I'm the first one to tell potential clients that filing bankruptcy is not a moral failing. Perhaps I should ask people if they're intending to run for office, though. The Press Democrat has been giving city council candidate Juan Hernandez a hard time over his two bankruptcy filings.
Hernandez and his wife filed for Chapter 13 bankruptcy protection last years, listing $156,000 in liabilities and just $59,000 in assets. $67,000 of those liabilities are unpaid taxes, which aren't dischargable and being repaid through a Chapter 13 plan.
But there's something fishy in the candidate's protestations that he's "paying his bills" through the plan. Hernandez is spinning the Chapter 13 as more ethical than a Chapter 7, in which most debts are discharged.
He said he could have filed a Chapter 7 bankruptcy that would have wiped away his debts, but instead chose the procedure that will allow him to repay his creditors in full. "I chose to pay the debt I owe," he said, a statement that appears to be contradicted by court records. As the article points out, his plan only repays the IRS for back taxes; it pays 0% of other unsecured debts. And in a Chapter 7, tax obligations are not discharged, so a Chapter 13 is actually more advantageous since it allows him to pay a nondischargable debt at a comfortable $1,500 per month.Regardless, a second article reports, Hernandez is making robocalls with the message that he's repaying all his debts through the plan.
"I filed the kind of bankruptcy that simply allows me more time to pay all of my debts. I was not trying to avoid any of my responsibilities," he says.Unless he planning on doing more than his plan calls for, the statement rings false.
