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Abdicating Financial Affairs To A Spouse Can Spell Disaster In Bankruptcy

Posted By admin || 28-Jan-2009

In the bankruptcy case of Washington Mutual Bank v. Heard, a debtor's Chapter 7 bankruptcy discharge was denied because she failed to disclose asset transfers that occurred before filing for bankruptcy. In the bankruptcy case the debtor defended her failure to disclose asset transfers by stating that she was a housewife who handed over all financial affairs to her husband. Allegedly she signed asset transfers before filing for bankruptcy without reading or understanding what she was doing. The bankruptcy court ruled that since she signed the asset transfers it is presumed that she read them before doing so.

It is quite possible that this debtor really did abdicate all over financial affairs to her husband; but that is never a defense in bankruptcy court. This debtor was lucky because the bankruptcy court only found that she was guilty of "reckless indifference to the truth" and not fraud. Whether you're doing well financially or facing financial crisis such as foreclosure and garnishments never blindly hand over your financial affairs to another person even if he/she is your spouse.

Categories: Chapter 7 Bankruptcy
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