This Should be Interesting – Casey Anthony Files for Chapter 7 Relief

Bankruptcy lawyers around the nation now get to make their comments in the apparently never ending Casey Anthony saga! Ms. Anthony filed for relief under Chapter 7 with around $800,000 in various kinds of unsecured debt. OK…she can do that, but the more interesting question is what the unemployed young woman will still be saddled with when she emerges from the case.

Most credit cards, medical debts, legal fee debts and other unsecured debts will be discharged. What she may be left with, however, is liability for (1) tax debts, (2) student loans, (3) debts incurred by fraud or misrepresentation, (4) debts incurred by reason of “willful and malicious injury by the debtor to another entity or to the property of another entity”, (5) fines, penalties and forfeitures owed to and for the benefit of governmental entities, and certain other debts enumerated in 11 U.S.C. §523 (appropriately entitled “Exceptions to Discharge”). Some of these are more likely than others.

Ms. Anthony is the subject of several civil lawsuits, each of which is presently stayed by reason of the automatic stay that any bankruptcy will afford the debtor. Her creditors may, however, seek to vacate the stay and to declare her debts to them non-dischargeable by the commencement of an adversary proceeding, which is the technical term for a bankruptcy lawsuit, to declare particular debts non-dischargeable under Section 523. Who might file these suits??? The IRS will not have to. Neither will the state courts to whom Ms. Anthony might owe fines and penalties. Texas Equusearch, who spent a great deal of time and effort on Ms. Anthony’s behalf to find her missing daughter, might file such a case. So too might Zenaida Gonzalez, who is currently suing Ms. Anthony over the accusations of kidnapping Caley. Finally, Ray Kronk, who found the body and was then accused of the murder might seek to prevent the discharge of his claims.

Each of the above potential creditors could seek to remove the protections of the bankruptcy code from Ms. Anthony and thereafter seek to recover from her. Moreover, the Trustee in the case could well move to dismiss her case under the “good faith filing” and “totality of the circumstances” test of 11 U.S.C. §707(b)(3). A debtor must file the case in good faith and some creditors may argue that the debtor in this case did not do so because of her history of dealings with these creditors and the manner in which the debts came about. I am not saying that the case is a bad faith filing, and I am sure her attorney reviewed the case carefully, but these are some of the issues she may face. I look forward to seeing what gets filed in this case – who knows, maybe it will go smoothly.