Filing Bankruptcy for Someone with a Mental Disability

by Michael Sosna

A person with a mental disability is entitled to file bankruptcy and receive the protection of bankruptcy code like any other citizen. However, if the individual is not competent to file by himself or herself – in other words, he/she does not understand their debts and/or property sufficiently to discuss it with their attorney – that individual must have someone file on their behalf.

It is not uncommon for someone suffering a mental impairment or dementia to fall behind in their bills and suddenly find themselves facing foreclosure, threats of vehicle repossession, or other legal action. Family members are often unaware of the dire situation until the emergency need for assistance arises.

If someone, usually a family member or close friend, has already been appointed guardian of the person through State court action, the remedy is fairly simple. This is also true if there is already a valid power of attorney. In these instances, the state-appointed guardian or attorney-in-fact already has authority to act on behalf of the disabled debtor and can sign the bankruptcy petition and schedules for him/her.

Unfortunately, more often than not, the person suffering the mental impairment does not already have someone who can act on their behalf. In that situation, a bankruptcy can still be filed, but additional steps and information are required. In this instance, at the same time the bankruptcy petition and schedules are filed by the family member or close friend, the person filing must submit a motion asking the court to appoint a “next friend” or “guardian ad litem” for the debtor. In order for the appointment to be approved, the person filing for the debtor must provide certain information, including why he/she should be appointed, a statement of the debtor’s incompetency from a treating physician, and a copy of a power of attorney, if one exists.

Sometimes this information is not readily available, but yet there is an urgent need for the debtor to file bankruptcy immediately to prevent a foreclosure sale or repossession. Fortunately, the Court has adopted a procedure to provide an additional 30 days to gather the required documentation.

As you can see, this procedure is complicated, and it usually requires the assistance of an experienced bankruptcy attorney if it is to be successful. The attorneys at Sosna Law Offices, PLLC, have experience in handling all kinds of bankruptcy cases, including filing for disabled and mentally impaired debtors. If you have a family member or friend who needs the protection that bankruptcy provides, contact us to arrange a free consultation with an attorney to discuss the circumstances and determine how to best protect the rights and property of the disabled debtor.