Hiro Nakamura Should Be a Bankruptcy Lawyer

Hiro Nakamura is a character on the TV show Heroes who possesses the ability of space-time manipulation.

Why should he be a bankruptcy lawyer?

Because, as I indicated recently, I get emails that look a lot like this:

"I've not had full time work for a year and a half. My bills are current for the month of February; however, I've exhausted my savings and will not be able to pay my bills in March. I need assistance and guidance."

Now, the only problem is that my super power is super-boredom; that is, I'm boring at levels usually only attained by beings from Krypton when they've turned on their super-boring. And that is useful when I'm talking to angry creditors.

But if Hiro Nakamura were a bankruptcy lawyer, he could go back in time and give advice to folks to see a bankruptcy lawyer BEFORE they had exhausted their savings.

That would greatly improve the benefits that a bankruptcy lawyer could provide to his clients.

Oh, well.

You work with what God gave you.

PLEASE DON'T WAIT UNTIL ALL YOUR ASSETS ARE GONE BEFORE YOU TALK TO A BANKRUPTCY LAWYER IN ARIZONA, OR ANYWHERE ELSE!

Guys,

There are some people who really, actually break my heart.

They are the nice, sweet, hard-working people who make America the great Country that it is, and who spend their very last dollar trying to do the right thing.

So stop it! Do not spend that last dollar! Do not beggar yourselves for credit card companies and banks that have already made money off of you for all your lives.

Here's part of a letter from a very sweet woman.

LEARN FROM HER SITUATION, AND DO NOT SPEND YOUR LAST DOLLAR PAYING THE BANK OR MAKING CREDIT CARD PAYMENTS. PLEASE, I WANT YOUR GOLDEN YEARS TO BE, YOU KNOW, GOLDEN!!

Dear Mr McDaniel,

I am 61 years old. My husband passed away in November 2006 - after
three years of valiantly fighting a brain tumor. During that battle,
he could not work. I kept up with our bills and commitments as well
as over $100,000 out of pocket hospital and doctor bills.

Then in June 2008, the company for which I had worked for the past
seven years went out of business. I did not have a job. I continued
to pay all my bills but eventually ran out of money or other
assistance.

I refinanced the townhouse where we had been living in _________ so
now make mortgage payments of $1,381 per month.

However, after two years of unsuccessfully trying to sell the new
house my husband and I had been building, I quit making the payments
to _________ Bank (__________). The house eventually went into
foreclosure.

I continued to make payments on two pieces of land (one in _______ and
one in ___________) until January 2009. I then let _ & _ Bank know
that I had no more money and so stopped making those payments. Both
pieces of land also went into foreclosure.

I now have a lawsuit filed against me from _ & _ Bank for the land in
____________. _ & __ purchased the land themselves from the Trustee Sale
and say that now I owe the $104,000 remaining from the mortgage.

I am sure I will receive a lawsuit from them for the __________ land as well.

Is it too late to file for bankruptcy? What are my options?

------------------------------------------------------------------


Okay, now I'm without words.

If You Were A Zillion Dollar Credit Card Company, Would You WANT to Drive People into my Office?

Traditionally, lawyers have exchanged a bottle of scotch or champagne with attorneys who referred them cases over the years. Or sent out baskets of fruit. Or cigars and blonds. Depended on the state.

I'm torn. I am not happy with the behavior of credit card companies, but they're sending me so much business, I almost feel compelled to find out if they prefer gift baskets with fruit and chocolates or with nuts and gourmet coffee.

I was talking to YET ANOTHER hardworking, do-the-right-thing kinda potential client today, who said, YET AGAIN, that she had worked two jobs to keep all her credit cards up to date.

And then, with a credit card company she'd been with for twenty years, she was ONE HOUR LATE making a payment. And her interest rate instantly went up from 2% to 29%.

