to do the return over again because they didn’t keep a copy.

2. The statute of limitations on collection of the debt never started because the return was never “filed”.

3. The time frames necessary to meet bankruptcy requirements never start to run.

4. The IRS has often filed it’s own return for the taxpayer and overstated the debt.

5. That IRS filed return is now being used to bludgeon the taxpayer with liens and levies.

6. That same IRS filed return has probably made it difficult if not impossible to discharge the tax debt even if corrected in bankruptcy.

If you are filing an IRS tax return and you are doing it on time or late, it makes sense as a result to make sure that you can prove the return was filed in the first place. A small but as you can see, very important detail.

So the question is how to do that?

Some thoughts:

File the Return Electronically

When you file the return on time, you can file it electronically if your taxpayer is set up to do this or if you use one of the online tax prep services. The IRS even has it’s own service that allows certain taxpayers to file for free and electronically.

There are problems with e-filing, most of which have to do with getting the information correct on the return so that the system will accept it. For most though, e filing works well.
It also allows you to easily prove that you filed on time because the return is usually marked with an “electronic postmark”, a time-stamp that attaches to the return.

Mailing it – US Postal Service

Many people just mail it in with a stamp. In my opinion if it is mailed to the right location, it almost always gets there. If filing it on time isn’t that big of a deal, i.e. you are expecting a refund than if the IRS doesn’t get it, you will eventually figure that out and re-send.

What if you are filing a return that will tell the IRS how much you owe? You want to ensure they receive it on time if possible and even if late filed, you want the “clocks’ mentioned above to start running.

If you mail it – you could simply follow up to make sure you get a bill from the IRS within a few months. If one doesn’t arrive, there is probably something wrong and you will need to send them in again.

Walking returns into the office

The IRS has local offices that will accept returns that are walked in. The nice thing about it other than waiting in line, is that they will take a copy and stamp another that shows not only when you filed, but what you filed as the stamp is on the front page of the return.

Many of our clients with late returns will walk the return in and get a stamped copy.

This is the best way to ensure the IRS gets the return and for purposes of proving that you filed it later.

Sending returns via certified mail

Really…what is the point of going to all the trouble? The certified mail receipt doesn’t prove what was in the envelope does it?

Some people will put the certified mail receipt number on the first few pages of the return and the signature page and of course on both receipts and then copy the entire package of documents and the envelope in which it was sent.

Overkill? Usually yes. Some of us will be glad we did though.


We lead busy lives. Filing an income tax return doesn’t really fit into our schedule. However, If a large debt is anticipated…it should be a priority.

Otherwise, that tiny detail, the inability to prove a return was filed, could become a “devil”.

CHAPTER 13 BANKRUPTCY AND THE “HARDSHIP” DISCHARGE – When completing the Chapter 13 Bankruptcy has become too hard, you may be entitled to the bankruptcy discharge anyway

It is a very common thing in these United States for a Chapter 13 Bankruptcy to “fail”. They fail in the sense that Help 1they are dismissed before the Discharge of debt is entered quite regularly and for a number of different reasons.

The Debtor is often just not able to live on the proposed budget and stops making chapter 13 plan payments. Sometimes, people lose jobs, get ill or any number of other things happen, that make the chapter 13 plan payment difficult or impossible to make.

The Bankruptcy Code has been written with these types of problems in mind.

If you can’t complete the Chapter 13 plan you may be able to file a motion with the Court and ask the Judge to grant you a “Hardship Discharge”.

Here are the criteria:

1. You failed to complete your plan payments due to circumstances “for which you should not justly be held “accountable”

You must be able to show the Court that something more than just a temporary job loss or the flu. The new condition you have found yourself in needs to be “permanent” and you may need some evidence of the condition.

2. You have paid your unsecured creditors at least as much as they would have received if you had filed a chapter 7 case.

If all you would have lost in the chapter 7 bankruptcy was your collection of Shaq memorabilia, than this may not be a hard burden to meet. On the other hand if you are protecting your non-exempt antique gun collection this burden may be more difficult.

3. Modification of the Plan wouldn’t work

The Judge has to be provided evidence that modifying the plan won’t work to save it.

The First of the three criteria is usually the most difficult one to prove. If you are in a Chapter 13 Bankruptcy and think you meet all three criteria, you should talk to your Attorney about this option.

For most, it is usually easier to convert to a Chapter 7 Bankruptcy if available, or to dismiss the Chapter 13 and plan for a Chapter 7.

Experienced Arizona Bankruptcy Counsel is necessary when you are facing problems with your Chapter 13 case especially if you facing a real hardship.