Kathy Cox
Posted on 11/25/2008 7:39:51 PM PST by Huntress
One of Georgia’s top elected officials is feeling the pain of the housing industry slump in a very personal way.
State Schools Superintendant Kathy Cox and her husband, a homebuilder, last week filed for personal bankruptcy, citing more $3.5 million in liabilities and less than $650,000 in assets, according to court documents.
Most of the debt relates to John Cox’s business, Pebble Hill Homes, which he started in Fayetteville in 2001, the filing indicates. Kathy Cox, who makes about $125,000 a year, has no role in the business but is a co-signer on loans for it, a spokesman said.
As homebuilding slowed to a crawl last summer, Pebble Hill and the Coxes came under siege from creditors, the filing shows, and Kathy Cox’s salary alone was not paying the family’s expenses.
In what Kathy Cox described in a statement as a “gut-wrenching decision,” the couple on Monday filed for Chapter 7 bankruptcy.
“I want to be clear … that this filing does not affect my ability to perform the duties of my job as state superintendent of schools,” Cox said in the statement, issued through spokesman Dana Tofig. Tofig on Saturday said she would not comment further.
The filing came barely two months after Cox won $1 million on the television game show “Are You Smarter Than a Fifth Grader?” She said at the time she would donate the winnings to two schools for the deaf and one for the blind. Tofig said she will honor that plan and has already set up a “gift foundation” to handle the money.
A Chapter 7 filing allows debtors to keep and continue paying for some assets deemed exempt, such as homes and cars, while others are liquidated to pay creditors. The Coxes’ filing was first reported Friday in the Times-Herald of Newnan, where it occurred.
“On Nov. 17, after consultation with numerous attorneys, my husband and I made the difficult decision to file for bankruptcy due to losses incurred by his home building business,” Cox said in the statement.
“The collapse of the home building market has been well documented and small builders, like my husband, have been hit especially hard… . in the end, we felt that we had no choice.”
The Coxes’ biggest listed asset is a Peachtree City house valued at $450,000 where they live with two teenage sons. Two mortgages on the home total $442,907.55. No one answered the door at the home Saturday afternoon.
The filing indicates they will keep the home but give up John Cox’s Fayetteville office, which is security for an outstanding loan of $140,400.
According to the filing, the Coxes’ current monthly household income, after taxes and other withholdings, is $7,808. All of it comes from Kathy Cox’s salary, while John Cox currently has no income. The couple listed monthly expenses of $9,839.
Kathy Cox, a former Fayette County teacher and legislator now in her second term as schools chief, oversees a state system of 1.7 million students and an education budget of $9.5 billion, most of which it passes to local systems.
John Cox drew salary of $12,000 in 2007, and $5,000 for this year so far, the filing states. The filing doesn’t indicate how his business fared earlier in the decade, but small homebuilders across metro Atlanta have been ravaged by the near-collapse of the new home market in the past two years.
The filing shows that a few of Pebble Hill’s creditors began filing collection claims against the company and the Coxes in Fayette County courts last summer.
Among them was the biggest unsecured creditor, Neighborhood Community Bank of Newnan, with a claim of $732,776. The bank filed a demand for payment in Fayette Superior Court in August, the filing shows. First Horizon bank filed a demand in September, as did supplier Pro-Build South.
The filing shows that, as required under bankruptcy code, the Coxes got credit counseling from Money Management Inc., just prior to the filing in U.S. District Court.
Of the $3.5 million in liabilities, almost $2.9 million are unsecured debt. The Coxes had 11 credit cards with balances ranging from as little as $400 to Shell or as much as $19,500 on a VISA and more than $54,000 on an American Express Costco Business Card. It was not clear which cards carried debt for John Cox’s business and which ones were for personal expenses.
The filing shows a $2,357 unsecured claim for 2008 Fayette County property taxes. It also shows the Coxes owe more than $33,000 on two car loans for a 2008 Ford F-150 and a 2008 Ford Edge.
The filing said the Coxes have continued to give $100 a month to Peachtree City United Methodist Church. They closed an IRA account on Nov. 12.
