Explained: Will Trump declare bankruptcy as his legal debt soars over $500 million?

New York, USA

When ex-US President Donald Trump woke up on Saturday (Feb 17), his total legal debt obligations had soared to over half a billion dollars. A day before, a New York Judge ruled that he must cough up more than $350 million plus pre-judgment interest for intentional financial fraud stretching more than a decade.

According to New York Attorney General Letitia James, who brought the case against Trump, the GOP leader may be forced to pay $463.9 million in total. “That represents $363.9 million in disgorgement, plus $100 million in interest, which will continue to increase every single day until it is paid,” she said in a press conference Friday night.

This penalty came weeks after he was ordered to pay $83.3 million to writer E. Jean Carroll for damaging her reputation after she accused him of sexual assault. A separate jury had awarded Carroll $5 million from Trump for sexual abuse and defamation last year.

Trump maintains he is innocent and has denied any wrongdoing. So, what comes next, and will he have to pay up the full amount?

How much money does Trump owe?

In the above two cases, Trump owes above $540 million in total, including interest. But that’s not all. He owes another $110,000 for refusing to comply with a subpoena in the civil fraud case and $15,000 for repeatedly attacking the judge's law clerk in violation of a gag order.

Additionally, he also owes $400,000 in legal fees to the New York Times after an unsuccessful suing attempt.

Can Trump seek relief in higher courts?

Yes, certainly! It’s common in the US to get such high-amount judgments reduced on appeals.

He is expected to appeal the $350 million civil fraud case with an intermediate-level court first. If Trump remains unsatisfied, he could try to get the case taken up by New York's top appellate court, though legal experts say that is unlikely.

Trump’s net worth and his ability to pay

Trump claims he is worth $10 billion. Although, according to independent estimates, including one by the New York attorney general, the figure is close to $2 billion.

However, it is not clear whether Trump has enough cash in hand to pay off the legal obligations. A 2021 financial statement revealed the GOP leader had just under $300 million in "cash and cash equivalents."

Since then, he has sold a number of assets including his New York golf course and his Washington DC hotel.

Will Trump declare bankruptcy?

As per Friday’s ruling, Trump would have to pay the amount even if the Trump Organization declares bankruptcy. But the equation changes if Trump himself does so.

In that scenario, which experts and observers deem drastic and extremely unlikely, the enforcement of the judgments against him will stop.

Also read: Trump should be disqualified from 2024 presidential race for ‘insurrection’ on Jan 6, say lawyers

Trump in the past has bragged about the fact that he has never declared bankruptcy.

Can Trump use money from Republican fund?

Some are raising doubts whether Trump will use the campaign funds to pay his legal debt. Under federal election laws, that is illegal. However, he might still be able to use political action committees or PAC’s money for his expenses.

Watch: US: Trump's legal advisor Michael Cohen accidentally cited fake court cases generated by AI

In the last two years, Trump’s fundraising organisation has spent nearly $80 million on his legal fees. "The likelihood of the Federal Election Commission in its current configuration pursuing these violations is not terribly great," said Daniel Weiner, the director of the Brennan Center's Elections and Government Program.

Trump has already attracted criticism for eying to siphon campaign cash from the Republican National Committee (RNC).

Nikki Haley, Trump’s sole remaining rival for the Republican presidential nomination, said she won’t allow the RNC to be his personal piggy bank.

Also read: Trump’s tricky dual-purpose campaign – win elections and stay out of prison

“I don’t want the RNC to become his piggy bank for his personal court cases,” she told CNN’s The Source.

“We’ve already seen him spend $50 million worth of campaign contributions … Now we see him trying to get control of the RNC so that he can continue not to have to pay his own legal fees,” she added.

Meanwhile, Trump has installed his loyalists, including his daughter-in-law, Lara Trump, in leadership roles at the RNC.

What if Trump fails to repay?

Trump risks getting his assets seized and wages garnished if he fails to pay the legal judgments.

According to Weiner, "the president is not a king and the president's assets are not sacrosanct just because he happened to be the president."

According to University of Michigan law professor Will Thomas, the courts enjoy great powers, especially when someone like Trump is involved.

"The court might say we're going to freeze your bank account. Or even worse, they could say, 'We're seizing Trump Tower and we're putting it up for sale,'" he said.

(With inputs from agencies)