Then the big rock she was pushing up that steep hill got bigger, and then bigger, and then bigger, and then it rolled back over her hardworking, try-to-do-the-right-thing back, and when she regained consciousness, she realized that the companies she had worked so hard to make happy for so very long didn't care if she lived or died, and apparently wanted her to file a bankruptcy so she could shop someplace other than Walmart.

She has four kids, by the way.

So I listened to her talking, and I said, you know, sounds to me as though you'd sleep a lot better if you didn't have a hundred thousand in credit card debt (it used to be a lot less, before the credit card companies piled on massive interest rates and penalties).

She agreed.

So we're going to talk some more about it, and she's ultimately going to have a little more money to spend on the four kids.

And by the way, can you spell corporate stupidity?

Can I Keep Money in my Bank Account So I Can Pay the Trustee for the Preference so he doesn't Sue Mom?

Nope!

It makes sense that you'd want to do so, but you'll just lose that money to the trustee, because it's a non-exempt chunk of dough in a bank account on the instant of the Chapter 7 bankruptcy filing.

So the trustee has an absolute right to have and grab and take it, for the benefit of creditors in your case.

And then the trustee would STILL say, politely, would you rather pay me the amount of the preference which was paid to mom, or would you rather I sue her?

And usually, here in Arizona, they'll permit a stream of payments, rather than a onesie.

And perhaps, after the date for objecting has come and gone, you'll sell an exempt asset to get money to pay the trustee so he doesn't sue mom. Because that would make Thanksgiving Dinner a little...strained.

The Stupidest Consumer Protection EVER? Cute Post by Another Bankruptcy Lawyer

Apparently, some other lawyers have also failed to see the benefits to consumers (or the humor) in the BARF Act.

So I interrupt your normally scheduled blog to provide a rant from someone else, just for variation in rants.

Why Do Credit Card Companies Call It a "Repricing Event" When They Increase Your Interest Rate by 30%?

Because non-consensual sex is too hard to spell.

Sorry, I had to do it. A client told me this one today, and I'm still trying to get the coffee out of my keyboard.

One Ring to Rule Them All, And In the Darkeness Bind Them!

Okay, wrong ring.

But wedding and engagement rings continue to be issues in cases, and it may get a little worse over time before it gets better.

But don't stop breathing; I have written two different blog entries about wedding rings, and this is just an update. Read the other two so you'll understand this one.

And bear in mind that we're talking about only one issue: do you keep the ring or not? In every case where a client of mine wanted to keep the ring, they kept the ring.

Therefore, the only issue is, do you have to pay anything to the trustee for the ring?

There is a fiendishly smart (actually, he's a nice guy, trying to do a good job for his clients) trustee's lawyer in town named Terry Dake.

Terry has formulated an opinion that, while you can stack every other exemption in Arizona except the homestead exemption, you can't stack the wedding ring exemption.

The reason you can't stack the homesteads is that the homestead exemption statute is designed to prevent that.

The reason, Terry believes, that you might not be able to stack the wedding ring exemption and put both the husband's and wife's wedding ring exemption on her ring is simple. Terry believes that the wife's ring is not community property, because it was a gift.

What does that mean to a couple contemplating a Chapter 7 bankruptcy in Arizona, when she has a ring that cost $10,000 when new? Well, that all depends.

But she'll get to keep it, whether or not it's fully or partially exempt, depending on the valuation and the willingness of the couple to pay any overage and appear at an auction, to deal with overbids.

Do you begin to understand why I'm only 20 years old, and yet have this full head of silver hair, with a silver beard? I used to be six-four, two hundred fifty pounds of muscle, with GIGANTIC biceps; blond hair, blue eyes!

