The IRS has placed liens against Francis’ property and bank accounts due to more than $33 million in unpaid taxes. They froze bank accounts that Francis said were worth $100 million.

Francis is fighting back, and taking the government to court, claiming he doesn’t owe any back taxes.

This isn’t Francis first run-in with the law. Over the years he’s faced a long list of charges, from bribery to tax charges to racketeering and prostitution, and has served time in prison. He has also had several disputes over unpaid taxes.

Filing chapter 7 bankruptcy is designed to stop all forms of collection, and may help Francis protect if he decides to file.

The Associated Press reports Rhode Island Senator Sheldon Whitehouse proposed a bill that will provide an exception to bankruptcy laws for those who file due to medical bills.

Called the Medical Fairness Act, if passed it will allow provide families struggling with medical debt:

• Protection for homes worth up to $250,000
• Extend bankruptcy protection to financially distressed caregivers of ill, injured or disabled family
• Allow bankruptcy filers to pay attorney fees when they are financially able to do so after filing.

The proposed legislation will also waive the Chapter 7 means test and credit counseling requirements. The means test is used to determine if a person is qualified to file for Chapter 7 bankruptcy. Chapter 7 allows the debtor to get rid of all their debt and start fresh.

The Medical Fairness Act will only apply to those who meet the definition of medical debtors.

Republican Senator Jeff Sessions of Alabama disagrees with the provision of the bill eliminating the means test. The fear is that people who have gone bankrupt only partly due to medical bills  could file as medical debtors and receive the “special treatment.”

But there are many out there who hope the bill passes. Elizabeth Edwards, the wife of the former Senator and presidential candidate John Edwards, supports the proposed bill. She claims it could give medical debtors “a less burdensome, less catastrophic bankruptcy option that recognizes the unique circumstances that have driven them to bankruptcy.”

Kerry Burns attended the Senate Judiciary subcommittee hearing to plead senators to support this legislation. Despite having insurance, she lost her savings and retirement funds after her young son was diagnosed with cystic fibrosis.

She and her husband spent a lot of time in the intensive care unit with their son. They each missed a lot of work and shortly after, they weren’t able to keep up with their mortgage payments and other bills. Insurance covered most of the $5 million in medical expenses for their son, but they were still forced to file bankruptcy.

At this point the proposed bill is still in the legislative process. It must be reviewed and revised by committees before it can move on to the next step of debate.

Lear Corp., a company that manufactures seats and electronics for automobiles, filed for Chapter 11 bankruptcy four months ago, reports the Wall Street Journal. Now the company may soon emerge from bankruptcy protection in a better position to thrive.

The company is among 50 other auto suppliers who decided to file for bankruptcy this year. Most were able to reorganize and avoid liquidation and full shut down.

Lear Corp’s chief executive, Bob Rossiter, arranged deals with lenders and creditors to fund a $500 million debtor in possession facility, a move not uncommon for companies in Chapter 11 bankruptcy.

These deals allowed the company to maintain the operations and provided the opportunity to continue business during the bankruptcy reorganization. The creditors received new equity in exchange for the deal.

Rossiter has been chief executive since 2003 and has attempted to cut costs while running the company. He moved operations for the company to lower cost markets in an effort to keep expenses down and win business in markets outside the U.S  – including Europe and Asia.

The company also reorganized supply and labor contracts to cut down on costs.

Rossiter’s main concern with Lear Corp. is their dependence on auto makers. The US auto industry has had a tumultuous year, and many car makers asked their suppliers to reduce prices, cut down on costs and incur debt to win valuable contracts.

Even with the company’s attempt to cut costs, they decided to file for Chapter 11 because of all debt obtained thus far.

Analysts believe the Chapter 11 bankruptcy will lower interest rates for Lear Corp. and help drive profits. Lawrence Orlowski, S&P’s (Standard and Poor) credit analyst said: “The new company will reduce its debt by 75 percent.”

Lear Corp. said its stock should be back up and trading in the New York Stock Exchange after they exit bankruptcy court. The equity is now owned by the creditors who supplied the monies for the Chapter 11 bankruptcy protection.

