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man may discharge lawsuit debt with Chapter 7 bankruptcy

Sometimes when family and finances mix, it can create a volatile concoction. This can occur in Texas or elsewhere when a family member is trusted with managing assets. One 54-year-old man recently found this out when he lost a lawsuit against his mother and sister which contributed to forcing him into Chapter 7 bankruptcy. The judgment against the man was for $215,000 for improperly converting $185,182.54 from his mother's checking account during the course of approximately four years.

The man reported $7,131 in assets and $825,905 in liabilities. Part of the debt listed was unpaid income tax from 2008 and 2009 which totaled $17,000. The bankruptcy petition showed he is earning $2,166.67 per month, while he had expenditures of $3,936 every month. Among the debts included approximately $65,000 in credit card debt and $43,924.94 borrowed from TD Bank. He also owed a credit card management company $36,547 and $50,000 for advertising in Yellow Pages.

The man reported assets of $7,131, which included a 2002 Ford Explorer that he valued at $3,311. The vehicle has been driven for 157,000 miles. Assets also included $800 worth of appliances and household furnishings. Additionally, the bankruptcy petition showed he is owed approximately $2,500 for his 2012 tax refund.

Filing a Chapter 7 bankruptcy will allow the man to discharge the bulk of his debt, since this type of bankruptcy is designed to relieve petitioners of most unsecured debt. This could possibly include the judgment which was awarded to the man's mother and sister as well as his credit card debt. On the other hand, the money he owes in taxes cannot be discharged in a Chapter 7. Also, this type of bankruptcy in Texas or any other state requires the liquidation of most assets in order to repay remaining creditors.

Source: Worcester Telegram & Gazette, "Northboro selectman files for Chap. 7 bankruptcy," Elaine Thompson, Dec. 2, 2012

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