Bankruptcy ain’t so bad for Kansans of a certain class

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If a person who owns a million-dollar home files for personal bankruptcy, it seems only logical that he or she would be legally obliged to sell that home, find more modest accommodations, and use proceeds from the sale to repay creditors.

Not in Kansas.

The Sunflower State is one of seven in which the bankruptcy laws provide unlimited homestead exemptions. If you file for bankruptcy and have lived in Kansas for at least 40 months, you get to keep your house — no matter how expensive it is. Kansas: a great place to go belly up and keep your pool!

Matthew Kirk’s recent bankruptcy filing reveals just how much the state respects its citizens’ lifestyles. That is, it reveals how backward and abusable Kansas’ homestead exemption is.

Kirk, as The Pitch has reported, was one of the founders of ClickSpeed, a lead-generation company for online payday lenders. Kirk and his ClickSpeed co-founder, Herb Sih, sold loan applicants’ personal information to predatory lenders, many of whom have been prosecuted by various states and the federal government for illegal lending. (Kirk also co-owned a payday-loan call center called ClearVox, and he was among the original owners of Centrinex, also a payday-loan call center.)

The online-payday-lending industry thrived in the shadows here for much of the past decade. Millions and millions of dollars were made by bulking up microloans to the welfare class with 700 percent interest rates and hidden fees. And those millions didn’t flow exclusively to the lenders. Also raking in the dough were people such as Kirk and Sih, whose businesses made the lenders’ work very easy.

In 2013, however, the feds caught on and began pressuring banks to stop processing transactions to and from shady online lenders. This gutted the industry and left many local millionaires overleveraged. Two years later, their bills are overdue, and lawsuits against them are flying. So bankruptcy filings are beginning to land.

After Kirk closed ClickSpeed in 2013, he leased office space in Leawood’s ritzy Park Place development and started what he billed as an “Internet marketing” company: Oceanus Digital. According to Kirk’s bankruptcy report — filed July 15, 2015 — Oceanus has operated at a loss since its inception. Kirk, who owns 100 percent of the company, owes nearly $300,000 to VanTrust Real Estate, his Park Place landlord. (Answering an e-mail to confirm this part of Kirk’s filing, Jeff Smith of VanTrust tells The Pitch: “Obviously this [the $300,000] has to do with the lease and we do not make comments to others about a lease between one of our entity’s [sic] and a tenant.”)

ClearVox, of which Kirk holds a 60 percent stake, is also operating at a loss. It has no significant assets declared on the bankruptcy filing, which also shows that the company has moved to downtown Kansas City — presumably to the offices of Think Big Partners, as The Pitch reported in June — where it employs three people. Flus Medios, a Panamanian company of which Kirk owns half, has debts in Panama and has always operated at a loss. It ceased business operations in July. And four other companies that Kirk is involved with also have no value, according to the filing.

In addition to the Park Place debt, Kirk lists another $200,000 in debt to EHD Holdings, a former ClickSpeed landlord that has filed a lawsuit against Kirk in Johnson County. Other creditors named in the filing include Chase Bank and American Express (credit cards); Stinson Leonard Street LLP (legal bills); and member fees at a yacht club in Fort Myers, Florida.

In total, Kirk’s bankruptcy filing lists liabilities of $637,607.76.

This past March, Kirk sold his $1.5 million Overland Park home and purchased a new one worth $725,000. “The purchase price was a trade for his current residence plus approximately $765,000,” according to the filing. He also sold his Fort Myers condo for $315,000 and sold off $85,000 in stock in Union Broadcasting (owner of Sports Radio Station WHB 810).

Still, as denoted in the filing, Kirk’s exempt assets — the $725,000 house, a 2007 Lexus worth $16,500, various household items and a 401(k) — amount to $839,241.31. That’s more than $200,000 over his stated debt.

What kinds of laws allow a person to rack up more than $600,000 in debt, not pay it back, and continue to live in a house worth three-quarters of a million dollars? Not the kinds in effect for, say, student-loan borrowers, for whom bankruptcy is not an option, and who face liens on their homes if they default on their payments.

Kirk’s bankruptcy attorney declined to comment. Kirk could not be reached for comment. According to the bankruptcy filing, he has made $1,960 so far this year as an Uber driver. He has told the bankruptcy court that he hopes to eventually earn $6,000 a month working for the ride-share company.