In addition to saying the filing won’t affect her ability to perform her job, Cox said in her statement: “It also does not, in any way, deter my commitment to the citizens of Georgia that we will provide the best education possible to this state’s 1.7 million public school students …
“We know that thousands of families throughout Georgia are struggling in these difficult economic times. But we all must remain committed to the future of Georgia — our children!”
In September, after she won the $1 million game show prize, Cox said she’d donate the money to the Atlanta Area School for the Deaf in Clarkston; the Georgia School for the Deaf in Cave Spring in northwest Georgia; and to the Georgia Academy for the Blind in Macon.
Tofig said he wasn’t sure if the money had been sent to the schools yet, but that it would be distributed no later than next month.
“The superintendent never intended to keep the money,” Tofig said.
AJC staff writers Jim Galloway and Chandler Brown contributed to this story.
Like many builders in trouble, Pebble Hill Homes’ creditors include a mix of lenders and suppliers. Here are the top 5 listed in the Coxes’ bankruptcy filing, and the amount of the claim:
1. Neighborhood Community Bank — $732,776
2. First Horizon Construction Lending — $680,000
3. Heritage Bank — $266,000
4. Stock Building Supply — $227,000
4. Capital One Bank — $61,755
I bet the creditors can get access to the $1 million.
Prize winnings are not exempt.
Just ask for a bailout. Hell, everybody is doing it these days.
I agree, she already owes them. It would have been nice to give to charity it is an obligation to pay one’s debts.
Not defending her, but after taxes, she probably was left with 600k at most, and the family looked at the overall picture and realized they were screwed, due to their own irresponsibility.
Kathy Cox
Wow, that’s just sad.
reminds me of an idiot I work with. He’s got about a thousand dollars in medical bills and he wants advice on investing in the stock market ... unbelivable.
I believe the 1 million went to a charity.
Georgia recently had a SOS named Cathy Cox. As I recall, she was popular.
I always suspected that voters were confused about the similar name of Kathy Cox, which may have helped her get elected.
Maybe I was not paying close enough attention, but I don’t recall seeing too many pictures of Kathy.
Anyway, that debt load is astounding. But, one million could have partially paid the bills.
Weak decision just seeking cover from a perceived political embarrassment of bankruptcy.
Well, how's he ever going to afford them medical bills unless he hits it big on a penny stock? /sarc
My Mom’s friends was talking about this on how she won this on are you smarter than a fifth grader last week. Said she was the only one to win a million dollars on there (and quite proudly too, but she’s a retired teacher, but a conservative also)
I can hear Dave Ramsey now. Especially the brand new vehicles. I saw her on the show - a very smart woman. Somehow even smart people can make terrible decisions.
Remember it was her husbands business that failed.True, she co signed the loans which I dont understand.She also gave the money to charity before all this blew up in their faces.How the hell do you get out of debt owing that much?Just wow.
I guess those schools aren’t getting that prize money if they haven’t yet, the creditors probably have rights to it.
Yes, Cathy Cox was demrat, she lost the rat primary for Governor in 2006. Kathy is an R.
“I always suspected that voters were confused about the similar name of Kathy Cox, which may have helped her get elected.”
that’s what state dems claimed.
Two months ago. They'll have a hard time proving they weren't insolvent when they won the money. An aggressive creditor should be able to get to the money. I'd object to the discharge, for starters.
The filing shows a $2,357 unsecured claim for 2008 Fayette County property taxes. It also shows the Coxes owe more than $33,000 on two car loans for a 2008 Ford F-150 and a 2008 Ford Edge.
In for a penny, in for $3.5 million. She may be smarter than a fifth grader but she doesn't have a clue how to manage money. They have 2 new vehicles purchased after her husband's business was already in trouble. They ran up credit cards balances, their house is mortgaged to the hilt, and they are behind on the taxes. They undoubtedly knew they were in a hole at least a year ago but kept on digging faster.
The creditors will stop the $1 million donation check now that they filed for bankruptcy.
In this environment, pay your debts, however you can, pay them off as fast and as furious as you can.
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