Then I became a bankruptcy lawyer in Arizona, and look at me now!

p.s. as to the ring, if it's not paid off, there's a huge chance that the jewelry store has a security interest in the ring. The good news is that it reduces the equity in the ring, so you won't have to pay the trustee to keep the ring. But you would need to pay the jewelry store what they are owed to keep the ring! And then there's the thought of redemption, but it seldom has application with debtors who can't pay their credit card debts.

p.p.s. if I wrote the laws, this whole process would be very, very simple. I'd simply look at the value of all the exemptions. Then there would be one and only one exemption: the debtors can exempt property with a fair market value as of the date of the filing of a buncha dollars.

Done! Eezy-peezy!

But I didn't write the exemption laws, so we get to work with the laws we have. And Arizona has fairly generous exemption laws, although they're uneven as all get out!

Am I an Arizona Bankruptcy Law Expert in Phoenix? Well, Let's Go to the Dictionary!

I heard this from a potential client this morning, and couldn't resist passing it on.

You know what an expert is, right?

Well, an "ex" is a has-been.

And a "spurt" is just a drip under pressure.

So I guess if the shoe fits....

Unexpected Compassion in Bankruptcy Court. Vacating Reaffirmation Hearings on Cars!

I have written before that Bankruptcy Court is one of the few Courts in the United States where the Pity Pitch doesn't work very well.

The reason is obvious. Everybody there has an excellent reason to make a Pity Pitch, and if everybody can make the same sort of argument, that specific argument will mean less to the people at whom it is directed. They develop a resistance when they've heard it all before.

In addition, the system has been re-designed, after the 2005 Amendments (the "BARF" Act), to eliminate the risk that a human might feel or manifest compassion ("my job is only to calculate ____________: after that it goes to Jerry, for action. I have no discretion in deciding a result at all. It's all numbers.").

But they forgot the Judges! And apparently there is compassion left buried there.

I went to a reaffirmation hearing recently for unrepresented debtors. I must have taken a wrong turn, or I was disoriented because of my advanced age. For whatever reason, I was there.

And I got to watch a remarkable demonstration of compassion from a Bankruptcy Judge I won't embarrass by name.

But he heard about thirty motions for reaffirmation on automobiles in bankruptcy cases involving unrepresented debtors, and he vacated all of them.

Here's what I think is going on in the area of automobile reaffirmations in Arizona.

There's a nifty opinion entitled In re Moustafi, Ch. 7 Case No. 4-07-00407-EWH, 2007 Bankr. LEXIS 1925 (Bankr. D. Ariz. June 4, 2007), and in that opinion, the Judge said, more or less, the debtor tried to get a reaffirmation approved. That's good enough. So even though the reaffirmation wasn't approved, the debtor gets to keep the car as long as payments are current.

Are you confused? Well, you certainly should be!

Here's some history that may help.

Prior to the "BARF ACT" 2005 Amendments to the Bankruptcy Code, a debtor in Arizona could keep a car simply by making payments.

But BARF modified section 521(a) of the Code so that Section 521(a) of the Bankruptcy Code merely requires the debtor to "take steps to act on an intention to either retain or surrender."

So IF a debtor wants to keep a car, and IF the debtor files a reaffirmation agreement timely, and IF the Bankruptcy Judge, FOR WHATEVER REASON, vacates or denies the hearing on the reaffirmation agreement, THEN PROBABLY the debtor gets to keep the car IF the debtor stays current, MAYBE.

Got it?

Yeah, I know. Confusing.

Here's another discussion of the cases and the doctrines and the outcomes, which is in a nifty Georgia Bankruptcy Law Blog.

Yet Another Way to Keep a Business in a Chapter 7 Bankruptcy Case

My guess is that this is going to provide more fodder for blogs than most topics, because there are a lot of different patterns in businesses.

Let's do a quick recap; bankruptcy is critical to job-formation in the United States because entrepreneurs need to be able to learn their jobs, because no school teaches you how to be an entrepreneur. That's partly because the job description changes daily.

It's also because running any particular business requires a learning curve.

So for any particular biz, all you need to do is to work on it like crazy for five years. And then experience the heartbreak of massive failure.

And then the humiliation of bankruptcy, a public failure. That's public record.

