Dykstra’s bankruptcy fraud shows importance of compliance

It goes without saying that filing for bankruptcy requires the insolvent party to consult an experienced attorney. Most people, though, would assume that the most important role a lawyer plays for the bankrupt party is to handle the complicated issues of Chapter 7 or Chapter 13 filing. To the contrary, often times it is the simplest of mistakes that can trip up an insolvent individual during their bankruptcy proceedings.

A common mistake is failing to communicate with your court-appointed trustee or understand the requests that trustee is making. Compliance during bankruptcy sounds simple, but too often the filer makes a tiny mistake that costs him or her thousands of dollars. Bringing a lawyer in to make sure the bankruptcy is being handled properly both by you and your trustee can not only expedite your bankruptcy proceedings, but it can save you money.

 Lenny Dykstra — a former Major League Baseball player who enjoyed a successful 12-year career because of his hardworking, gritty style of play — recently learned how painful non-compliance can be when it comes to bankruptcy. 

Dykstra was sentenced to 14 months in jail because of bankruptcy fraud. He apparently hid assets and sold others to try and keep them out of the reach of his trustee and bankruptcy court. Prosecutors wanted him behind bars for 30 months, but Dykstra’s reduced sentenced will be even shorter since he already served more than half of his 14-month sentence. However, he will also have to pay around $200,000 in restitution for the undeclared assets. 
Source: Associated Press, “Dykstra sentenced in bankruptcy fraud case,” Greg Risling, Dec. 3, 2012

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