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Bankruptcy trustee claims debtor abused the process

Michigan residents who file for bankruptcy can expect to have their finances scrutinized. In a Virginia case of a man who filed for Chapter 7 protection and had two homes, the bankruptcy court found that he had not abused the system despite a challenge from the trustee overseeing his debt discharge.

The man’s family had been financially stretched after he incurred $60,000 in student loans and his wife purchased another home to accommodate her mother who had dementia. The trustee contended that he could sell one property and then pay his creditors. The court, however, sided with the man by ruling that his expenses for two properties did not represent an abuse of the law.

He also faced criticism from the trustee, who held that he should have filed for Chapter 13 because he could have paid a portion of his debts if payments were restructured through that alternative form of bankruptcy. Again the court supported the debtor by pointing out that his choice to file for Chapter 7 discharge of his debts was not a choice that abused the system.

A person who chooses to file for bankruptcy could benefit from the support of an attorney. Before approaching a court, an attorney could evaluate the person’s finances and anticipate how the law could guide a bankruptcy. A legal analysis could aid the person in understanding the variables that the trustee will examine. If challenges arise, an attorney could provide documentation and explanations to support the debtor’s position. Communications with creditors could also be taken over by an attorney after filing court papers, which could relieve the debtor of harassing telephone calls, letters and texts.