Call Now!
Call Us 414-326-9231 608-260-7133 Text Us 414-326-4709

Asset forfeiture and its potential affect on bankruptcy, P.2

In our previous post, we spoke a bit about civil asset forfeiture and its use—and potential abuse—by law enforcement in criminal investigation. As we noted, civil asset forfeiture can impact bankruptcy cases, both for creditors and debtors.

For debtors, of course, having assets seized and forfeited reduces the amount of solvency they bring to the table in a bankruptcy filing. Whether or not a debtor is found guilty of a crime, forfeiture can have a significant negative financial impact. For creditors, asset forfeiture can impact the distribution of assets under the Bankruptcy Code, not only in terms of reducing payments on debt, but also by introducing an alternative distribution scheme. This can be especially seen in cases where assets are seized in the investigation of fraud crimes where multiple victims are involved.  

In cases where seized assets are determined to be tied to crimes of fraud, whether committed by the debtor or not, authorities typically use the proceeds to compensate victims. General creditors of a debtor who has had assets forfeited, however, are not compensated in this process unless they are themselves victims of fraud. If the debtor files for bankruptcy, creditors may be compensated, but according to the distribution scheme set forth in bankruptcy law. The scheme for compensating creditors under the Bankruptcy Code is not compatible with the approach the government uses to distribute forfeited assets.

Debtors who have had assets unfairly seized in a criminal investigation should, of course, seek legal help in recovering those assets. For creditors involved in a bankruptcy case where assets have been forfeited as part of a criminal investigation, it is important to work with an experienced attorney to ensure their rights under bankruptcy law are protected. This is all the more important given the tensions between the way assets are dealt with in asset forfeiture proceedings and the bankruptcy process.

Sources: American Bar Association, “What Just Happened? How Asset Forfeiture Affects Bankruptcy Distributions,” Henry C. Kevane, June 21, 2012. 

No Comments

Leave a comment
Comment Information
Email Us For A Response

Free Case Evaluation

* indicates required field

Miller & Miller Law, LLC
  • VISA
  • Master Cards
  • Discover
Milwaukee Office map Madison Office map Kenosha Office map

633 W Wisconsin Ave, Suite 500
Milwaukee, WI 53203

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 414-312-6581
Fax: 414-277-1303
Milwaukee Office

2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 608-260-7133
Madison Office

6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 262-326-1669
Kenosha Office

Appleton Office
4321 W. College Ave.
Suite 200
Appleton, WI 54914

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 920-280-3838
Appleton Office

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 262-261-0665
Brookfield Office

Glendale Office
6333 N. Green Bay Avenue
Glendale, WI 53209

Toll Free: 866-678-9352
Phone: 414-326-9231
Phone: 414-973-8662
Glendale Office

Fax: 414-277-1303 - We also have offices in Appleton, Glendale and Brookfield to better serve you.