By Daniel Gill
A single mother of three was denied her bankruptcy discharge because she failed to disclose that she had $3,500 cash on hand when she filed her Chapter 7 case, an Illinois bankruptcy judge ruled Nov. 22.
Although the debtor intended to hide the money, Chief Judge Mary P. Gorman of the U.S. Bankruptcy Court for the Central District of Illinois hung some of the blame on the debtor’s attorney ( Richardson v. Swisher (In re Swisher) , 2017 BL 420597, Bankr. C.D. Ill., No. 17-07012, 11/22/17 ).
Stephanie Swisher filed Chapter 7 because her wages were being garnished by one of her creditors.
In Chapter 7, a debtor’s assets are liquidated by a trustee for the benefit of creditors. In most cases, the debtor gets a discharge, wiping out most of her debts.
In the disclosures she filed with her bankruptcy, Swisher said she expected to get tax refunds of about $10,000. But she had already received her tax refund and spent some of it.
At the meeting of creditors conducted by the trustee, the debtor admitted that she had cash on hand at the time she filed but didn’t disclose the money because it was “spoken for"—she intended to use the money for rent and moving expenses.
The trustee sued to deny the discharge on the grounds that Swisher lied under oath and purposefully hindered and delayed payments to her creditors by spending money that perhaps should have gone to the trustee.
The court agreed. The debtor knew what “cash” is and she purposefully didn’t disclose her cash on hand because she wanted to use the money for her own expenses, the court said. She therefore was found to have lied in her bankruptcy schedules.
And by failing to disclose the funds, she intended to hinder or delay creditors or the trustee, the court said.
Swisher insisted she didn’t have any fraudulent intent. The court noted that it was perhaps the debtor’s attorney’s fault that Swisher didn’t appreciate the seriousness of her actions with regard to the $3,500.
Gorman noted that Swisher’s attorney knew enough that he could readily have prevented Swisher from improperly handling her cash on hand. “Had her attorney pursued even the most basic of questions with her before filing, the results here most likely would have been different,” she said.
The Chapter 7 trustee, Jeffrey D. Richardson, was represented by Andrew S. Erickson, Decatur, Ill. Michael J. Logan, Springfield, Ill., represented Swisher.
To contact the reporter on this story: Daniel Gill in Washington at email@example.com
To contact the editor responsible for this story: Jay Horowitz at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)