Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

Game Show Winner of $1 Million Files Bankruptcy

I recently ran across this interesting news piece on ABCNews.go.com that may not be as forthcoming as it needs to be.  It seems Kathy Cox, a school superintendent from the state of Georgia and a recent $1 million winner on the TV game show “Are You Smarter Than a Fifth Grader?,” recently became another housing crisis victim when she filed for bankruptcy.

According to a spokesman for Cox, in spite of declaring bankruptcy with more than $3.5 million in liabilities and less than $650,000 in assets (which is separate from her winnings), she still plans on upholding her promise of donating her winnings to two schools for deaf children and a school for the blind.

Cox is the co-signer on loans for Pebble Hill Homes, her husband, John Cox’s, home-building business, according to the Chapter 7 bankruptcy petition the couple filed on November 17.  Cox, an earner of around $125,000 per year, said that she was unable to support the couple on her salary alone after a downturn in the home-building industry and as creditors sought after the assets of the couple.

I am going to monitor this story to see how it actually turns out.  Having filed chapter 7 bankruptcy cases and chapter 13 cases now for over 14 years in St. Louis, this is not your typical case.  Although I admire her desire to keep her promise to donate the money she won to charity, once she filed for bankruptcy, that decision might not be hers to make.

When a chapter 7 is filed, it creates an estate of all property owned at the time of filing and all property the debtor has a right to receive at the time of filing.  If the money hasn't been paid to her yet from the game show, that money is property of the estate if won before she filed her case.  In that situation, a chapter 7 trustee is not going to just let her give the money to charity, but will take the money to pay her creditors.

Even if she received the money before filing and already paid it to the charity, a chapter 7 trustee can avoid certain transactions to get that money back for the estate, especially if it was done within 90 days of filing.  Ironically, if she filed her bankruptcy case on November 17 and won the money on November 18, it would not be a part of the bankruptcy estate and the trustee would not have any interest in it.

Castle Law Group and St. Louis, Missouri and Illinois bankruptcy attorney James Brown frequently helps people avoid foreclosure, repossession and wage garnishment by filing a chapter 7 bankruptcy or chapter 13 bankruptcy case.  If you would like to find out more about what options you have to get out of credit card debt, you can request a free copy of my book "7 Critical Mistakes to Avoid the Dismissal of your Bankruptcy Case" or give us a call toll free at 1-866-570-8484.