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Criminal judgments not dischargeable in Chapter 7 bankruptcy case

When a person files for Chapter 7 bankruptcy protection, the majority of his or her unsecured debt is discharged if approved by a bankruptcy court. Certain debt however is not dischargeable and that includes tax debt, child support and alimony payments or a criminal judgment for restitution as one former employee for the city of Detroit recently learned. The former chief of staff for Mayor Kwame Kilpatrick recently filed for Chapter 7 bankruptcy protection and is hoping to discharge more than $400,000 in debts.

The former staff member, Christine Beatty relocated to another state in an effort to stay out of the spotlight after the scandal that ended in her serving time in jail for lying in court about her affair with the mayor. She was ordered to pay restitution to the city of Detroit over the incident and reportedly still owes the city just over $83,000. Ms. Beatty's attorney said she is meeting her obligations to the city and that remains high on her list of priorities.

Ms. Beatty's attorney also stated that her income has been drastically reduced in the past year and circumstances have made it necessary for her to file for bankruptcy protection in Georgia where she currently resides. By filing for bankruptcy she will have more income in which to focus on meeting her obligations regarding restitution to the city. Once a person files for bankruptcy all collection efforts by creditors must cease until the bankruptcy petition is completed by the court.

The majority of her personal assets, which are listed as a vehicle not yet paid for, a $220,000 mortgage and miscellaneous household items will most likely be exempt from the process. If she has significant equity in the home she will most likely be required to sell it in order to pay down some of the creditors listed in her bankruptcy filing. If there is little to no equity in her home she may be allowed to keep making payments to her mortgage lender.

If she is under water on her mortgage it may be in her best interests to attempt to sell the home in a short sale or pursue a strategic foreclosure if at all possible. Bankruptcy offers a number of protections to consumers who find themselves in so much debt they are no longer able to keep up. A bankruptcy attorney can advise someone struggling with debt on the various options available to them to seek debt relief and start a new financial chapter in their life.

Source: WXYZ, "Christine Beatty sheds debt in bankruptcy, but still owes city of Detroit thousands," Julie Banovic, Feb. 5, 2013

Our Detroit law firm helps families and individuals learn about bankruptcy options and other debt relief strategies so they make a fresh financial start for a better future.

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