On July 8, 2021, the United States Bankruptcy Court for the District of Minnesota issued a ruling upholding the rights for bankruptcy debtors who receive benefits under the Federal Indian Gaming Regulatory Act of 1988, 25 U.S.C. §§ 2701, et seq. (“IGRA”).
The 18 page opinion ends with a clear admonishment: “even outside of the Pokagon Band’s sovereign authority to create and define property rights, the per capita payments are not property of the estate in policy, logic, or equity.”
When you file a Chapter 7 bankruptcy, any property which cannot be exempted (i.e. protected), becomes property of the bankruptcy estate, which means it can be liquidated by a trustee and the proceeds are used to repay creditors that you owed as of the date your bankruptcy was filed. For most cases, what is exempt or not is very clear cut, but it still does not prevent a Chapter 7 bankruptcy trustee from bringing motions to attempt to sell property if the trustee believes they have the right to do so.
In this case, the trustee was attempting to receive all of the bankruptcy debtor’s future monthly per capita payments from the Pokagon Band of Potawatomi Indians. It has been understood in bankruptcy law that the chapter 7 trustee cannot interfere with indigenous peoples’ or tribes’ sovereign rights, but that did not prevent this trustee from attempting to take the payments from this debtor anyway. The court delivered a strong message in denying the trustee:
“Ultimately, to find that all future income from a given source belongs to the debtor’s creditors for an indeterminate amount of future time is unconscionable in the context of the underlying tenets of the Bankruptcy Code.”
This is why you should not go into a bankruptcy filing alone, without experienced bankruptcy counsel. If the trustee is bringing motions to take your property, you need to be able to stand up for your rights. Bankruptcy law does change over time, but rulings like these help to validate long-held beliefs and protect future Minnesotans receiving benefits from their tribe but still going through difficult financial circumstances. An experienced attorney can help to avoid these disputes in the first place, and to protect you if something does come up.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
When you are ready, if you would like a free consultation about your options, please give me a call at 1-800-551-3292, or go on to https://lifebacklaw.com/ for more information. You will be happy you did.
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