Who has not been stung by bankruptcy? Very few, I imagine. My friend Walter E. Williams and I often use the term legalized theft. Bankruptcy is a prime example.
My other friend, Terry Juhl, got into financial trouble in the 1980s, when US trade policy bubbles burst, throwing farm country into depression. He and Michael Vick have two things in common. Bev loves Terry because he is Terry, and Michael because he plays football. The other thing is they both put morality above the law.
Writes Joe Salerno at Mises.org:
Michael Vick filed for bankruptcy in July 2008, while serving time in Leavenworth federal prison for participation in an illegal dog-fighting ring. He was then earning 12 cents per hour mopping prison floors. Six years later he has almost paid back the full $17.8 million he owed his creditors, including returning $6.5 million of salary to the Atlanta Falcons, his former employer. “Big deal,” you may say, “Vick has earned nearly $49 million during the five years (2010-2014) since he returned to the NFL.” But it is a big—and very heroic—deal because it is rare that Americans who file for personal bankruptcy repay their full debts to their creditors. For the rotten U.S. bankruptcy laws permit individual debtors to weasel out of most of their indebtedness. As the liquidating trustee in Vick’s case commented:
What Michael did was the exception, not the rule. He didn’t have to do this. The law allows you to skate by and pay your creditors 10 or 20 cents on the dollar, but he thought this was the right thing to do.
Vick could have filed for Chapter 7 bankruptcy, under which most of his debts would have been forgiven. Instead he chose to file under Chapter 11, which required repayment of his entire debt. Under the arrangement he made with his creditors, Vick restricted himself to a $300,000 annual budget until his debts were paid off. This was necessary because more than half of what he was earning went to pay taxes and legal fees. Vick continued to repay the salary-related portion of his debt even after the Falcons decided to sell the liability, presumably at a substantial discount, to Fortress Capital, a gigantic investment firm with $66 billion under management.
Vick explained his choice to pursue the path of righteousness and honesty and not to use an unjust law to plunder the property of his fellows very simply and directly:
I didn’t want to stiff people who never stiffed me.