But by then, Grasshopper, you will have learned the answer to the Koan!

Not the ever-popular "What is the sound of one hand clapping?"

But one that's more useful in the business world: how do I run this business without ANY overhead, just by subcontracting the elements of the business, and overseeing the process?

Okay, the first Koan is much more elegant.

But finding the answer to the second Koan makes you very, very happy indeed.

Note: this is a post-graduate issue. If you have a brick-and-mortar business, and you want to keep and improve that by way of your bankruptcy, don't be embarrassed. The trick with the loaves and fishes is not so easy, Grasshopper!

Why Do I Ask Clients, "Is there Anything Else You Think I Ought to Know?"

A cleanup question is a useful tool.

Remember that they call it the practice of law.

There's a reason for that. You learn as you go. Every single day.

About twenty-eight years ago a nice young man called me on the phone about a possible bankruptcy filing.

I asked him a ton of questions. He answered; he was well-spoken, well-mannered, and well-organized.

I figured he was an ideal client on the hoof.

At the end of the discussion, he asked if there were going to be any law enforcement officers at the first meeting of creditors.

I responded that it was in the Federal Building, so yeah, there were going to be Feds.

I asked why he had asked the question. He answered that he had recently become aware of a warrant for his arrest.

For murder.

I told him he didn't need me. I gave him the name of three board-certified criminal defense lawyers here in Phoenix, and suggest that he not pay me, and instead pay them.

Whatever they wanted.

And I also pointed out that credit cards were the least of his worries.

Why There Are No Jobs, But Plenty of Bankruptcy Cases to go Around!

Clients, you can skip this one; it's just an observation on the reasons that there are too few decent jobs to go around in the United States.

And this isn't a blog about macro-economics, because I'm just a bankruptcy lawyer, and I'm not smart enough for all that theory.

But my understanding is that the middle class has not gotten a raise in real income for several decades, for a lot of reasons.

One of those reasons is that production of goods has been outsourced by a large number of large corporations.

I was reminded of the plight of the middle class in the United States when I heard a satirical song when I was looking for some old guy rock and roll.

Seems to me that there are countries that have decided that they want to produce their own energy instead of importing it, and they therefore pay less for their energy. And there are countries that decided it would be good to make it easy for manufacturers of goods, and they have jobs coming out of their ears. Kinda like the United States when it was the arsenal of democracy, and when it could produce its own tanks, entirely in the United States.

And then there were very few bankruptcy cases.

So maybe we ought to figure out what makes it hard for manufacturers to produce in the United States, and make those barriers go away.

Or we can always just keep mass-producing bankruptcy cases.

Your call, of course. I just sit here chained to the desk, trying to help some poor devil who tried all his life to work as an engineer, only to find that we don't need engineers in the United States anymore.

So maybe he can go back to school and become a hair-cutter, or learn to give therapeutic massage.

And we can watch how well an economy works when we all trade haircuts for back-rubs for car washes. You know, an economy that is entirely based on services to one another, instead of production of anything whatsoever.

One nice side-effect of no production of any actual products at all is that the air will be very, very clean indeed.

Bankruptcy: The Most Important Job-Creation Tool

How do I get there?

Simple.

Jobs are created in the private sector, not the public (government) sector. If somebody has a government job, the money to pay for that position came from the private sector. No private sector at all, no jobs at all. Except under socialism and communism, and the problem with socialism, according to Margaret Thatcher, is that eventually you run out of other people's money.

Therefore, if you have a job and you can feed your family, thank an entrepreneur. And thank bankruptcy.

Because an entrepreneur, the guy who assembles the assets and the employees of a business, isn't totally stupid.

He will take risks; his risk is failure. And if you're running a business and you guess wrong, or the business environment changes, you get to FIRE a bunch of people, and many entrepreneurs would rather drink molten lava.

Our economic system is driven by a profit motive, and it provides the highest standard of living in the world for the largest number of people.

