Earlier this month, the Supreme Court of Illinois decided a case in which a couple was involved in an accident with the defendants and failed to disclose the accident as a “potential asset” to the bankruptcy court. In the case, Seymour v. Karmeier, the court ruled that a plaintiff’s failure to disclose a pending personal injury case to a bankruptcy court does not give the court hearing the personal injury action the power to rule in favor of the defendants based on that fact.
Evidently, the plaintiffs had filed bankruptcy back in 2008. Two years later in 2010, the plaintiffs were then involved in an accident with the defendants. Between these two events, the plaintiffs submitted several “changes in circumstances” to the bankruptcy court, keeping the court apprised of the couple’s financial situation. However, the couple never informed the court that they had a pending personal injury action against the defendants. Upon hearing this news, the defendants sought dismissal of the case against them, based on the fact that the plaintiffs were attempting to hide their “potential asset” in the pending case.
The lower court hearing the case at trial agreed with the defendants and dismissed the case at the summary judgment level. The plaintiffs appealed the case to the intermediate appellate court, who agreed with the lower court. Finally, the plaintiffs made their final appeal to the Supreme Court of Illinois.
The Case on Appeal
On appeal, the Supreme Court of Illinois ruled in favor of the plaintiffs, holding that “the fact that the plaintiffs had a legal duty to disclose this suit, and failed to do so, does not, given the facts of this case, establish the intent to deceive and/or manipulate the bankruptcy court.” The court agreed that, technically speaking, the plaintiffs did have a legal duty to disclose their open case against the defendants. However, the court also noted that the fact that they did not do so should not prevent the case from moving forward.
The court reversed the two lower courts and ordered the case to go back down to the trial court so it could proceed towards trial. While the plaintiffs’ case is still intact at this point, they suffered a significant detour on their way to recovery because of a near failure to comply with relevant bankruptcy laws governing their situation.
Are You Involved in an Open Bankruptcy Matter?
If you are currently involved in an open bankruptcy matter, or you are considering filing for bankruptcy, you should consult with a dedicated attorney so you are not caught by surprise by a failure to comply with a rule or regulation. The bankruptcy laws are notoriously complex and often counter-intuitive, and a failure to comply with even a seemingly small rule can result in drastic consequences. To learn more about the relevant bankruptcy laws to your situation, and to speak with an experienced bankruptcy attorney, call 866-366-3328 today to set up a free consultation.
More Blog Posts:
Seventh Circuit Court of Appeals Affirms Lower Rulings Denying Discharge of Student Loan Debt, Kentucky Bankruptcy Lawyers Blog, published August 1, 2015.
Ninth Circuit Affirms Dismissal of Pro-Se Debtor’s Bankruptcy Petition for Failure to Meet Deadline, Kentucky Bankruptcy Lawyers Blog, published August 17, 2015.