The equity is expected to be worth about $1.9 billion after the company gets out of bankruptcy protections.

Rossiter stated, “We think we fixed the business and we’re going to come out with investment-grade metrics.”

A Chapter 7 bankrutpcy would mean an end to the company, but a Chapter 11 business filing with a quick turnaround for bankruptcy protection may prove beneficial to their operations.

Small businesses are still struggling to survive, as shown in the seven percent rise in business filings last month. Many businesses have been struggling to obtain financing and loans due to tight credit markets, and things may be getting worse.

With major small-business loan provider CIT Group recently filing Chapter 11 bankruptcy many small and medium-size businesses wonder where they will turn for financing. The CIT bankruptcy was one of the largest in this country’s history, and they were  key source of financing for mid-size companies.

A total number of 7,771 businesses filed for bankruptcy during the past month. This was an increase from from the 7,271 filings during the previous month of September.

Some of the industries that have been hit the hardest are real estate and retail. But many other industries have been affected as well such as manufacturing and home building.

California seems to be the state that has been most affected and has the most commercial bankruptcies filings, the Wall Street Journal reports.

Personal bankruptcies are also on the rise. More personal bankruptcy filings were reported in October than any month in the last four years. In all, 135,914 peopled filed for bankruptcy protection.

While the stock market has seen some recovery, job losses remain high. Congress recently extended the unemployment benefits, but more people are going longer without jobs.

And while aid packages for first-time home buyers continue, there is little help besides bankruptcy for home owners facing foreclosure. Credit card bills and interest rates remain high, and many people are facing dwindling savings accounts.

Maureen Thompson – legislative director for the National Association of Consumer Bankruptcy Attorneys – told CNN “People are still carrying a lot of debt in terms of credit cards and home equity loans, and unemployment is still rising.”

According to CNN, the last time that personal bankruptcies were this high was in October of 2005 due to state legislation that made it more difficult for consumers to prove they needed to file for Chapter 7 bankruptcy and clear their debts. Many were forced to file for chapter 13 and set up a repayment plan for five years.

Experts are forecasting the number of personal bankruptcies to surpass 1.4 million in 2009. Until the economy provides more jobs, personal bankruptcies might be on the rise. Personal bankruptcies affect businesses. If consumers cannot afford to spend their money, then businesses start to suffer.

Former ‘Husker lineman Aaron Taylor was forced to liquidate seven championship rings and his Outland Trophy to settle his debt after filing Chapter 7 bankruptcy.

Taylor was a star offensive guard for the University of Nebraska football team from 1994 through 1998. In his time as a Cornhusker, he helped the team to three national championships. In 1997 he won the Outland Trophy as the nation’s best interior lineman. The trophy itself depicts a lineman charging forward to make a block.

Taylor filed for bankruptcy as a result, for the most part, of the failure of his Cornhuskers-themed restaurant, the Scarlet and Cream Letter Club, at which he was an officer. He started the restaurant in Omaha with several other former Nebraska football players, ESPN reported.

But the business struggled, and Taylor filed for bankruptcy, reporting more than $100,000 in debt, most of which came in the form of taxes owed on the failed restaurant for which he was legally responsible. In the filing he only listed $5,300 in assets, leaving off his football memorabilia.

Initially, Taylor tried to block the liquidation sale of his college football memorabilia. According to the conditions of his Chapter 7 bankruptcy, however, the law did not allow him to do so, and the items were put up for auction.

Chapter 7 bankruptcy is designed to clear your unsecured debt quickly, but creditors may be allowed access to valuable non-exempt property. Every state outlines extensive exemptions which can be used to protect valuable when you file.

Unfortunately, Taylor’s case did not qualify for a bankruptcy filing that would have allowed him to maintain possession of some assets while he repaid the debt. And the court’s viewed Taylor’s rings and trophies were too valuable for the exemptions, which typically include things like homes, cars, clothes, work tools and household goods.

