Sunnyside’s schools superintendent is no longer pursuing Chapter 7 bankruptcy after the U.S. Trustee Office said he miscalculated his disposable income and actually had enough money to pay his debts.
However, Superintendent Manuel Isquierdo said he will refile, for Chapter 11 bankruptcy, within 30 days.
Under Chapter 7 protection, debts can be erased or reduced, while under Chapter 11, he can seek to have his debt restructured with the intention of repaying over time.
Isquierdo is paid $237,500 a year in total compensation to run the Sunnyside Unified School District, Tucson’s second-largest district.
Before his pay was reduced in June under a contract extension, he was paid $302,500 a year.
The Trustee Office, part of the U.S. Department of Justice, says Isquierdo miscalculated his disposable income while claiming he carried a deficit each month, with no money left over to pay his debts, according to U.S. Bankruptcy Court documents.
Isquierdo filed for bankruptcy in May to prevent the foreclosure of his house after the value of the home depreciated and he couldn’t refinance because of tax liens.
The deficit in his disposable income stemmed from the fact that the house was sold after he filed for bankruptcy, meaning he could no longer claim the home as a debt, Isquierdo said.
As a result, Isquierdo and his attorney never provided the additional documents to verify his disposable income because they were willing to withdraw from the bankruptcy case, said his attorney Derek Burdsall.
“Since we’re not making payments and the house sold, we can’t use the house as a debt,” Isquierdo said. “We agreed.”
Isquierdo listed $8,700 as a monthly expense for the debt payment for the house, but the Trustee Office claims he hasn’t made payments in several months and has no intention of paying the debt.
He bought the house in 2011 for $1.1 million, which included a $5,000 down payment, with the purchase financed by the couple rather than a bank, according to the Pima County Recorder’s Office.
However, Isquierdo said he actually paid the $8,700 per month for a year and a half as part of the down payment, which was added to $50,000 he contends he and his wife paid when they first purchased the home.
The total equals more than $200,000 invested in the home, he said.
The superintendent and his wife wanted to refinance with a bank after three years, but he knew they wouldn’t be able to because of a couple of tax liens filed against Isquierdo by the IRS.
Also, the home’s value fell to $975,000 in April. The house was eventually sold for $965,000, he said.
When Isquierdo realized he wouldn’t be able to refinance, he asked to renegotiate a deal with the couple who sold him the house.
They declined, which led Isquierdo to stop making the payments after he received advice from his Realtor, he said.
That’s not the only dispute he has with the couple who sold him the house.
The couple filed a separate motion last month requiring the superintendent and his wife to show why they were not in contempt of court.
The motion stems from a court hearing that Isquierdo and his wife missed on Aug. 20, according to court documents.
The couple requested court involvement after claiming the Isquierdoes intentionally removed and destroyed some fixtures and appliances before they moved out, according to court documents.
The husband, who was out of town, declined to comment on Friday.
According to court documents, the couple said Isquierdo and his wife either destroyed or removed cabinets and countertops, a microwave, a dishwasher and other items.
Isquierdo dismissed the accusations, saying he and his wife remodeled the home after they moved in, which included installing new cabinets and other fixtures, he said.
“We took nothing when we bought the house. We remodeled it,” he said.