GOP candidate filed for bankruptcies

James Holschen Jr., a Republican candidate for the House in Spokane’s Third District, sought protection in U.S. Bankruptcy Court in two separate financial failures over the past four years.

In 2000 at age 22, Holschen filed a Chapter 7 bankruptcy seeking protection from $17,130 in personal debts. The court granted a discharge of debts three months later.

The following year, he entered a lease-purchase deal to take over an Arctic Circle franchise restaurant at Third and Cedar in Spokane. He has worked there since age 16. The Chapter 7 bankruptcy cleared his debts so he could take over the restaurant, but he was not prepared to handle the money side of the business, he said.

In 2002, he returned to Bankruptcy Court under his business name, Glorify and Serve Restaurants Inc., seeking protection under Chapter 11 in an effort to save his ownership. The case was dismissed six months later without debt relief. He subsequently filed under Chapter 13 in another effort to reorganize his business.

The Chapter 13 case listed $159,000 in debts, including taxes and secured claims totaling $100,546. The court dismissed the Chapter 13 petition because a proposed repayment plan could not be used to reduce tax liabilities.

Today, Holschen, 26, said he is left with $125,000 in debt from the Arctic Circle venture, money he intends to repay. Portions of that amount are owed to the Internal Revenue Service and state of Washington, he said. He has gone back to working at the restaurant as manager under owner David Peterson, who had to take back the restaurant as a result of the financial problems.

Peterson, who hired Holschen originally, said he wished Holschen had told him about his mounting financial problems before they had gotten so bad. Holschen, he said, apparently was too young when he took over the Arctic Circle but has a history of being a “pretty honest person.”

Holschen said he spent too much money on advertising, labor and personal items and then failed to hold back enough money to pay the larger bills that were due periodically.

“Once you start falling behind, the payments and interest start accruing,” he said.

His first bankruptcy came after he ran up the bill on credit cards he obtained when he was younger.

Last March, he was fined $325 for operating a motor vehicle without liability insurance, according to court records. He said his driving problems stemmed from his financial problems.

Holschen said he’s learned from his mistakes and wants to move ahead with his life. He thinks high school students should be offered financial management instruction to help them avoid money problems.

“I’m a lot more responsible today,” he said. He is married and has three children.

In July, he filed as one of two Republicans seeking to unseat four-term Democratic Rep. Alex Wood, 58. The other Republican in the race is David Stevens, 42, a deputy prosecuting attorney in Spokane County.

Holschen told Republican Party officials in Spokane about his problems before he filed in the race.

“He was very upfront and forthright about it,” said Jon Wyss, vice chairman of the party in Spokane County.

Wood said he does not consider Holschen’s financial problems to be a campaign issue, even though details of personal and business problems are likely to surface during an election. “If you are going to run for office, your life is going to be looked at,” Wood said.

Stevens said, “It sounds like he did the right thing when you get over your head. That’s what the bankruptcy laws are for.” Stevens also said he doesn’t view his opponent’s bankruptcy as “a real issue.”

Wood and Stevens each have had their run-ins with the legal system. Three years ago, Wood was stopped in Olympia for driving under the influence. He underwent a deferred prosecution with alcohol treatment and successfully completed three years of probation, he said. “It taught me a lesson I never want to go through again,” Wood said.

Stevens was hauled before a judge at age 15 in Sacramento following a fight, he said, and the case was dismissed because he was defending himself. He grew up in a low-income neighborhood, and some of his acquaintances from those years ended up in prison, he said. The episode became a turning point in his life, he said.

“It’s all in what you do afterwards,” Stevens said. “Everybody makes mistakes. I believe in redemption.”