According to the New York Times, it took only about 30 minutes for Taylor’s college football memorabilia to change hands via online auctions. The auction items included the Outland Trophy, which sold for $6,800, and the championship rings, which were encrusted with diamonds, which sold for between $2,000 and $5,900. In total, the auction items sold for $28,500.

A group of Nebraska Cornhusker football fans were reportedly upset about the situation, and attempted to raise funds in order to help Taylor bid on the memorabilia himself. Those attempts seemed to have been futile, however, as the bankruptcy trustee in the case told the Associated Press that Taylor did not appear to be the buyer for any of the auction items.

While he was drafted by the NFL after college, Taylor began his business career following a short-lived attempt to play football professionally. As a college player, he was voted onto several All-Century teams, honoring him as one of the best college football players of all time. Even that sterling reputation, however, was not able to save the trophies and rings that marked that time from the saddening realities of financial hardship.

The move comes as the business property market continues to decline after several slow years. Many

Many U.S. banks have been hurt by losses on commercial real estate loans. High unemployment means consumers have less to spend forcing many businesses to close. Now, however, fewer businesses are expanding or even stepping up and filling vacant space, leaving a glut of business property in many places across the country.

Many developers have been forced to default on loans because they can’t afford to pay them back. Capmark, for example, lost $1.6 billion last quarter in revenue. The company could have lost a lot more revenue if not for some planning that allowed them to set aside $345.8 billion to cover any future loan losses.

Capmark listed their debt at $21 billion and assets at $20.1 billion. The company is hoping to reduce its debt while maintaining their daily operations.

President and CEO Jay Levine said in a press release: “We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets which presented a significant challenge for Capmark and similarly situated finance companies.“

Capmark recently entered an agreement with a company owned by Warren Buffet Berkshire Hathaway and Leucadia National Corp called Berkadia III LLC. The deal is for Capmark to sell its North American servicing and mortgage banking operations to the company.

Since the company filed Chapter 11 bankruptcy protection, it will now receive $415 million and a $75 million note in the deal with Berkadia. If the companies completed the deal outside of bankruptcy protection, Capmark would have received a lesser payment of $375 million in cash.

Capmark claims that its bank – Capmark Bank – is not a part of the Chapter 11 bankruptcy protection filing, according to a MSNBC report. The bank recently received $600 million in new equity from Capmark Financial. The bank will continue its operations as normal and keep serving customers.

Capmark – at this point – has more than $500 million in cash to support its daily operations. The company said they have enough liquidity to pay for vendors and their services as well employees salaries and their benefits.

Get more information on chapter 7 bankruptcy and business filings.

The median income is the center line of incomes in your state. Each year, the US Department of Justice releases the median incomes to be used in evaluating Chapter 7 eligibility. Essentially, you should be eligible to file Chapter 7 if your annual income is at or below the state median.

On Nov 1, these new incomes go live, and they may affect whether you can file Chapter 7 bankruptcy.

In most states, the changes are minor, with the incomes moving up or down by only a few hundred dollars.

View the new state median income tables.

But in some states, the median incomes have been adjusted by several thousands of dollars. If you weren’t eligible to file last year, it’s possible that you are eligible this year.

The economic troubles of the past year have had a clear effect in several states. In places like Nevada, Arizona and Michigan, the state median income levels fell for single-earners and families.These states have been among the hardest hit during the current recession.

This is also a good time to remind people that while you must pass the means test in order to file Chapter 7 bankruptcy, the requirements are very inclusive.

The median incomes adjust for family size, and, in some cases, you may be able to earn more than $100,000 in a year and still be eligible to file.

In 17 states, a single earner may make $45,000 or more and still be eligible to file. For each non-earning family member, the income allowance typically goes up $10,000 or more.

So if you’re under the impression that you earn too much to qualify for Chapter 7 bankruptcy, you may want to take a look at the new numbers and think again.

The Chapter 7 means test is designed to keep people from abusing the system – not stop them from getting debt relief. If you’re dealing with out-of-control credit card bills, phone calls from creditors, massive medical debt or more, then you may want to take a serious look at how Chapter 7 bankruptcy might help.

