Incapacitated Person’s Right to File Bankruptcy

It’s quite likely that you want to file bankruptcy on behalf of a parent or relative who is in coma, or is incapacitated because of some illness like dementia. Interestingly, bankruptcy law does have provision for a living incompetent person to file bankruptcy. Here are a few options you could consider:

1. Order of Guardianship: One method is for you to apply for an order of guardianship before the appropriate court (local probate court or any other appropriate court) in the jurisdiction where the incapacitated person resides. If you are successful in securing an order of guardianship, it implies that the issuing court is convinced that the incapacitated person has lost the capacity to make decisions on his/her own. The guardianship order will identify and list the powers that are assigned to you. Since you are anticipating filing bankruptcy, you could request the court to include the power to file bankruptcy on behalf of the incapacitated person.

2. Power of Attorney: Another option would be for you to secure a power of attorney from the incapacitated person authorizing you to file bankruptcy on behalf of him/her. The issue with this scenario is that the bankruptcy judge might want to ascertain if the power of attorney was issued when the issuing person was competent. Now if the power of attorney was obtained while the person was competent, but there is no specific assignment of the power to file bankruptcy, you will have to argue before the bankruptcy judge that the authority conferred through the power of attorney document includes the power to file bankruptcy.

The first option seems to be more practical because it helps you enter the bankruptcy court with a clean chit. The second option leaves you at the mercy of the bankruptcy judge who needs to do a lot of cleaning up before getting to your bankruptcy petition. However, please realize that securing a guardianship order as mentioned in the first option will take a few months because there will be some paperwork that needs to be done before issuing such an order.


Inside Incapacitated Person’s Right to File Bankruptcy