If a Family Member is Mentally Incapacitated Can They Still File for Bankruptcy?

If one of your relatives is struggling with dementia or other mentally incapacitating diseases, it’s certainly possible for them to file for bankruptcy, and in some cases necessary if their finances have been negatively affected by their illness. The first thing to consider would be to have someone be appointed guardian or conservator of your relative, so that the appointed individual could work with the advising bankruptcy attorney to draft the necessary petition for bankruptcy. In cases where a guardian or conservator signs in place of the debtor, additional paperwork verifying the appointed individual as guardian or conservator are necessary for bankruptcy proceedings. As well as appointing an individual as guardian and conservator, one additional step you may want to consider would be to request a waiver for the credit counseling course for whichever relative is filing for bankruptcy.

In order to better understand the unique circumstances surrounding filing for an incapacitated relative, it would be to your advantage to set up a consultation with a local bankruptcy attorney.

How Long does the Automatic Stay Last?

The automatic stay and its protections abide by certain rules which govern how long it can last. If you attempted to file for bankruptcy within the past year and that case was dismissed, then the automatic stay can only last for 30 days, but can be extended by the bankruptcy court if the case was filed in good faith. If you attempted to file for bankruptcy several times within the past year and those cases were dismissed, then the automatic stay will not go into effect unless you are able to demonstrate that your current attempt to file is in good faith. If you haven’t had any bankruptcy cases dismissed within the past year, the automatic stay ends at the earliest of the possible following events in your case: the date your case is closed, the date your case gets dismissed, the date you receive or are denied discharge, and the date on which a court order ending the stay becomes effective.

If you have any questions or concerns about whether or not another attempt to file would be in good faith, it is recommended you set up a consultation with a local bankruptcy attorney to discuss your financial situation.

COVID-19 and Bankruptcy:

In response to the COVID-19 crisis, several rules and regulations regarding consumer bankruptcy have been temporarily altered under the CARES act up through March 27, 2021. In the case of current bankruptcy cases, one such alteration allows for debtors who currently have a chapter 13 repayment plan to extend their plan to up to seven years rather than just five years. This allows the debtor to reduce their monthly payments and gain some breathing room in case of financial hardship due to the impact of COVID-19. Most notably for those who are concerned about filing for bankruptcy, any stimulus checks or related government payments in response to COVID-19 will not be considered as monthly income for those who wish to file under chapter 7 and such payments will not be considered as disposable income for those who wish to file under chapter 13. These changes will not impact the eligibility for debtors interested in filing either chapter 7 or chapter 13 bankruptcies.

To better understand if filing for bankruptcy is the right action for you, it is recommended to set up a consultation with a local bankruptcy attorney.