The Wall Street Journal reports the company is seeking Chapter 11 bankruptcy protection to reduce its debt by two thirds and keep the company from going under.

In 2008, Fairpoint made a series of moves to increase their size and market share. Previously a rural market operator, they acquired Verizon Wireless Inc.’s landlines  in New England. That move came with $2.3 billion in debt, and some rapid growth, according to the New York Times.

The company quickly became the eighth largest communications company in the country as they jumped from 275,000 customers to almost 2 billion!

The company obtained Verizon and their large debt just before the credit market rules and regulations were tightened. So once the deal was made, the company struggled to refinance or obtain any new loans.

Coupled with customer migration from landlines to wireless service, the company was faced with new debt but fewer customers.

Without the ability to make payments on their $2 billion debt, FairPoint decided to seek bankruptcy protection.

The reorganization plan is designed to cut down FairPoint’s debt from $2.7 billion to about $1 billion. The company will not make any interest or principal payments while in chapter 11 bankruptcy protections. After the plan is complete, it will reduce its interest payments by $200 million to about $65 million a year.

The plan will provide lenders with full equity ownership so any profits made by the company will go to the lenders to pay off any debt. Lenders gave FairPoint until the end of October to reach an agreement for debt repayments before they begin to demand the outstanding loans.

After the company finishes with bankruptcy court about $1.1 billion of their debt will be converted to equity. This will transfer the equity ownership and control of the company to their lenders of the credit facility.

David Hauser, FairPoint Chairman and Chief Executive, said that the everyday operations of the company should continue as normal after they file for bankruptcy. Their financing will convert to a five year revolving credit facility once they are finished filing for chapter 11. This means they will not have a fixed number of payments for their credit. As of now the company has $46 million in cash to keep everything going.

Learn more about Chapter 7 bankruptcy.

From January through September of 2009, Chapter 7 filings in Massachusetts totaled 11,872. During the same period a year ago, there were only 8,777 filings.

This 35 percent increase represents the highest rate of people filing Chapter 7 bankruptcy since 2005, when the new bankruptcy laws were enacted.

According to Timothy M. Warren, Jr., CEO of the Warren Group, “a growing number of people are being forced into bankruptcy because job losses and salary cuts have made it difficult for them to pay their bills. Some have relied on credit cards to pay for even basic living expenses and now are seeking protection under bankruptcy law as a last resort.”

Chapter 7 filings rose despite a recent 23.4 percent drop in Chapter 13 bankruptcy filings. According to The Boston Globe “the shift is an indication those people who do file for bankruptcy may be deeper in debt or have less income to repay their bills.”

In fact, total bankruptcy filings – including businesses – have declined. The eight percent drop this past quarter is the first decrease in filings in the state in several years.

Warren told the Globe that fewer total filings may be a signal that some people have hope that the economy is turning around. This optimism may prompt them to try and hold on without bankruptcy for a little longer.

There is some concrete good news out of Massachusetts, too. The state experienced a decrease in foreclosure as, according to Warren, banks and mortgage lenders back off troubled home owners because of trial loan modifications and new foreclosure-protection laws.

The company filed chapter 11 bankruptcy last March. Although the company is based in Missouri, they filed their plans in New York state. A judge in the Southern district there recently approved their plan, allowing the company to move forward with major restructuring plans to help them deal with more than $20 billion in debt, a recent New York Times report stated.

Charter Communications provides phone, Internet and cable television services in 27 states and has about 5.5 million customers across the nation. Charter was one of largest publicly traded companies in the United States.

Charter was unable to refinance or obtain new loans because of their debt, strict credit markets and a tough economy. The company’s goal is to shed $8 billion of their $21.7 billion debt through bankruptcy, giving them more flexibility.

The bankruptcy plan also shifts ownership from Chairman Paul Allen – who is also the co-founder of Microsoft – to Charter Communications shareholders. Mr. Allen will continue as the chairman and an investor, according to the St. Louis Business Journal.

