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Relief from Automatic Stay Denied in Casey Anthony’s Chapter 7 Bankruptcy Case

800px-Orlando_Florida_April_2010_14Casey Anthony, who gained international notoriety after prosecutors charged her with the murder of her daughter, Caylee Anthony, in 2008, filed for Chapter 7 bankruptcy in early 2013. She claimed substantial debts mostly related to her legal fees. In re Anthony, No. 8:13-bk-00922, vol. petition (M.D. Fla., Jan. 25, 2013). A Florida jury acquitted her of murder charges two years ago, but she has continued to face civil suits, including two defamation suits by individuals who claim Anthony falsely implicated them in the murder. The defamation plaintiffs sought relief from the automatic stay in her Chapter 7 bankruptcy case in order to continue pursuing their claims in Florida state court. Relief must first be granted before any state court action may be taken. The reason is that once an individual is under bankruptcy protection, no collection action may be taken against them. This is know as the “automatic stay”, and it arises in both Chapter 7 as well as Chapter 13 cases. A bankruptcy judge denied their motions, but ordered that they may assert their claims as objections to the discharge of Anthony’s debt.

The news media focused extensively on Anthony’s six-week murder trial during the summer of 2011. Anthony’s family had reported Caylee, who was two years old at the time, missing in July 2008. Caylee’s body was found that December. A grand jury had already indicted Anthony for first-degree murder and other charges in October 2008. The trial began in May 2011 in Orlando, and a jury acquitted her of all charges except four counts of making false statements to police on July 5, 2011. A Florida appellate court reversed two of the four convictions in January 2013.

Anthony filed a voluntary Chapter 7 bankruptcy petition in January 2013. She identified just over $1,000 in assets, and more than $792,000 in debt. She claimed to have no regular income. The unsecured debts included about $68,000 owed to the Internal Revenue Service, Anthony, petition at 22; $500,000 owed to her attorney during the murder trial, id. at 24; and $145,000 owed to the Orange County Sheriff’s Office, id. at 27.

At least two individuals were in the process of filing defamation suits against Anthony when she filed her Chapter 7 petition. Roy Kronk found Caylee’s body in 2008, and now claims that Anthony’s attorney falsely implicated him during the murder trial. Zenaida Gonzalez has the same name as a nanny that Anthony allegedly falsely identified as the possible killer. Both suits assert causes of action for defamation, and both are subject to the automatic stay.

Kronk and Gonzalez each moved for relief from the automatic stay, seeking to pursue their claims in state court. The bankruptcy judge denied their motions. Anthony, mem. op. (Jul. 1, 2013). The court treated their claims as “personal injury tort claims,” id. at 3, which must be tried in the bankruptcy court, according to federal law. Id., citing 28 U.S.C. § 157(b)(2)(B) and (5). The two claims involved multiple unresolved disputes, so while the court denied relief from the automatic stay, it held that the plaintiffs could seek adjudication of the dischargeability of their claims.

When an individual’s income is not enough to allow them to service their debts, bankruptcy may offer them relief. In a Chapter 13 bankruptcy, a person can restructure the payments on their bills and discharge some of the remaining debt in three to five years. A Chapter 7 bankruptcy may allow a person, after liquidating their non-exempt assets, to discharge their debts completely. Bankruptcy attorney Devin Sawdayi has sixteen years’ experience guiding clients in the Los Angeles area through the bankruptcy process. To schedule a free and confidential consultation, contact us today online or at (310) 475-9399.

Web Resources:

In re Anthony (PACER registration required), No. 8:13-bk-00922, U.S. Bankruptcy Court, Middle District of Florida

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Los Angeles Bankruptcy Court Dismisses Tech Entrepreneur’s Case Because of Missed Deadline, Los Angeles Bankruptcy Lawyer Blawg, June 19, 2013

Photo credit: ILA-boy (Own work) [CC-BY-SA-3.0], via Wikimedia Commons.