Filing Bankruptcy for Someone Who’s a Minor or Not Legally Competent

19 Jan Filing Bankruptcy for Someone Who’s a Minor or Not Legally Competent

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I will occasionally get a phone call from a family member of someone who is facing a lawsuit, repossession or foreclosure…that is scheduled for next week. Normally, I’d suggest that the potential client facing the lawsuit, repossession or foreclosure come in right away so the we can file an emergency bankruptcy petition to immediately stop the collection action thanks to the Automatic Stay. The problem? The potential client is not legally competent. This could mean that they’re a minor (I have filed a number of Chapter 13 bankruptcies for minors who are the sole owners of real estate, usually as the result of the death of a parent), that they suffer from Alzheimers, or are currently hospitalized and can’t deal with legal matters right now.

Are these people out of luck? Must the lawsuit, repossession or foreclosure proceed without any protection from the Bankruptcy Court?

No.

In fact, Rule 1004.1 of the Federal Rules of Bankruptcy Procedure specifically allows for a bankruptcy filing on behalf of someone who is legally incompetent through a “next friend.” The “next friend” could be a family member or a trusted friend who signs the papers, attends the Meeting of Creditors, and acts on behalf of the person who can’t. The Court can also appoint a “Guardian Ad Litem” (“Ad Litem” is Latin for “for the lawsuit”), who is someone appointed by the court to represent the interests of minors or incompetent persons in legal actions. The Guardian Ad Litem’s only job is to represent the person’s best interests and advise the court.

You don’t need a Specific Power of Attorney authorizing the bankruptcy filing to file as a Next Friend. You don’t even need a general Power of Attorney.

Filing a bankruptcy through a Next Friend can be complicated. Make sure that you have an experienced attorney to assist you.

 

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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