Chapter 13 Bankruptcy Filing Goes up in Smoke

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woman's chapter 13 bankruptcy gets dismissed


A couple in Colorado who operate a marijuana business filed Chapter 13 bankruptcy proposing to pay their creditors with money earned through the sale of marijuana. While the state of Colorado has legalized the sale of marijuana it is still against Federal law. Because of this, the Bankruptcy Judge dismissed the couple’s case stating the Federal Bankruptcy Court cannot accept a payment plan funded by marijuana or break federal law by overseeing assets tied to marijuana sales during the course of a Chapter 13 bankruptcy. The couple has appealed the dismissal of their case and is awaiting a ruling from a Bankruptcy Appeals Court.

Chapter 13 Bankruptcy, Federal Law, and State Law

This chapter 13 bankruptcy case highlights the conflict between state and Federal laws. “Citizens who live in a state which has legalized marijuana sales are unable to take advantage of the Federal Bankruptcy law to resolve their debts when Federal law continues to ban the sale of marijuana,” states bankruptcy attorney Jon M. Gold of RGG Law.