More than your finances can be at stake in bankruptcy

Sometimes financial challenges are not the only problems that people in Mississippi experience before deciding whether or not to file for bankruptcy. They may also be exposed to criminal liability. In such circumstances, it may be difficult to determiner whether to proceed with a personal bankruptcy proceeding.

One couple, with a combined debt of over $3 million, is facing this dilemma. They decided to seek debt relief and are now filing for bankruptcy. While their bankruptcy is pending, however, the community is accusing the husband of the couple of operating a Ponzi scheme and scamming unsuspecting individuals out of hundreds of thousands of dollars.

It is unclear whether the couple's debts are in any way related to the alleged financial scam. The community is actually hoping that the couple's personal bankruptcy will reveal some information regarding their possible criminal liability. The wife is relying on a constitutional tool to keep such information confidential -- she is pleading the Fifth. Specifically, she has pleaded the Fifth over 90 times in responding to questions posed during the bankruptcy proceeding. Many may not understand her tactic, but some lawyers comment that she may believe that it is better for her creditors to get to her assets than expose herself to jail time.

To understand this hypothesis, it is useful to explore the Fifth Amendment. It protects the right against self-incrimination. In other words, the Constitution guarantees that no one will be forced to testify against herself. Although the alleged Ponzi scheme may be in no way related to her bankruptcy, the wife is still entitled to "plead the Fifth" to avoid making any statements that may incriminate her.

Mississippians may not appreciate what a useful tool the Fifth Amendment can be in bankruptcy proceedings. Sometimes when an individual is juggling more than one issue -- both debt and possible criminal liability -- it can be difficult to figure out how to begin to resolve these issues. The Fifth Amendment is a constitutional right that can offer some relief.

Of course, it is a complicated legal right that may require the explanation of a skilled legal professional. The Fifth Amendment cannot always guarantee that an individual seeking debt relief can smoothly carry out a personal bankruptcy without making any incriminating statements. A lawyer may have to help a debtor secure immunity from the government and criminal charges before effectively proceeding through bankruptcy.

Source: Foster's Daily Democrat, "Fifth Amendment at issue in Skaltsis bankruptcy case," Michelle Kingston, April 28, 2013.

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