Chapter 7 or 13 Bankruptcy for Those Who Can’t File for Themselves
A Chapter 7 or Chapter 13 bankruptcy must be filed by an individual debtor (leaving aside business Chapter 7 bankruptcies). What can be done when an individual debtor is suffering from collections harassment but is not physically or mentally capable of undertaking a complicated bankruptcy process themselves?
The answer is that the bankruptcy can be filed by a caretaker or loved one as a “next friend” with a power of attorney in order to attain the benefits of the bankruptcy discharge of debt for the disabled or incapacitated debtor.
What Sort of Power of Attorney and What Else Is Required for the Bankruptcy Filing?
Not just any power of attorney will do. Nor will a power of attorney be sufficient in and of itself to demonstrate to the US Trustee and the Bankruptcy Court that the holder of the power of attorney possess sufficient knowledge of the debtor’s assets and liabilities (debts) to adequately represent the debtor at the required 341 Meeting of Creditors hearing.
The power of attorney used must be one that specifically provides its holder the power to sign the bankruptcy petition, schedules, and other related documents; to represent the debtor at the 341 Meeting of Creditors; to sign affidavits and other documents necessary for the filing of motions or other related items.
The holder of the power of attorney must be able to attest to possessing sufficient personal knowledge of the debtor’s financial affairs in order to represent the debtor and to answer all questions posed by creditors, the Chapter 7 or Chapter 13 bankruptcy Trustee, or the US Trustee at the 341 Meeting or other hearings required within the bankruptcy process.
A generalized power of attorney prepared by a non-bankruptcy elder law or family attorney will generally not be sufficient unless that attorney is also a bankruptcy practitioner.
The use of the power of attorney and the appearance of the next friend or personal representative of the actual debtor must be approved by the Bankruptcy Court prior to the 341 Meeting of Creditors.
How Is the Power of Attorney and the Appearance of the Personal Representative Approved?
In coordination with the experienced bankruptcy attorney retained to represent the debtor in the proceeding, the power of attorney must be prepared, signed, and notarized in accordance with the laws of the state in which the bankruptcy is to be filed.
Along with the filing of the bankruptcy petition, your bankruptcy lawyer will need to file one or more “first day” motions seeking to accomplish a couple of important things: to allow the appearance of the next friend/personal representative and to allow the disabled or incapacitated debtor, if necessary, to be exempted from the financial education requirements of the US Bankruptcy Code, which require all other filing debtors to complete two separate credit counseling courses along with the filing of a bankruptcy petition.
The motion(s) will need to adequately evidence the debtor’s condition and the qualifications of the personal representative to appear and attest to the debtor’s financial circumstances. Typically, along with the power of attorney itself, a letter from the debtor’s physician will also need to be attached in exhibit to the motion.
Can I File Bankruptcy through a Power of Attorney? The Bottom Line
The bottom line is that such a bankruptcy, while very much within the realm of possibility, is not something that should be attempted without an experienced bankruptcy attorney. The ability to confidently navigate the process of having the disabled or incapacitated debtor’s personal representative approved is a must, or the bankruptcy case will be over before it has begun.
If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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