Since the reorganization has been approved, Allen will no longer control the nominations and votes for the board of directors. How much control he will have with the future of the company will depend on how much stock he has after the plan is complete, said a report on CNN Money.

In the reorganization a number of different debt holders and bond holders will get new notes, equity and cash depending on seniority. Unfortunately, all shareholders will not get anything for their stocks, which are being canceled.

The reorganization hasn’t been all smooth sailing. JP Morgan Chase Co lent $8.2 billion to the company and  opposed the plan stating it violated their loan agreement with Charter.

The company stated in a press release, “The purpose of Charter’s financial restructuring is to strengthen its balance sheet in order to fully support the company’s operations and service its debt.” By filing for chapter 11, Charter is cutting their interest expenses and in the long run this might generate more cash flow to invest back into the business, the St. Louis Beacon reports.

Charter claims it has $800 million in cash. Along with its ability to sell assets without the price fluctuating and cash from operations the company will should have enough to see them through the bankruptcy and meet the companies’ needs.

The company continues to state that they will be better able to provide their services to all their customers and business operations will carry on as normal. Learn more about Chapter 7 bankruptcy.

They have hired several different law firms to aid them in the Chapter 11 reorganization and bankruptcy case. Experts are estimating the cost at $800 million to $1.4 billion, the New York Times reported.

So far they have paid their lawyers $402.9 million since the business collapsed in Sept 2008. The company hired attorney Kenneth Feinberg to set up a committee to review all the fees they have paid their attorneys thus far in their chapter 11 bankruptcy case. They want to determine if all the fees are fair and plausible.

Feinberg is familiar with high profile cases involving lots of cash. His credentials include setting up funds for September 11 victims and their families. He was then later hired by the U.S Treasury Department to review and monitor companies that received compensation from federal bailout money.

Lehman brothers is paying several law firms to handle their business. They hired Alvarez and Marsal to handle their contracts and help oversee operations during the reorganization of the business. The law firm said they needed 175 employees to work on the Lehman brother’s case during the reorganization. They were paid a total $169.3 million for their services, according to the Wall Street Journal.

Lehman’s bankruptcy firm Weil, Gotshal, & Manges charged $98.6 million in fees and expenses for their services. They work for $ 950 per hour. The firm Lehman Brothers hired to manage the unsecured creditors committee was paid $29.2 million for their services.

At this point, Feinberg’s committee found most of the fees charged by Lehman Brothers attorneys are legitimate. According to reports filed in court there has been only $223, 262 in inappropriate fees through January 2009. A small amount considering the millions upon millions in fees levied in the case so far.

Despite the large fees, there are some rules in place to limit the charges and fees attorneys are racking up, including:

• No car service for attorneys is allowed before 8pm
• Only $20 per person for working meals
• Written explanation for any workday billing more than 18 hours

With millions of dollars at stake and teams of lawyer at work $20 here and there adds up. It seems it takes a team of lawyers to monitor a team of lawyers.

Learn more about filing Chapter 7 bankruptcy, and what kind of work a lawyer may do for you and your case.

Back in May, the Phoenix Coyotes owner Jerry Moyes decided to file bankruptcy protection. The Coyotes have been in Phoenix since 1996, but have failed to be profitable. Moyes plan, according to the Wall Street Journal, was to sell the team to Jim Balsillie, the mogul for popular PDA maker BlackBerry. Balsillie would then move the team back to Canada.

But a bankruptcy judge rejected the plan. Then, when the NHL tried to buy the team, the same judge rejected that plan.

All this leaves the franchise in limbo. But, at least right now, they’ll keep playing the games.

To start the regular season ticket prices were slashed – some by as much as $300 – in an attempt to bring out a crowd. Last year the Coyotes, who have not been to the playoffs in several years, struggled to attract crowds to their home games.

The plan worked, and the Coyotes were sold out for their home-opener, and everyone in attendance was given a white T-shirt as part of a “Welcome Back White-Out,” reports the WSJ.

