The Wall Street Journal is reporting that David Cassidy, famous from The Partridge Family is filing for bankruptcy. In his bankruptcy filing, Mr. Cassidy reported assets and debts each between $1 million and $10 million. Among his largest unsecured creditors are Wells Fargo, owed nearly $300,000, and a South Florida law firm owed $103,000.
In a note on his website, Mr. Cassidy said that bankruptcy is “necessary for practical reasons to reorganize my life as I go through divorce and to restructure my finances.”
I previously wrote about David Adkins’ (aka- Sinbad) bankruptcy filing. I was irritated by Sinbad’s filing, because he was proceeding under Chapter 7 because of a specific carveout (found in 11 U.S.C. 707(b)) in Chapter 7 for people with “non-consumer debt” or “business debt”. This carveout allows Chapter 7 bankruptcy debtors, whose debts are primarily related to ‘business debt’, regardless of their income, to discharge most of their debts without repaying anything. A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. My irritation regarding Sinbad was that, according to Sinbad’s bankruptcy schedules originally filed in his case, he grossed over $1 million in the six months leading up to his bankruptcy filling. After all of his business expenses (which includes around $14,000 in monthly legal fees, $14,000 in travel expenses, and $6,800 in ‘personal expenses’) Sinbad claims to make, on average, $16,000 per month. After all of his expenses, Sinbad clams to have no money left over to pay his bills. According to the U.S. Census, the median income for a family of two (presumably Sinbad and his wife) in California is roughly $64,000. Sinbad received a standard chapter 7 discharge and lost no property.
Don’t get me wrong- I do not fault Sinbad. I’ve helped dozens of small business owners file under Chapter 7. I fault the 2005 U.S. Congress for creating a completely unfair bankruptcy system for the majority of American facing financial difficulty.
Neverthless- its important to note that Mr. Cassidy filed a petition under chapter 11 of the bankruptcy code. Chapter 11 allows businesses or individuals to restructure their debt in a way that makes it possible for them to continue to financially function. Typically, individuals utilize Chapter 13 to restructure their debt. However, most likely due to the maximum debt requirements of chapter 13 debtors, chapter 11 was probably the only option other than a chapter 7 liquidation proceeding.
This isn’t Mr. Cassidy’s only recent struggle. Last year, he was sentenced to rehab and filed for divorce from his wife Sue.
Filing for bankruptcy protection is not an easy thing to do. It seems to me that one of the biggest obstacles to people finally filing for bankruptcy is the social stigma attached to it. Many people think that they are dead-beats or just irresponsible for filing for bankruptcy. Or that as soon as they file, that everyone in their church or neighborhood will suddenly know about it. As if bankruptcy filings were included in the church announcements every sunday. This could not be any further from the truth. Often times, it is the economy and the decisions of other people (divorce or separation) that lead us in the filing for bankruptcy. It is IMPERATIVE for everyone thinking of filing for bankruptcy that they understand that bankruptcy is a FINANCIAL decision- not a MORAL one. The founders of our country understood the role of bankruptcy and provided for the creation of courts to administer bankruptcy cases in the U.S. Constitution.
Call today for a free consultation and get prepared for the future. The future can offer a lot of hope if you get moving.