Judge Harlin D. Hale of the United State Bankruptcy Court for the Northern District of Texas recently dismissed the chapter 11 bankruptcy case filed by the National Rifle Association (NRA) for cause. We hear you: so what?
First, those of us practicing law in the Northern District know he goes by Cooter, but we have to fancy this up a bit, so we'll call him Judge Hale. Anyway, Judge Hale found that the case was not filed in good faith. He meant the NRA was using bankruptcy not to get out from under creditors and debt, but to avoid litigation elsewhere.
Judge Hale's dismissal sent the NRA back to New York, which is pursuing a lawsuit of its own against the organization. The NRA is incorporated in New York, not Texas, but they want to move to Texas so this was part of their overall moving plans. So what does Judge Hale's ruling say about bankruptcy?
The ruling by Judge Hale says the bankruptcy system works. Though we salute the NRA's attorneys for the originality of a desperate legal maneuver, bankruptcy is not to be used to subvert the regulatory process or authority.
Despite headline-grabbing news like the NRA's stumble, bankruptcy is a routine, effective and — dare we say? — compassionate legal solution to financial disaster. The bankruptcy process balances the needs of debtors (the parties filing for bankruptcy) with the needs of creditors (the parties owed money by debtors).
Bankruptcy is a legal and safe option that gives debtors the opportunity to begin anew, to clear the field and get a fresh start. Bankruptcy — like other important institutions such as marriage,— is not to be entered into lightly or unadvisedly. It is a last resort, not a reflexive response, to financial peril. If you need it, bankruptcy is fabulous. Or, as I like to say, #bankruptcyisbeautiful.
Missing the Target
Judge Hale's court examined the NRA's case very carefully. The Judge examined evidence, including the NRA's own chief financial officer (CFO) who testified that the NRA had no financial reason to file bankruptcy, though the organization faced potential litigation (that would be the New York State Attorney General's lawsuit). The court stated that the NRA was “financially healthy, solvent, and growing.”
Few, if any, folks filing for bankruptcy would describe their personal financial situation as “healthy, solvent, and growing.” Individuals filing for bankruptcy routinely get to the end of the money before they get to the end of the month. They enter into vicious circles of using one credit card to pay another credit card bill, and soon they are plunged deep into debt with no way out other than bankruptcy.
Say No to Saying No
Many parents remind their children not to cut themselves off from opportunities. “Don't tell yourself ‘No,' let someone else tell you ‘No,'” the parent says. That one line has convinced plenty of kids to try out for the team, the play, the band. Letting the college admissions office tell you “No” is a lot easier than perpetually wondering if you could ever get into college.
A lot of people tell themselves “No” to bankruptcy out of concern that their bankruptcy case will not be heard. They look at a case like the NRA's and assume that organization's issues and their own difficult finances are similar. They assume a bankruptcy judge will tell them “No,” so they rob themselves of the legal relief bankruptcy can bring!
We understand the fear. If the NRA was dismissed from bankruptcy court, then surely you will be, too!
But that is simply not the case.
You are not the NRA. Every personal bankruptcy is different, but some common threads do appear:
- Texans face challenges beyond their control, like medical crises, job loss, COVID-19 complications, or family emergencies
- Proud individuals become ensnared in unsecured debts with high interest rates
- They fall behind on payments
- Their small financial reserves disappear
- They face foreclosure, repossession of vehicles, seizure of their possessions
Your situation is nothing like the multimillion-dollar NRA's situation. Your bankruptcy case will not be at all like the NRA's bankruptcy case. Do not cheat yourself of the legal protections bankruptcy offers.
Bankruptcy can be a viable, beautiful option for you. Find out today! Please contact a Frisco, Texas, bankruptcy lawyer at The Page Law Firm. For a complimentary 40 minute strategy session, call 214-618-2101 or email us at [email protected].