06 Sep Can a Person in a Coma File Bankruptcy?
Several times a year, I get calls from potential clients who want to know how they can get a bankruptcy filed on behalf of a parent or other relative who is incapacitated because of dementia, or who is unconscious and/or in a coma.
Usually these situations involve a pending foreclosure, where the homeowner is not competent to file a bankruptcy case, but an adult child wants to use Chapter 13 to stop the foreclosure.
The bankruptcy law does allow a living, but incompetent person to file bankruptcy. Ideally, the relatives should first obtain an order of guardianship from the local probate or appropriate state court in the jurisdiction where the incompetent person lives. If an order of guardianship has been issued, it means that a state court judge has reviewed the affected personâ€™s medical records and has made a finding that the person does not have the capacity to make decisions.
Most guardianship orders specifically identify the powers assigned to the guardian. If the concerned relatives anticipate a bankruptcy filing, they should ask the state court judge to specifically include the authority to file a bankruptcy case. Bear in mind, however, that your stateâ€™s rules about filing for a guardianship may require various notices and a hearing and that the process could take several months.
Another option, albeit one that is less desirable would be for the concerned relatives to use the authority arising from a power of attorney to file a bankruptcy case on behalf of an incapacitated debtor. This option is less ideal because powers of attorney often do not specifically mention a power to file a bankruptcy case and because the bankruptcy judge has no way of knowing for certain that the power of attorney was issued when the debtor was still competent.
From my research on the topic it appears that different jurisdictions accept or reject powers of attorney so I would check with the United States trustee in your jurisdiction if you wish to proceed under a power of attorney.
I ran across an interesting case decision from a judge in the jurisdiction where I practice (the Northern District of Georgia) about a case filed under a defective power of attorney. In the Justine Benson case, the debtor, Ms. Benson, suffered from a medical condition that left her incompetent to file a Chapter 13 case. Some time earlier, she had executed two separate powers of attorney – one to an adult daughter and one to an adult son. The adult daughter filed a Chapter 13 case on behalf of her mother, and the Chapter 13 trustee objected on the grounds that the power of attorney used by the daughter did not specifically contemplate bankruptcy and that it was unclear whether the second power attorney issued to the son superseded the first one.
The judge in the case held a hearing on the matter and found that neither the daughter nor the son appeared to have a full understanding of their motherâ€™s financial situation or whether it was in Ms. Bensonâ€™s best interest to be in bankruptcy at all.
The judge allowed the case to go forward, but appointed a guardian at litem – a guardian appointed by a judge for a single matter – to further investigate Ms. Bensonâ€™s financial affairs and to act on her behalf. In this case, the judge assigned an experienced consumer bankruptcy lawyer to serve as the guardian ad litem.
My sense is that Ms. Bensonâ€™s adult children were fortunate in this case that the judge did not dismiss the Chapter 13. Perhaps because the adult children were all in agreement as to the need to save the home and the harm that could accrue to Ms. Benson with a dismissal persuaded the judge to keep the case active.
Again, the best course of action if you are tempted to act on behalf of someone who is not capable of making decisions would be to obtain your authority in state court first, and not depend on a bankruptcy judge to clean up a messy filing.
by Jonathan Ginsberg, Atlanta bankruptcy lawyer
Jonathan Ginsberg, Esq.
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