But despite all the cheers and shirt-waving, the future is still cloudy for the franchise. For their next home game ticekts that cost as little as $35 for the opener will go back to normal prices. For some seats, this is an increase of hundreds of dollars, report CBCSports.ca.

But where the money goes – and where the team goes – is anyone’s guess.

USA Today reported that the bankruptcy judge overseeing the case has no timeline for reaching a new deal. The bankruptcy judge said the NHL may make another attempt to buy the team if the offer is more fair. The NHL had planned to buy the team and then re-sell it to an owner who wished to keep the team in Phoenix. Balsillie said he would not make another attempt to purchase the team.

Until further action, the team will play on in the middle of bankruptcy.

Most of these take the form of debt management or debt settlement plans.

Debt management plans typically involve having a third party negotiate lower interest rates and fees for the debtor and incorporating them into a payment plan in order to pay off creditors.

With debt settlement, the debtor ceases all payments they were previously making to their creditors while the settlement firm attempts to negotiate lower balances with the creditors.

According to a recent story in the Washington Post, many debt settlement firms can charge up to 15 percent of the total outstanding debt owed and many people are unable to continue the program to pay off their bills.

Also, debt forgiven by creditors can be taxable if over $600. So while this may sound like a gift from heaven, having your debt forgiven could put you further in debt – this time with the IRS. It’s important to keep in mind that credit card debt is relatively easy to deal with – particularly when filing chapter 7 bankruptcy. But IRS and tax debt may only be included in your bankruptcy case under certain circumstances.

According to the Federal Trade Commission, there are some illegitimate debt settlement companies who offer a great package of services for a profit. But once consumers sign up for the program, they offer little to no service and the customer is stuck paying a high bill.Some companies are being prosecuted for their practices in Alabama and West Virginia.

But there are good organizations out there as well that provide not only debt management but counseling and education. They also have manageable monthly fees that the debtor cans afford to pay.

When looking for debt management as an option over bankruptcy, consumers may want to consider organizations accredited through the National Foundation for Credit Counseling or the Association of Independent Counseling.

There are pros and cons for the various forms of debt relief. Every situation is different and doing the research into debt relief options may help people determine their best possible options.

This another part of Washington’s current push to alter bankruptcy laws yet again, however this time the results may benefit of the average person.

Inside Higher Ed reports that Rep. Steve Cohen (D-Tenn.), the chair of the House Judiciary Subcommittee on Commercial and Administrative Law, has held a hearing to begin crafting legislation that will undo a 2005 change to federal bankruptcy law.

The law in question,he says gives private student loan lenders a “favorable and unusual” advantage over student borrowers and their parents, as well as more preferential treatment compared to the issuers of most other kinds of consumer loans.

Cohen is determined to take action on the issue in the near future. “Hopefully it’ll be bipartisan,” he says of the proposed legislation. “And if not, you know, we’ll just have to forge ahead and do what’s right.”

The ranking Republican on the subcommittee, Rep. Trent Franks, (R-Ariz.) has not closed the door on GOP support. Still, he says that any bill ending the favorable treatment private lenders receive would likely be the death knell of the private student loan industry, the entirely of the job falling to government lenders, an unacceptable solution in the eyes of many Republicans.

Currently, bankruptcy law prevents nearly all borrowers from getting rid of their private student loan debt when filing bankruptcy. Most other forms of debt – from home loans to utility bills – can be discharged when filing chapter 7 or chapter 13 bankruptcy. The only exceptions to the student loan rule are made in cases of “undue hardship.”

Lauren Asher, president of the Institute for College Access and Success, says that federal loans can’t be discharged either, but that type of loan comes with a fixed interest rates, flexible payment plans and other consumer protections.

“Private student loans are one of the riskiest ways to pay for college,” she says. Such loans are “not financial aid any more than using a credit card to pay for tuition or books is financial aid.”

The issue of private loans is becoming more pressing as more and more students use them to cover the gap between federal aid and college tuition, a gap as wide as $12,500 per year on average in some studies.

