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 person’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 state’s rules about filing for a guardianship may require various notices and a hearing and that the process could take several months.
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Discharge of student loans in bankruptcy is an uphill battle according to a New York Times article. News papers these days abound with descriptions of truly desperate families saddled with massive student debt. The story of Ohio student loan debtor Doug Wallace, age 31, unemployed and legally blind is hardly unusual. In fact, it is so commonplace that bankruptcy lawyers hardly pay attention to such cases and their compelling facts.
While bankruptcy discharge of student loan debt is theoretically possible, and does occur in a few cases, it is a difficult proposition at best. A debtor seeking relief from student loan debt must convince the court their financial situation is not only hopeless; they must prove it will not likely change for the better in the future. Without dramatic facts, discharge of student loan debt is denied in most bankruptcy courts.