Medical Bankruptcy

A young woman approached me wondering if “medical bankruptcy” was actually “a thing”. She had a lot of medical debt and a friend encouraged her to contact this place that promised to get rid of medical debt for $71.00. I had to disappoint her because one cannot just file on certain debts; all your debts must come in. Also, a bankruptcy for $71.00 is a scam. They are just selling forms that can be obtained online for free.

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Things to be aware of if facing bankruptcy 6

As a follow-up to my last warning post  where I talked about preferential payments including to insiders (friends and family members). I ended that post saying that after your bankruptcy is completed (discharge order, case closed) then you can repay anyone you like. This post is a caveat to that statement. Do not promise a creditor, whether friend or foe, that you will repay them afterwards. Simply let it be a nice surprise. T

You see, if you end up not paying them in full after the bankruptcy is over, your promise to pay could give them a legal argument to try to overcome the discharge of the debt. Basically, they would say that they relied upon your promise to their detriment and thus you defrauded them.  This could lead to that particular debt suddenly becoming non-discharged. This is an unlikely eventuality, but attorneys deal with such things all the time. So, it is best just to stay silent and pay if you can.

Fraud or dissipation of assets and divorce

The Kentucky Supreme Court just issued its decision in Gripshover v. Gripshover, (2005-SC-000729-DG & 2006-SC-000258-DG)(Feb. 21, 2008)(to be published). There is a pretty extensive factual background in the published opinion, but unless you either enjoyed reading cases in law school or aspire to enjoy reading cases in law school, I will focus on some key rulings in the case.

Unfortunately, there are spouses who, when they begin contemplating a divorce, engage in fraudulent maneuvering to hide away assets. This can take the form of transferring property belonging to the marital estate so as to exclude it as marital property in the impending divorce. When this dissipation of marital assets occurs, the trial court can recharacterize assets or pull them back into the marital estate in determing a “just” distribution of property.

In Gripshover, the wife alleged that real property transferred into a limited partnership and other property transferred into a trust defrauded her of her marital interest. The Supreme Court disagreed. For a finding of fraud or dissipation, there has to be evidence that the transfers were made in contemplation of divorce and with the intent to impair the other spouses interest. In this case, no such evidence was produced.

While I do not advocate suspicion within a marriage, it is important for both spouses to be understand the ramifications of significant transfers of property. So, I do advocate both spouses being engaged in the finances of the family.