Connecticut Woman's Bankruptcy Saga Drags for 16 Years
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Connecticut Woman's Bankruptcy Saga Drags for 16 Years

October 7, 2011

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Bankruptcy is supposed to provide a fast source of debt relief for those burdened by debts. Occasionally, a complicated case will drag on for a few extra months while the details are sorted out.

Connecticut resident Michelle DiLieto has been fighting for more than a decade and a half to settle her 1996 bankruptcy case. She filed to deal with medical bills associated with a hysterectomy performed at Yale in 1995.

Though many Americans file for bankruptcy because of medical bills, DiLieto's case quickly became more complicated: a year after filing her case, she learned that her doctors' diagnosis had been incorrect, that she hadn't had cancer, and that her hysterectomy was therefore not necessary.

While still ensnared in bankruptcy court proceedings, DiLieto reportedly sued Yale for damages and eventually won a judgment of $9.2 million in 2010. The problem still plaguing her is that her bankruptcy trustee has insisted that she owes him $80,000 for his services during her bankruptcy filing.

The trustee, Michael J. Daly, has reportedly had difficulty justifying those claims.

Bankruptcy Court Scandal

Daly, it seems, was recently audited by the United States Justice Department and found to have illegally transferred money from bankruptcy estates into personal accounts. In July, he pleaded guilty to embezzlement and is now awaiting sentencing, which could result in up to a year behind bars. Daly has also been disbarred by the state of Connecticut.

Sources note that DiLieto's bankruptcy lawyer has repeatedly contacted Daly in an effort to get his time sheets for DiLieto's bankruptcy case. Based on those sheets, he would receive payment for her case. Daly, however, has allegedly failed to supply any documentation of his work on DiLieto's case, leaving his payment uncertain and DiLieto's case still unresolved.

Part of Daly's argument for receiving the $80,000 he has requested includes a claim that DiLieto's case would have been dismissed for procedural errors if he hadn't intervened in 1999. But DiLieto maintains that Daly has exaggerated his role in her bankruptcy and that he has even worked to keep her case open in order to collect payment from her estate.

To date, DiLieto's 16-year bankruptcy case is apparently the longest in Connecticut's history.


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