From politicians to businessmen, bankruptees display wide variety of circumstances
March 30, 2011
By Mike Hinshaw
Sometimes high-profile bankruptcies are celebrities such as movie stars, sports figures or high-roller business types.
Sometimes, though, they’re politicians. For instance, just last month we learned of Rep. Ruben Hinojosa’s (D-TX) filing, apparently driven by being unable to repay a loan for a family business.
State senator on high-ranking financial committees
Recently, a state senator from Kansas has entered the picture. According to a March 6 piece in The Wichita Eagle, “A Republican state senator who serves on the budget and banking committees has filed for personal bankruptcy.
“Ty Masterson, R-Andover, lists more than $800,000 in unsecured debts, not tied to assets or collateral.
“Often people filing bankruptcy are able to discharge those bills, which in Masterson’s case include credit cards, commercial loans and debts to local businesses.”
Problem is, Masterson told the paper, even though the debts are from a failed business, MasterBuilt Homes, “But I personally guaranteed the notes, so I have to file it under personal bankruptcy.”
The story says that Masterson disclosed financial troubles during his 2008 campaign for the state legislative body, saying he was working on $150,000 in court-ordered judgments. His December bankruptcy petition, however, shows the higher amount. Creditors include banks (commercial loans), a credit-card company (revolving account), and local businesses and vendors.
Not surprisingly, the case trustee had a dig for the senator: ” ‘I certainly hope Sen. Masterson is a better steward of the people’s money than he is his own,’ said Ed Nazar, a Wichita bankruptcy lawyer who, as the case’s trustee, represents the creditors.”
Masterson is vice chairman of the Financial Institutions and Insurance committee and also serves on the Ways and Means committee.
County board member’s debt includes back taxes
“Celebrity bankruptcy” might even extend to local couples who, in this case, are a politician and her businessman husband. From a March 25 bit in the Omaha World-Herald, “A second-term Douglas County Board member and her husband recently filed for personal bankruptcy, and court documents show that they owe thousands of dollars in back taxes and debts to banks and retail businesses.
“Pam Tusa and her husband, Gary Tusa, a real estate agent, reported a combined annual income of about $53,000. She receives $35,500 annually as a county commissioner on the seven-member board.”
The couple filed a Chapter 7 petition, showing assets of $24,357 and liabilities of $211,445, including $8,255 owed the Internal Revenue Service for taxes from 2004 and 2006.
Ms. Tusa said the problem for them is that her husband is a Realtor who got clobbered by the downturn in the housing market. She told the paper “that her personal bankruptcy is unrelated to her ability to serve her constituents or to fulfill her duties on the board.”
Window company’s behavior leaves clients, installers out in cold
An unusual case involves both a defunct business in Pennsylvania and a personal bankruptcy filing in Florida. A company going out of business may not seem like a “celebrity” story, but you can bet customers who put down deposits then never get a product or service will certainly have that business on their minds. A March 1 piece in the Philadelphia Inquirer says, “In a move whose effect on consumers was unclear, the founder of the troubled Windowizards home-improvement company declared personal bankruptcy in Florida. But claims continued to be settled with Philadelphia-area customers with unfinished orders.
“Consumer-protection officials in Bucks County, who have been consulting weekly with Windowizards founder Harvey Goodman since the Levittown business stopped completing orders around Christmas, said they learned of his Chapter 7 filing while probing the broader issues of what might have brought the window-replacement company to the brink.”
According to a local Fox affiliate, whose broadcast includes a reference to “the giant window” vendor, a bunch of contract installers were also left without answers–and the firm’s principals may face criminal charges:
Mike Bannon, the head of the Bucks County’s Consumer Protection Office, says he’s losing patience with Windowizards and may soon ask the district attorney to file criminal charges against the company on behalf of customers who have put down money on windows but have yet to receive them.
The news comes amid growing concern that the Levittown, Pa.-based company may be closing up shop, leaving customers and workers out in the cold.
About a dozen independent window installers gathered in Windowwizards’ parking lot on Thursday morning bracing against the cold and looking for answers.
The men say they are owed money for window installations and are trying to find out if the company is still in business.
All these examples should be taken to heart. The bankruptcy code serves a legitimate end and fits with the American character that recognizes people deserve a second chance. But the code is not there to further fraudulent activity. If you need to hit the financial reset button, do so with no shame–but do follow the counsel of your trained, experienced bankruptcy attorney.
Next time, we’ll continue with more interesting bankruptcy cases.
Whatever you do, before making major, life-changing financial decisions, consider consulting a trained, experience attorney. If you think your home is a candidate for a short sale, be sure to ask your attorney about it–it could greatly affect your standing and strategy for starting over.
For bankruptcy basics, please see:
Introduction to Chapter 7
Introduction to Chapter 13