Los Angeles Bankruptcy Lawyers Blog

Part I of this series presented the case of Dam and Trinh Huynh, an uneducated, non-English-speaking, Vietnamese immigrant couple with a casino gambling addiction. They had amassed a mountain of credit card debt before seeking relief under chapter 7 of the Bankruptcy Code. You were asked your opinion of their case. Part II presented the points of law that the court used to make its decision and asked if the couple stood any chance of relief, known as a "discharge", under the Code.

It turns out that there was, or might have been had Dam known a few simple rules of bankruptcy at least as well as he knew the rules of blackjack. The court's bias is with the debtor. As one court put it, "Denying a discharge is a drastic remedy." In this case, the court bent over backwards trying to find a way to grant the petitioners the discharge they sought.

Concerning Point a., transferring assets, the court gave the Huynhs a pass on their untimely transfers, finding no intent to defraud. When they maxed out their available cash advances, they bought gold and jewelry at retail and sold it for a fraction of its cost to fund their gambling habit. No matter, said the court, they were just getting money "to strike it big...in order to pay off their overwhelming debt", not to defraud anyone.
As to Point b., destroying records, the court also overlooked the absence of any credit card statement or other record of the Huynhs' finances. In light of their lack of education, sophistication, and business experience, the court found that their failure to maintain adequate records was justified.

Point c., concerning false accounts and withholding records, is a curious one, given a petitioner's freedom to amend his or her petition in response to a trustee's request for additional information. Here, the Huynhs were excused due to their language barrier and the fact that "the omissions...appear to be sloppy accounting and not an attempt to obfuscate the truth."

Now you would think that the worst was over...Dam and Trinh had survived the toughest hurdles, and the last point ought to be a cinch, given that the Court found the destruction of records was justified. Alas, despite the fact that the absence of records was justified, all the Court had to go by was Dam's word that he had lost all that money gambling - he had no corroborating proof. The Court found the Huynhs' inability to satisfactorily explain their loss of assets to be fatal and denied them a discharge on that basis. The message, however, is clear: regardless of your level of education, the presence of a language barrier, or what have you, keep records of your finances. The decision to do so or not can make a huge difference should you ever need protection under our nation's Bankruptcy laws.

Also note that the Court does not engage in moral judgment - someone who is crushed by debt due to medical bills or the fallout of a bad economy is no more or less "worthy" of bankruptcy relief than people like the Huynhs who placed themselves at risk. The Court is more interested in following procedure, preventing fraud, and meeting & proving qualifying rules than it is with assessing the underlying reasons for a petitioner's particular financial predicament.

The bottom line is this: anyone who meets the financial criteria (with proof) is "worthy" of bankruptcy relief. So don't let your feelings about your financial predicament prevent you from seeking the relief to which you may be entitled. The Frazee Law Group will analyze your situation in a free consultation to determine if you meet those financial criteria.

Part I of this series presented the case of Dam and Trinh Huynh, a Vietnamese immigrant married couple, both of whom were uneducated, non-English-speaking, and addicted to casino gambling. They had amassed a mountain of credit card debt before seeking relief under chapter 7 of the Bankruptcy Code. You were asked your opinion of their case, whether or not the Bankruptcy Court should grant them relief. If you need some help with that exercise, here are the points of law that the court used to make its decision:

"The court shall grant the debtor a discharge unless:

a. The debtor, with intent to hinder, delay, or defraud a creditor or [trustee], has transferred...property...within one year before the date of the filing of the petition;

b. The debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve records...from which the debtor's financial condition...might be ascertained, unless such act or failure was justified under all of the circumstances of the case;

c. The debtor knowingly and fraudulently...made a false oath or account...or withheld records from [the trustee];

d. The debtor has failed to explain satisfactorily...any loss...or deficiency of assets to meet debtor's liabilities."

It looks bleak, doesn't it? Dam and Trinh transferred property well within one year of filing for Chapter 7 relief. They destroyed all the records from which their financial condition might be reconstructed. They failed initially to disclose the totality of their financial condition to the trustee, necessitating an amended petition, and they could not explain where their money went, except for their uncorroborated testimony that they had lost it due to addictive gambling. Is there a ray of hope for this couple in Bankruptcy Court?

Please read Part III to learn the outcome of the Huynh's bankruptcy trial. The result may surprise you.

Dam and Trinh Huynh, 61 and 60 years old in 2008, were born and married in Vietnam and came to the United States in 1995. Neither of them can speak, read, or write English. Dam was in the Army in Vietnam and has no formal education. He has worked various labor jobs since settling in North Dakota and Trinh works as an assembler at Fargo Assembly. Despite the Huynhs' Spartan means, they filed for relief under Chapter 7 of the Bankruptcy Code in 2007, listing total unsecured debt of over $170,000 owed to 44 creditors! Something was definitely wrong with that picture.

In their amended Statement of Financial Affairs, the couple disclosed gambling losses estimated at $100,000 and 5 transfers, made shortly before they sought Chapter 7 relief in 2007, including cash, jewelry, and gold. They had failed to report these losses and transfers in their original petition. Dam claimed that a majority of his unsecured debt was due to a gambling addiction. He gambled on weekends at area casinos and played blackjack during the week at local establishments, taking numerous cash advances from various credit cards to fund his gambling habit and pay outstanding bills. He thought he would eventually win big and be able to pay back his credit card debt. But other than his candor concerning his addictive behavior during the entirety of the bankruptcy, Dam could not prove his claims: he did not keep any record of his finances, he threw away all of the credit card statements since he could not read or understand English, and the casinos could not corroborate his claims because he only used his rewards cards sporadically.

Now you get to play attorney (or you can read the case for yourself: In re Huynh, 392 BR 802 - Bankruptcy Court, D. North Dakota 2008). Are the Huynhs worthy petitioners for relief under Chapter 7?

In a free consultation, the Frazee Law Group will discern whether you are "worthy petitioners for relief under Chapter 7." Please read Parts II and III to learn more on the Huynh's bankruptcy saga.

For the first time in decades, governmental agencies are making "deep job cuts" as reported in the Daily News on July 4, 2010, distributed in Los Angeles. As also reported, public employees should brace themselves as the job cuts could worsen in the second half of the year. Not only are the government agencies cutting jobs but also reducing salaries.

With the reduced income, many families cannot meet their obligations which were based on a higher expected income. Bankruptcy provides relief for these families. A single gentlemen, in trying to raise three children, just filed for bankruptcy. In addition to income reduction, the children's mother had stopped making child support payments. So his income got reduced two-fold.

Fortunately, as we look at Independence Day, our US bankrutpcy laws provide independent relief for bankrupt families. By filing bankruptcy, you can again build your credit rating and start life anew. Without filing for bankruptcy, you are reminded daily by collection callers who harass you for payments you cannot make. Bankruptcy stops those calls dead in their tracks.

There are many provisions in bankruptcy law. You are wise to secure a bankrutpcy attorney who can assist you through the maze of bankruptcy law and procedures to save your home from foreclosure as well as other properties .

-RoseAnn Frazee
Pasadena and Los Angeles Bankruptcy Attorney