A bankruptcy judge files for bankruptcy protection

Shocking indeed.  I first found a reference to this story in the April 24, 2012 edition of The Daily Journal (California).   The first nine paragraphs are quoted below.

A federal judge has filed for bankruptcy protection in his own district creating the unusual situation in which a colleague on the bench will preside over his financial matters.

U.S. District Judge Otis D. Wright II filed for Chapter 7 bankruptcy under mounting credit card debt and a steep mortgage late last year, according to court documents.

Wright and his wife, Evelyn, listed approximately $90,000 in debt mostly on credit cards, plus an $800,000 mortgage on their Rancho Palos Verde home in a bankruptcy petition filed in December 2011.

The petition, filed before U.S. Bankruptcy Judge Ernest Robles in Los Angeles, shows how even individuals with income above the median household income in California can land in choppy financial waters.  The Wrights combined income dropped from $271,000 in 2009 to $171,000 in 2011 – apparently related to troubles his wife encountered in her business as a clinical social worker in Rolling Hills Estates, which left them unable to pay bills and targeted in at least two collection lawsuits.

Legal experts said it is rare for a judge to file for bankruptcy and could raise concerns for litigants about Wright’s ability or temperament to decide financial cases, such as breach of fiduciary duty claims.

“This just looks really bad,” said Gregory L. Ogden, a professor at Pepperdine University School of Law with expertise in judicial ethics.  “Judges are supposed to have a degree of financial probity, and financial stability tends to promote that.”

According to the bankruptcy petition, the Wrights owe $18,000 in student loans but accumulated most of the debt between 2009 and August 2010, including $56,000 on two credit cards, plus $12,700 at Nordstrom, Inc. and $4,500 at Macy’s Inc.

A lawsuit by American Express seeking an undisclosed sum was dismissed from Los Angeles County Superior Court, while a suit by Nordstrom remains pending suit, the couple reported in their bankruptcy petition.

The real estate bubble appears to have added to the couple’s problems:  They either purchased or refinanced their home in August 2006, according to court documents, listing its value as $800,000 with a reported a monthly mortgage of $5,335 before taxes, insurance and other expenses.

Having to file for bankruptcy protection is embarrassing and humiliating for anyone.  It must be even more so for a bankruptcy judge, who having spent time presiding over other cases, must now face the mirror as a debtor.

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