Single Mom Denied Bankruptcy Discharge for Hiding $3,500

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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

To contact the editor responsible for this story: Jay Horowitz at

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