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The weaknesses of the impossibility defense

Residents of Ohio may be interested in a recent article describing an interesting bankruptcy case. The case described the efforts a Georgia man, who was formerly a D.C. police officer, to escape having to pay the amount owed to his trustee after filing a Chapter 7 bankruptcy. The man attempted an impossibility defense. This means that he attempted to prove to the court that he was unable to comply with the order to collect payment, despite his best efforts.

In the beginning, the man listed an arbitration claim that he was expected to get from the police department. He was warned that a portion of that money would need to be presented to the trustee because it was counted as part of his assets for liquidation. In a Chapter 7 bankruptcy, the trustee is responsible for liquidating any necessary assets that are not exempt in order to pay off debts.

The man, however, failed to present this money to his trustee. By the time the trustee issued an order to collect the money, the man said most of it was gone because he had spent it, but he admitted that he still had a portion of the settlement. The man then failed to turn over that portion, and after continued delays in turning over a car that he had purchased, the man was forced into. He claimed a gambling addiction, but could not account a large amount of money that should have been turned over to the trustee. Ultimately, the man was held in contempt, fined and threatened with incarceration. Reports suggest that he is currently trying to appeal the contempt ruling.

Bankruptcy is a complicated process that involves strict adherence to certain terms, and failure to comply might result in fraud charges and incarceration. An attorney who is familiar with the process could help a client maintain compliance with the terms of a bankruptcy, allowing that person to enjoy a fresh financial start.

Source: Forbes, "The 'I Lost It At The Casino' Defense Fails Again In Tate", Jay Adkisson, May 26, 2014

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