Two thirds of all graduates of four-year colleges have student loans and a third of students took out private loans, according to Asher’s ICAS studies. The percentage of students taking out private loans in any given year has risen 10% since 2003-2004.

Financial institutions oppose any changes, in particular a return to the status quo of 1975, when debtors could still discharge student loans via bankruptcy within five years of graduating.

That system, warns J. Douglas Cuthbertson, an attorney who represents some lenders, led to “debtors filing for bankruptcy almost solely on student loans.” Congress barred student loans’ discharge within five years, then barred discharge in seven years, and, in the most recent and onerous change, made it almost impossible to discharge student debt at any point.

Brett Weiss, a consumer bankruptcy attorney who testified before Cohen’s subcommittee says such a return to bad old days is unlikely. Even in the 1970s, he says, a study commissioned by the government found that less than 1% of all matured student loans had been discharged in bankruptcy.

“The notion of people who view bankruptcy as an easy debt-elimination option is so far from the reality, it’s just absolutely dead wrong,” Weiss says. “Student loans are not the primary factors for bankruptcy filings. They are sort of in the mix. People very, very rarely file for bankruptcy because of a student loan.”

One compromise approach: Changing the definition of an “undue hardship,” which would allow bankruptcy courts wider latitude in making faster decisions regarding whether a debtor should have his student loans discharged. A Congressionally-mandated definition could make it much easier for debtors to receive an “undue hardship” exception without a long and complicated legal process.

Both Democrats and Republicans have indicated that they are willing to explore this option. Once the exploration begins, however, bipartisanship may yet creep in again, with overstretched Americans still waiting for unbiased debt relief choices.

The Alexandria Town Talk newspaper is reporting that the Spurlins have been indicted on charges that they concealed assets after filing for bankruptcy and gave false statements in bankruptcy proceedings. Scott Spurlin has also been charged with bankruptcy fraud. Both pleaded not guilty to the charges, brought in federal court.

According to the indictment, the Spurlins filed for Chapter 7 bankruptcy in federal court in September, 2005. As is the normal procedure in such cases, the Spurlins were required to file numerous bankruptcy schedules and prepare a complete statement of their financial affairs, a statement that they swore was correct under the penalty of perjury.

Prosecutors for the government say that the Spurlins failed to identify some of their property during the bankruptcy proceedings and did not list other property they had interest in, including several businesses: Golden Choice Financial, Golden Athletics, J&S Management and Marketing and International Oil, Gas and Mineral Management.

In fact, the cars the couple used and the home they lived in were not owned directly by the Spurlins, but were owned by the companies they allegedly failed to report. During a bankruptcy proceeding, a person’s financial affairs are subject to scrutiny and approval by the courts, but according to the indictment, Scott Spurlin sold Golden Choice Financial to his wife for $125,000, and both Spurlins sold a home for $330,000 shortly thereafter. Prosecutors say that the pair “knowingly and fraudulently” concealed some of their property inside these transactions.

The second count of the indictment accuses Debra Spurlin of making false declarations during the couple’s bankruptcy filing. Specifically, Spurlin was an heir to the estate of her deceased father, who had died prior to the bankruptcy filing. Even though that case was pending, the Spurlins allegedly concealed it from the bankruptcy court.

In the final count, Scott Spurlin is charged with accepting $705,000 from a company in Chicago, not named in the indictment, as part of a real estate financing agreement with another party in 2002. The project fell apart, and though Spurlin promised to return the money, he did not, and the company filed a lawsuit in 2004 to recover it. Spurlin filed for Chapter 7 bankruptcy the following year, and also placed his company, Spurlin and Associates, into bankruptcy. The indictment says that he listed the $705,000 debt as an unsecured debt in both petitions, “knowingly and fraudulently devised and intending to devise a scheme and artifice to defraud and for the purpose of executing and concealing such a scheme and artifice.”

In other words, bankruptcy is meant to help debtors, and persons suspected of using the process as a shell game for questionable financial dealings will be held responsible. The Spurlins are currently free on supervised release and await their day in court.