Can A Person Incarcerated File Bankruptcy?
A person who is incarcerated can, in fact, file for bankruptcy. However, there are some extra steps that will have to be taken.
Since a person who is in prison obviously cannot leave, they must file a power of attorney so that a friend or family member can meet with the bankruptcy lawyer who is intending to file the bankruptcy. This would have to be done as soon as the incarcerated person decides that a lawyer needs to become involved. This is because the lawyer will need power of attorney information from the very beginning of the meetings in order to discuss anything with the friend or family member.
One of the things that is required when filing bankruptcy is the debtor has to take the credit counseling course and financial management course. Since a person who is incarcerated most likely will not have regular access to the internet, a motion must be filed by the attorney to waive the requirement to take these courses.
There is also one other motion the attorney will most likely have to file. Since the incarcerated person will not be able to attend the 341 Creditor’s Meeting, a motion will have to be filed stating the reason that the debtor cannot attend.
All of this information is based on the debtor being in the Western District and Middle Districts of North Carolina. Most likely some of these steps will be the same in different districts, but be sure to check with your attorney because there very well could be different requirements.
Are Debts Ordered in a Separation Agreement Dischargeable in Bankruptcy?
When the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) became effective October 17, 2005, debts ordered in a separation agreement, divorce decree or other order of the Court became non-dischargeable. This can be reviewed in detail at 11 U.S.C § 523(a)(5) and 523(a)(15). Domestic support obligations, inclusive of alimony, child support and other debts ordered to be paid by the court, cannot be eliminated in bankruptcy regardless of whether it is ordered before, during or after the date of the bankruptcy filing. In addition, the debts cannot be eliminated regardless who is owed the debt – spouse, ex-spouse, child, guardian of the child or a governmental unit. 1 U.S.C § 101(14A).
If you are in the process of a separation and divorce, it is important to understand what you are obligating yourself to pay prior to signing the paperwork. A couple of common examples are provided below:
Example One: You and your soon to be ex-spouse have a credit card with a balance of $10,000. You and your spouse incurred this debt when trying to start a business. During the negotiations of the separation agreement, you decide to take responsibility for the credit card. You feel this is the right thing to do since you pushed the development of the business. In this case, your spouse is “held harmless” for this credit card balance. As a result, you must pay this debt.
Example Two: You and your ex-spouse own a home. Your ex-spouse and two children live in the home and want to continue to live in the property. Both of your names are on the first mortgage loan but only your name is on the second mortgage. You have agreed in the divorce decree to pay the mortgages on the home until your youngest child graduates from high school. Once again, since you took responsibility for the debts under the divorce decree, you cannot file bankruptcy to eliminate the debts on the two loans. You are now solely responsible for the debt on the house.
There are obviously many examples, but these are two of the more common scenarios we see at Duncan Law. Again, it is extremely important to assess your ability to pay prior to accepting responsibility for the debt¸ since it will not be dischargeable in bankruptcy.
What Are the Most Common Reasons A Bankruptcy Case is Dismissed?
There are numerous reasons a bankruptcy case may be dismissed. A dismissal of a bankruptcy case is when the federal judge issues an order terminating a case. Usually the debts are not eliminated if the case is dismissed. In contrast, a “discharge” means the debts have been eliminated. Listed below are the most common reasons a bankruptcy case could be dismissed:
1) The debtor gives a false oath or information on the bankruptcy petition with the intent to defraud creditors,
2) The debtor has filed a previous bankruptcy within a certain time period and is not eligible to file another bankruptcy and receive a discharge of the debts,
3) The debtor has not filed all the required documents with the bankruptcy court,
4) The debtor did not take and complete the required court approved credit counseling and/or financial management courses as required by federal law,
5) The debtor fails to provide certain documentation to the bankruptcy Trustee upon request of such documents by the Trustee,
6) The bankruptcy Trustee has objected to the discharge of the debtor’s debts based upon his investigation of the debtor,
7) In a Chapter 13 repayment plan, the debtor fails to make the required Chapter 13 plan payments to the Chapter 13 Trustee,
8) The debtor has non-exempt property and fails to turn such property over to the Trustee upon request,
9) The debtor fails to obey a lawful order of the court, and
10) The bankruptcy judge believes there is good cause to deny the debtor a discharge and dismisses the bankruptcy case.
In conclusion, the above list is not exhaustive, but does highlight some of the most common reasons a bankruptcy case could be dismissed.
Can I Collect Workers’ Compensation Benefits If My Employer Files For Bankruptcy?
Most employers’ employees are covered by workers’ compensation insurance. This workers’ compensation insurance is provided by a third party insurance company, not the employer themselves. Insurance companies are required by the state to keep a reserve of money on hand to cover the cost to pay out benefits to the injured worker. Therefore, if your employer files bankruptcy and they had workers’ compensation insurance at the time you were injured, the insurance company will be required to pay you your benefits.
However, there are a few exceptions to this rule, especially if your employer is a large company that is “self insured”. In the event your employer is self insured, they must usually have a bond through an insurance company that will “guarantee” injured workers receive their benefits in the event the employer files bankruptcy or cannot provide benefits to the injured worker.
Sadly, if your employer does not have workers’ compensation insurance and they file bankruptcy, it may be difficult to collect money from them if you were injured on the job because they are “broke” and you “can’t get water from a dry well.”
