Saturday, May 25, 2013

Fraud and False Pretense: Lenny Dykstra Sentenced in Bankruptcy Case

In December of last year, Lenny Dykstra was sentenced for bankruptcy fraud and related crimes.  Specifically, he pleaded guilty to bankruptcy fraud, concealment of assets and money laundering.  He received a 6 1/2 month sentence.  The crux of the case was that Dykstra was busted from taking and selling things from his mansion while he was in bankruptcy.

The biggest thing I tell my Bucks County bankruptcy clients is that they must realize that everything they own comes under the purview of the bankruptcy court.  Specifically, you can't conceal assets, sell assets, or hide assets.  There are creditors who are owed.  A Trustee must determine if you have assets that can be liquidated (after your exemptions) and be paid to your creditors.  If you take those assets and liquidate them (or hide them) on your own, you are committing fraud.  In Dykstra's case, it was pretty egregious.  He tried to sell some memorabilia and furnishing from his home to, presumably, pay for his lifestyle.  You can't do that.

Thus, what I tell my Bucks County Chapter 13 clients and my Bucks County Chapter 7 clients is "when in doubt, wait and check."  You cannot take matters into your own hands and you cannot seek to liquidate assets while in bankruptcy.

Sunday, May 19, 2013

Cancer and Bankruptcy

I tell a lot of my Bucks County bankruptcy clients that people come to see me for one of six reasons:

  1. Death of a spouse
  2. Divorce
  3. Sickness
  4. Unemployment
  5. The economy
  6. Some other life tragedy

The CBS article, "Cancer patients more than twice as likely to go bankrupt, study shows" is a telling sign about our health care system, the reason bankruptcy exists, and support for #3 on my list.

I have represented many people, as a Quakertown bankruptcy lawyer, who are in similar positions.  Rounds of tests, months of treatments, huge co-pays, and loss of wages due to sickness all create an unfortunate, perfect financial storm.  It is a crying shame to see people in this situation.

Frequently, the most difficult issue relating to a medical debt bankruptcy is the timing of the bankruptcy.  If a person has a chronic condition, the potential for post-petition debts may prevent a true "fresh start".  If a person is unsure of when their condition/sickness/illness may end, it may make sense to wait until the health situation is resolved.

In the end, if there ever were a reason for bankruptcy, medical debt seems to be it.  When someone gets sick and incurs debt simply trying to live, they are entitled to relief to move on.