A recent article in the Seattle Times laid out an interesting moral dilemma.
Georgia State School Superintendent Kathy Cox went on the show "Are You Smarter than a Fifth Grader?", won $1 million and pledged the winnings to three state-run schools for the deaf. Months later, Cox and her husband filed for Chapter 7 bankruptcy protection and a bankruptcy trustee wants the game show winnings to pay creditors.
At first glance, many people would think what a generous and thoughtful gesture. Don't be swayed by the emotion when dealing with the Bankruptcy Trustee however. When you file Bankruptcy, the Trustee's job is to protect the creditors and to assure that a debtor is being truthful.
As a Pasadena Bankruptcy Attorney, I would presume that the Trustee would be unmoved by the Donation of Lottery Funds to the needy. The creditors have their rights regardless of the humanitarian nature of a debtor.
The message to those of you who are thinking of being generous to others prior to filing Bankruptcy - DON'T DO IT. You will almost assuredly be held to owing your creditors for any of that money given away, especially within the last 90 days prior to filing. This is just one of the many pitfalls debtors can fall into. If you are thinking of Bankruptcy, give us a call and we will protect you from getting into trouble, even though your intentions may be honorable.
