It was quite a long shot when Michael Vick filed for bankruptcy in July 2008, but given the new six-year, $100 million contract the Eagles quarterbacksigned, the creditors are likely going to get back the $20.3 million Vick owes them.
We consulted Paul Campsen, a partner at Kaufman & Canoles and one of the lawyers who worked on Vick's bankruptcy, to help walk us through how the payments would be made to his creditors, which include the Atlanta Falcons ($6.5 million) and a former agent, Andrew Joel ($6 million).
Let's break it down for you.
Vick's adjusted gross annual income, with his new contract, will be somewhere in the $17 million range — we don't know the exact number because his endorsement deals are unknown. Taxes immediately come out, leaving $10.2 million left.
Vick, until 2015, gets to take an allowance of $300,000 for himself. That means that there's $9.9 million left over for creditors. The creditors are paid on percentages based on what Vick makes. The creditors get 10 percent on the first $750,000 ($75,000), 25 percent from $750,000 to $1.75 million ($250,000), 30 percent on $1.75 to $7.5 million ($1.725 million) and 40 percent on $7.5 million to his total adjusted annual income of our hypothetical $17 million ($3.79 million).
Add all of those up and Vick would pay $5.85 million to creditors in a year. According to court documents, Vick started with $20.3 million to pay. He has so far paid of $2.08 million. That means after paying off $5.85 million, he'd owe $12.37 million, which would likely be paid off in two more years considering Vick's endorsement money is very conservative.
So if Vick is still playing for the Eagles in the 2014 season, it likely means his creditors will be made whole.
How does Vick make out? Well, he's allowed to keep the money left over after his creditors are paid off on the schedule made by the court. So next year, he starts with $17 million, takes $300,000 for himself, gives $5.85 million to his creditors, pays taxes and makes after taxes and makes required monthly payments to his ex-girlfriend and his mother, among others. That leaves him with about $3.7 million.
Of that, he has to pay the lawyers and accountants, 50 percent ($1,850,000). Vick can then bank the other $1,850,000, but can't touch it. That means that on a $17 million salary, Vick will net about $1.88 million next year. That means he makes 11 percent of what the Eagles pay him.
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