crim debt

 

Debts related to alleged criminal behavior generally can‘t be written off in bankruptcy. But bankruptcy can often still help.

Bankruptcy does not write off criminal fines or restitution, and does not stop criminal court proceedings. But sometimes you can find yourself dealing with fallout from criminal allegations against you BEYOND the criminal court, and that is where bankruptcy may be able to give you a critical fresh start.

Once the criminal case is resolved—even if in your favor—you could face a lawsuit by the alleged victim in civil court. The following example illustrates some of the ways bankruptcy can help in this situation.

An Example

Let’s say you’ve been charged with domestic assault and battery, resulting from a fight between you and your now ex-spouse shortly before your divorce. The situation is complicated by a mysterious fire two days later which destroyed your ex-spouse’s expensive vehicle and damaged the garage and part of the house. You know nothing about the fire and believe you are being framed by the ex-spouse. With critical help from your criminal defense attorney, and thanks to conflicting stories by the witnesses, all the criminal charges are eventually dropped.

But now your enraged ex-spouse is suing you for civil assault and battery from the fight, for severe emotional distress from the fire, and for $140,000 property damage to the vehicle and real estate. You are afraid that with an unsympathetic judge and jury, you could end up owing a fortune. You know there is a lower standard of proof in civil court than criminal court—“a preponderance of the evidence” instead of beyond a reasonable doubt—basically, whichever side has a more convincing story wins. You’re advised that you could lose.

You are thinking about filing bankruptcy because of other financial pressures. You wonder if it can help with these ex-spouse problems as well.

Bankruptcy Can Help in Specific Ways

1. Automatic stay

If you filed a bankruptcy before this civil case went to trial, the bankruptcy case would at least stop that litigation temporarily. Your ex-spouse’s attorney would have to get permission from the bankruptcy judge to continue with the civil lawsuit, and would likely have to hire a bankruptcy attorney to do so. That pause in the litigation, and a review of the litigation by another attorney, could be enough to have the other side re-think whether the benefits of proceeding are worth all the costs.

2. Proof of your actual finances

Your ex-spouse may well press on with the lawsuit against you if he or she thinks you have hidden assets or some other way to pay damages. But if you really don’t, your bankruptcy documents may make that case for you quite persuasively. The documents you are required to file under oath in your bankruptcy case will paint a rather thorough picture of your finances. They will presumably show rather convincingly that you have little worth chasing. Even if your ex-spouse is too angry to care, this practicality should catch the attention of his or her attorney. If for nothing other than the attorney’s self-interest, he or she will be concerned about investing too much in chasing you.

3. More difficult elements to prove

When you file your bankruptcy, you make it harder for your ex-spouse to win against you. He or she doesn’t just need to show that according to the law, you’ve caused damage to person and property—in other words win the state court lawsuit and get a judgment for the amount of money you owe him or her. AFTER THAT, then the ex-spouse must also show that this debt you owe fits within some rather limited categories of debts that are not discharged (written off) in bankruptcy.

For example, if you file a Chapter 7 case, your actions must have been determined to have been “willful and malicious” or else the ex-spouse’s claim against you would be discharged (legally written off forever). That generally means that your actions must be found to have been intentional, not just reckless, and been done without any just cause or excuse.

Conclusion

Once your ex-spouse and his or her attorney are forced to pause in the litigation, see the truth of your finances, and realize that your bankruptcy has created an additional major hurdle to getting anything out of you, they may well decide that their lawsuit against you is not worthwhile. And even if they keep pressing with it, you would have at least made it harder for them to prevail against you.

 

If you have concerns about this aspect impacting your pursuit of a bankruptcy, don’t hesitate to call for a FREE CONSULTATION.  We are here to help you determine the availability of bankruptcy as an option for you.

Here to serve,

 

Catherine King

KING LAW OFFICES

Redding, CA