Nearly 1 million people filed for bankruptcy in the United States last year. In the Lowcountry, personal bankruptcy cases are heard in U.S. Bankruptcy Court in Charleston.
Monthly waited in line with people trying to get out from under their debts, and found that sometimes the real story starts with Chapter 7.
On a dreary, drizzling January morning, they file into the nondescript office building in the middle of Charleston’s historic district. They come from cities and towns like Conway, Hilton Head Island, Bluffton, Edisto Island and Ridgeland.
There are young and old people, couples leaning on each other, single women and single men, black, white, Hispanic.
There are few smiles, and a feel of jangled nerves and tension permeates the atmosphere. That’s because these people are all heading into the U.S. Bankruptcy Court District of South Carolina. They are not alone. Almost a million people in the United States filed for personal bankruptcy in the first three quarters of 2012, according to federal records.
On this day as petitioners file into the courtroom, a clearly angry man storms out cursing and yells to the others that he “hopes you have a better day in there than me!”
Most of the cases take about 5-10 minutes. There are no red flags and the lawyers and their clients file out. But there are several cases where Trustee Kevin Campbell picks apart the filing and questions the petitioner in-depth, particularly about what may be hidden assets.
At these mandatory “341 meetings,” Campbell sits at a desk in front of the petitioners and their lawyers and conducts a fact-finding tour. He asks the bankruptcy petitioner a set list of questions and has an uncanny knack for picking up on red flags in the vast amount of paperwork petitioners must file. While he is very much the gentleman, his patience seems to wears thin when someone is trying to hide assets or is just plain lying.
The first such case is one of a man who appears to be in his 60s, who repeats throughout the questioning that his wife has left him. His story is fairly convoluted, but after in-depth questioning by Campbell, it comes out that he has a couple of houses, a time-share, two leased vehicles and once owned a $36,000 Mercedes. Some of his assets don’t seem to be listed in the bankruptcy filing.
What’s surprising is how quickly people confess to what is not in the paperwork. It’s almost like watching a TV show as Campbell probes and questions and gets to the truth.
The next “red flag” case is that of a very elderly couple. When their name is called they shuffle slowly to the desk, the woman’s left arm shaking. It’s clear that most everyone in the courtroom is sympathetic to these sad, elderly people going through this ordeal.
It starts normally enough. They are asked the basic questions, one of which is whether or not they have sold anything in the last six years for more than $5,000. The man says he sold a $9,000 watch last summer, which gets everyone’s attention. It went something like this:
Campbell: What did you do with the money?
Man: Paid bills.
Campbell: You had $9,000 in bills?
Man: Well, we put it in the bank.
Then Campbell questions a portion of the filing that says he receives $800 in income monthly.
Campbell: What do you get $800 a month for?
Man: I sit on a board of directors.
Campbell: How did that come about?
Man: Well, I know the CEO and worked with him so he named me to the board.
Campbell wants a statement from the CEO.
Then the red flag of all the red flags is hoisted up the pole.
Campbell: Do you have any other income that’s not listed here?
Man: I have a business and an income of about $60,000 annually.
Campbell (shaking his head): Why isn’t that listed?
Man: Well, I really don’t make $60,000 because I spend almost that much on the business.
Campbell: What are your expenses related to the business?
Man: Oh, you know. Postage, copying, flying to California.
The result of this episode: Case is continued until all paperwork, including a profit/loss statement for the business is submitted.
The sympathy factor has been significantly reduced.
Others come forward, answer the questions and head out. But there are others that aren’t that simple (as if a bankruptcy is ever simple).
One petitioner’s lawyer steps forward on behalf of his client, who Campbell notes is “incarcerated.” Somehow they arranged for a notary to be with the client in prison and conduct the meeting on speaker phone.
However, the speaker on the phone doesn’t seem to be working, so Campbell asks the 50 or so people if anyone has a BlackBerry they could use. One man chuckles and says, “We’re bankrupt! If I had a BlackBerry I wouldn’t be here,” causing the crowd to laugh.
They get through the jail session and move on to a couple who look very poor. When asked about assets, they tell Campbell that their mobile home burnt to the ground in October and they lost everything.
Campbell expresses his best wishes for the new year for the couple, then asks about insurance. The woman says they are waiting on the insurance company to issue a check for the contents of the home. Campbell asks how much they expect. The woman answers, “$46,000.” Everyone kind of looks at each other, dumbfounded. Campbell puts the brakes on the case until they get answers from the insurance company.
There are several cases where married women are filing for bankruptcy independent of their husbands. There are people who get very irritated with the questions being asked. There’s a couple with two little girls who look very tiny sitting in the courtroom.
But for all of them, it’s a day of reckoning.
And for most, it’s a day where the dreary weather matches the mood.