All that could change overnight, of course.

But back to the topic: an entrepreneur is the guy who decides that the world needs a better juice drink. So he assembles the lease for the juice bar location. He interviews the potential employees. He begs Aunt Martha for the seed money, and then the SBA, and puts up his house for security. He works 20 hours a day for the first year, because he can't afford enough employees during that rough, rough first year.

Then he loses the farm. He guesses wrong. The business tanks. Remember, the average self-made American millionaire goes broke FOUR TIMES before he gets to keep it.

What would happen if people went to jail if they didn't pay their debts?

That's not a crazy suggestion, since for much of history, there have been prisons for debtors, and there still are in some countries.

Those countries typically don't have a vibrant economy.

Because an entrepreneur is smart. And if the risk of building a business is that he's going to get to go to jail if it doesn't work well, that will reduce the number of businesses being built very quickly, and also the number of jobs that businesses build.

So let's track it again: while banks may believe that bankruptcy is bad, it's really very good for the economy. Because it's hard to put together a business (no school does a good job of teaching you how to start and run a tiny business; sorry, Harvard). Therefore, an entrepreneur has to learn on the job. And risk a business failure every single time.

Because there are big risks in running a business (the SBA and the bank foreclose on your house, sue you for big bucks, and you get to tell all the friends you hired over twenty years that they have to go find somebody smart to work for), your third wife leaves you because she only liked your jet ski, and a bad time is had by all.

But a clever entrepreneur understands that if he files a bankruptcy, and can then assemble the seed money, and find employees and train them better, and find a better location, and advertise on the internet this time, and work 23 hours a day instead of 20, HE CAN MAKE IT WORK THIS TIME!

And he's right. Eventually he'll get it to work, and there will be more productive jobs creating widgets, or giving better haircuts, or building better mousetraps, or serving more and better crayfish etouffee, or teaching speed reading.

But he won't do it unless there's some way to get out from under and start over. And you really, really want an entrepreneur to be able to start over, after he's learned some of the lessons about running a business that they don't teach in school.

If you want your kid to find a job.

Yes, this is still a depression; Unemployment is officially 9.7%; Bankruptcy cases will continue to increase

You heard it here first, folks.

p.s. Wait until commercial real estate tanks.

p.p.s. Wait until hyper-inflation hits.

p.p.p.s. Maybe you think this makes me happy, because I'm a bankruptcy lawyer. And nothing could be further from the truth.

What Happens When Only One Spouse Files a Bankruptcy?

It's never good to make waves in bankruptcy cases. The trustees are used to seeing a particular set of facts, and they are trained to be curious about non-standard sets of facts.

So, for instance, when I was at a first meeting of creditors today in Casa Grande, I got to hear the filing spouse sputter when asked 1)WHY his wife didn't file, and 2)was his wife getting a tax refund, because if so, the trustee wanted it, even if the wife wasn't filing a bankruptcy, and 3)WHAT ASSETS did his wife own, even if she wasn't filing?

You just KNOW that debtor will be sleeping on the couch for several decades after the trustee takes his wife's car and tax refund, and whatever else looks like fun, when his wife had told him she wanted nothing to do a bankruptcy.

But wait! There's more! He'll be sleeping in the doghouse when his wife gets sued for debts that he has discharged in his Chapter 7 case, because creditors do that sort of thing. Darn creditors. But his discharge won't keep creditors from suing his wife, and they will sue her, working on the very strong presumption that debts incurred during marriage are community debts.

I've filed singleton bankruptcy cases for married folks, and gotten decent results in the past.

But it's always a bumpier road than a twofer.

Also note that the trustee wants to count the spouse's income for means test purposes.

Still, guys hate the idea of putting their wives through the process of a bankruptcy.

I always tell 'em, sure, I PREFER it if your wife doesn't file right now. And that's because I'll get paid to file your bankruptcy case, and then I can get paid to file your wife's bankruptcy case when she gets sued!

