Celebrity bankruptcies can teach you about your own bankruptcy about as much as celebrities’ lives can teach you about your life. Not much.
But the bankruptcy of three-time baseball All-Star Lenny Dykstra CAN teach us something in the same way that fairy tales can teach kids about the lessons of life. The life lesson from his bankruptcy: If you’re hurting and want to be given a break, be honest and don’t try to take advantage of the situation. Nobody likes being taken advantage of. And it’s really stupid to do this to people who can really hurt you.
So what’s Mr. Dykstra accused of doing? Allegedly, during his bankruptcy case he either destroyed or hid about $400,000 of his assets to keep them away from his Chapter 7 trustee and from his creditors. He’s accused of trying to sell a truckload of possessions to a consignment store, destroying or removing personal sports memorabilia, artwork, chandeliers and other fixtures at his mansion. Again, all this while he was in the midst of a Chapter 7 bankruptcy, when his assets were under the jurisdiction of the bankruptcy court. Oh, and then he allegedly lied under oath about this. See this story from the Los Angeles Times, and this one from CBSLosAngeles.com on “Lenny Dykstra Charged With Bankruptcy Crime.”
According to the U.S. Attorney’s press release:
“The indictment accused Dykstra of one count of bankruptcy fraud, one count of obstruction of justice, four counts of concealing property from the bankruptcy estate, three counts of embezzlement from the bankruptcy estate, and four counts of making false declarations to the Bankruptcy Court.”
How bad could this hurt him? He faces up to 80 years in prison if convicted on all 13 counts in the indictment.
This is obviously not your usual case. Unless your debts also total $38 million. Or unless you have $400,000 worth of stuff to hide. Most bankruptcies are relatively straightforward. The biggest lesson from Lenny Dykstra’s story: dishonesty is a good way to turn a case very complicated. And dangerous.
Realistically, most people filing bankruptcy feel guilty or fearful unnecessarily. The best thing you can do for yourself is to get ALL of your concerns out into the open in a confidential conversation with your attorney. Most of the time you will learn that you had nothing to fear. Or if there was a legitimate concern, then you will learn how best to deal with it.
In bankruptcy, knowledge is not only power. It is peace of mind.