State Sen. Tony Potts, R-Idaho Falls, who is approaching his first legislative session, is in the midst of bankruptcy proceedings.
Potts is currently a salesman at an RV dealership, as well as a property manager in charge of about 80 residential units.
But Potts has had prior business troubles, and he filed for Chapter 7 bankruptcy in March.
According to his filing, Potts has about $250,000 in debts, including $16,000 in unpaid taxes, and about $145,000 in assets. Potts confirmed that he filed for bankruptcy, and he said it stems from the failure of a 5 Buck Pizza franchise he owned in Idaho Falls.
“Several years ago, I bought a pizza business, and like many small businesses we came into some struggles,” Potts said. “We had employees, and we wanted to make sure they could take care of their own families.”
Potts said he dipped into his personal finances to make payroll, and when the business finally closed, he had accumulated more debt than he could pay.
“As much as we wanted to pay everyone off, we just couldn’t do it,” he said.
Bankruptcy at a glance
Chapter 7: Chapter 7 bankruptcy provides for liquidation of a debtor’s assets. Instead of filing a plan to repay creditors, a bankruptcy trustee sells the debtor’s assets in order to repay the creditors. Some of the debtor’s property also may be subject to liens in order to benefit creditors, though certain pieces of property may be considered exempt and unavailable for liquidation.
Chapter 11: Chapter 11 bankruptcy is often referred to as reorganization bankruptcy. Debtors often propose a plan to repay creditors while keeping the business alive. Funding of the plan may come from a debtor’s future earnings. In rare cases, a trustee is appointed to carry out the plan.
Chapter 13: Chapter 13 bankruptcy, also called a wage earner’s bankruptcy, allows an individual or entity with a regular income to develop a plan to repay creditors in installments spread over a three- to five-year period. Chapter 13 bankruptcy also gives individuals an opportunity to save their homes and stop foreclosure proceedings.
Source: Summary of bankruptcy code available at uscourts.gov.
Reporter Bryan Clark can be reached at 208-542-6751.