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Filing Bankruptcy for a Minor or Someone Who's Not Mentally Competent


I will occasionally get a phone call from a family member of someone who is facing a lawsuit, repossession or foreclosure...that is scheduled for next week. Normally, I'd suggest that the potential client facing the lawsuit, repossession or foreclosure come in right away so the we can file an emergency bankruptcy petition to immediately stop the collection action thanks to the Automatic Stay. The problem? The potential client is not legally competent. This could mean that they're a minor (I have filed a number of Chapter 13 bankruptcies for minors who are the sole owners of real estate, usually as the result of the death of a parent), they are not mentally competent, or are currently hospitalized and can't deal with legal matters right now.


Are these people out of luck? Must the lawsuit, repossession or foreclosure proceed without any protection from the Bankruptcy Court?


No.


In fact, Rule 1004.1 of the Federal Rules of Bankruptcy Procedure specifically allows for a bankruptcy filing on behalf of someone who is legally incompetent through a "next friend." The "next friend" could be a family member or a trusted friend who signs the papers, attends the Meeting of Creditors, and acts on behalf of the person who can't. The Court can also appoint a "Guardian Ad Litem" ("Ad Litem" is Latin for "for the lawsuit"), who is someone appointed by the court to represent the interests of minors or incompetent persons in legal actions. The Guardian Ad Litem's only job is to represent the person's best interests and advise the court.


You don't need a Specific Power of Attorney authorizing the bankruptcy filing to file as a Next Friend. You don't even need a general Power of Attorney.


Filing a bankruptcy through a Next Friend can be complicated. Make sure that you have an experienced attorney to assist you.

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