Tales of three bankruptcies: Reasons vary for commissioner candidates' filings

Three of the 14 active candidates for the two open seats on the Flathead County commission have filed for Chapter 7 bankruptcy in Montana.

Cal Scott, the interim Flathead County commissioner and a Republican candidate for the District 1 commissioner’s position, filed for bankruptcy in August 2009.

The case, which involved Scott and his wife, Laurale, was wrapped up in August 2011, according to public bankruptcy documents filed with the Montana district of the U.S. Bankruptcy Court in Butte.

Clara Mears-LaChapelle, a Democrat running for the District 3 commissioner spot, filed for bankruptcy on April 16. And Gary Krueger, a Republican candidate for the District 3 commissioner seat, was in bankruptcy court back in 1992.

Details of Krueger’s and LaChapelle’s filings are not available on the bankruptcy court’s website, in his case because it is so old and in her case because it is so new.

Krueger filed for Chapter 7 bankruptcy in 1992, three years after his wife, Julie, died of cancer. He became a single father of three young boys.

The cause of the bankruptcy was overwhelming medical debts, Krueger said in an interview last week.

Krueger tearfully recalled how his wife had been diagnosed with a cancerous growth on her thyroid gland prior to their marriage in 1981. She recovered but was unable to get health insurance that would cover her for cancer.

She was diagnosed with cancer again soon after the birth of their twin boys.

“From that point on, my life went into hyperspeed,” said Krueger, a farmer who formerly operated a local concrete business. “For a year and a half, I spent every dime” on her health care.

Three years after her death, Krueger said, he still couldn’t keep up with the debt that had been accrued. He said bankruptcy was his only option.

“I built my life twice,” said Krueger, who now is remarried. “The guy that gets up from that and gets back, maybe he has more energy than the other guy” running for commissioner.

Because Mears-LaChappelle began Chapter 7 bankruptcy proceedings in mid-April, only preliminary fling documents are available from the court.

Mears-LaChappelle said she had no choice because she lost $2,400 in monthly income.

“I had to leave a previous job and that’s what caused this issue,” she said, adding that she was also faced with medical costs and costs associated with helping to care for a handicapped grandson.

“I tried everything possible to avoid this and it just didn’t work ... I cried when I had to do this. It was devastating, but I just couldn’t find employment,” she said, adding that she was a “victim of the economy” as many others have been.

She recently found a job with a Spokane company that provides merchandising services for convenience stores.

“I’ll bust my butt to hopefully get this bankruptcy turned around,” she said, adding that as a commissioner candidate, she wants to see an improved economy in Flathead County.

“I’m fighting for this (election) so this doesn’t have to happen to anybody else,” she said. “I don’t want anybody to have to go through what I did.”

The Inter Lake investigated which candidates had filed for bankruptcy in Montana after receiving a partial copy of Scott’s initial filing from Aug 27, 2009.

Copies of the bankruptcy document had been mailed anonymously to the county commissioners’ office and to another District 1 Republican candidate, Mike Shepard. Reportedly, copies were mailed to other commissioner candidates as well.

Shepard said he hadn’t asked anyone for any information on Scott and wasn’t checking into his opponent’s background. But, he said, as a taxpayer, he is concerned that someone who claims to have budgetary experience, as Scott has said, has been through personal bankruptcy.

Contacted by the Inter Lake, Scott declined to discuss the matter on the record, but instead offered a written statement on the circumstances of his bankruptcy.

“I do not intend to diminish the seriousness of having been forced to take this step, however we believe it is a non-issue to the campaign as it happened years ago,” stated Scott, who is a real estate professional and consultant.

He added that the bankruptcy matter was brought up as “nothing more than shameful, dirty politics in an otherwise clean and respectful campaign.”

The statement continues: “Yes, we like thousand of others in our Flathead and across the United States were taken advantage of by corrupt practices, creating one of the worst economies to hurt Americans since the Great Depression. I and many responsible Americans lost our entire life’s saving as a result of the Madoff crisis, predatory lending and subsequent financial meltdown.”

According to the bankruptcy papers on file at the U.S. Bankruptcy Court in Butte, the Scotts were discharged from $229,154 in claims that were discharged without payment.

The court paid out just $1,065 to the claimants of unsecured debt, in this case mostly credit card companies. Administrative expenses of $835 were also incurred by the Scotts.

The filing included $342,621 in secured claims for two homes. One house, at 235 Sandy Hill Lane in Columbia Falls, was listed with a current value of $85,000 and a secured claim value of $74,890. The second property, at 395 Pleasant Valley Road in Marion, was valued at $275,000 with a $267,731 unsecured value, for a total value of property of $360,000.

The Marion property was taken as part of the bankruptcy but the Scotts kept the Columbia Falls property, where they live in a mobile home.

The trustee’s final account from June 29, 2011, included $170,170 in unsecured claims in credit card debt accrued on 22 credit cards.

The original filing in 2009 had listed $173,663 of credit card debt, along with a 2008 Subaru Tribeca valued at $23,564 that was repossessed in July 2009. The total unsecured debt in 2009 stood at $197,227.

Court documents cited a combined monthly income for the Scotts at the time of the initial filing of $1,483. That included $114 a month from Cal Scott’s instructor job at Flathead Valley Community College and $1,377 a month from his independent real estate consulting business.

The documents cited monthly expenses of $4,768, leaving an imbalance of $3,285.

Scott was appointed interim commissioner on April 16 and now makes a monthly salary of more than $5,200.

His statement concludes by saying, “Having learned much from our past experiences, I can better understand and concentrate on being committed to providing outstanding service to you, the taxpayers of Flathead County.”