Marijuana dispensary employee denied access to the Bankruptcy Court
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often referred to as a wage earners plan. In chapter 13 bankruptcy the debtor proposes to pay some of their debts back over time. The debtor will make a monthly payment to an appointed chapter 13 trustee. The trustee will use the money she receives to pay creditors.
In many chapter 13 cases, debtor’s pay little to no money to unsecured debts, and pay back home mortgage arrears or tax debts in full.
It matters what you do for work.
Across the country courts have been facing the question, If the debtor’s income comes from an illegal source, can that debtor be in bankruptcy. Here in Massachusetts retail marijuana is legal, however it remains a federal crime.
Can a non-owner, employee of a cannabis business file chapter 13 bankruptcy. Judge Katz of United States Bankruptcy Court recently answered this question with a no. Judge Katz wrote “It is simply untenable that this Court would continue to extend the protections and benefits of the federal bankruptcy laws to a Debtor that continues to commit federal crimes.”
Where do we go from here.
It is unknown at this time if the debtor will appeal the decision. Although Judge Katz has not allowed this debtor to continue his bankruptcy another bankruptcy judge may rule differently. “Today, the Court must decide only the case it has before it – a case involving a Debtor whose ongoing activities in the course of his employment constitute violations of federal criminal laws.”
You can read the full decision on the bankruptcy court’s website: https://ecf.mab.uscourts.gov/cgi-bin/op.pl?edk
See In re Scott H. Blumsack