Of course, I don't prefer it. I prefer a good result for the client. So nobody has to sleep in the doghouse for several decades.

Go Get 'Em, Tiger! Lawyer Sues: Unrelenting Calls on his Overdue Student Loans

This is a just for fun post.

I always like to see somebody going after those folks who make a lot of phone calls.

And student loan lenders are remarkably aggressive in collecting their money.

The ABA Journal recently ran this article:

A Seattle lawyer who says Sallie Mae harassed him with “unrelenting” automated collection calls is suing for at least $500 in damages for each unwanted contact.

Lawyer Mark Arthur is seeking class action status for the suit, filed in federal district court in Seattle, according to the Puget Sound Business Journal. The alleged calls to his cell phone were made after Arthur fell behind on loans for his education at the Seattle University School of Law.

Arthur claims the calls made on behalf of the SLM Corp., also known as Sallie Mae, violated the Telephone Consumer Protection Act. The suit (PDF posted by the Puget Sound Business Journal) estimates the number of potential class members to be in the tens of thousands. The action seeks damages of $500 for each unwanted call, trebled to $1,500 because the alleged violations were knowing and willful.

“Sallie Mae harassed me with dozens of unwanted calls on my cell phone, including calls that woke me up at all hours of the night and often within hours of each other,” Arthur said in a statement published by the Business Journal. “These unrelenting calls unfortunately corresponded with a time in my life that required great attention to family issues.”

The Super-duper Money-Back Bankruptcy Guarantee!

Puh-leeeze!

Generally, if something looks too good to be true, it is.

I've talked a little about docu-prep services previously.

But there's one step lower, or perhaps sideways, in the bankruptcy universe. That would be the online-computerized bankruptcy .

Recently I've read advertisements flogging their incredible, amazing, money-back guarantee if the Court doesn't accept the filing!

Well, duhhh.

The Court will accept a filing if it's written in crayon on butcher paper, as long as the filing fee is paid (that's an exaggeration, but not much).

On the other hand, I noticed that the super-duper money back guarantee said nothing about whether the Court (either the Clerk of the Court or the Judge, and remember to worry about the U.S. Trustee's Office and the U.S. Attorney's Office, and also the creditors themselves) would DISMISS the case after it was filed, or whether the U.S. Trustee would file a Notice of Presumption of Abuse, or whether a creditor would file to dismiss the case, or object to the discharge, or otherwise make a nuisance of itself.

It's almost as though a doctor's office would GUARANTEE that after they did a heart-bypass, the artery would be clear, and say nothing about whether the patient would live, or the frequency of infections, or the length of the recovery.

You know?

What's Going to Happen to My Time-Share in my Chapter 7 Bankruptcy in Arizona?

As with most things, that depends.

A time share is an asset. It's also not one of the assets listed as exempt under the laws of Arizona.

But it's a funny kind of asset. Maybe it's not transferable under the terms of the contract. Maybe there's a transfer fee. Maybe the timeshare agreement is fifty pages long and nobody in their right mind wants to read it!

And one timeshare is not the same as another timeshare.

Consider a timeshare in Haiti right now, you know? Or in New Orleans right after the flood.

Some timeshares are easy to sell, and debtors often sell them prior to filing in order to buy food, fuel, and provisions prior to filing a Chapter 7; that's probably just fine, as long as they sell it for close to fair market value to a non-insider. It's not a fatal problem if they sell it, for fair market value, and receive that value, prior to filing, and spend it on food, fuel, provisions, and so on.

But any transaction with an insider (which includes but is not limited to an insider) will be subject to much more scrutiny than a transaction with a non-insider.

So what happens if the time-share can't be sold by the debtor prior to filing?

Well, the trustee will probably try to sell it at auction, as trustees do, about once a month.

Or the trustee may, in the exercise of his or her business judgment, decide that it's not worth anything at all, and may abandon it out of the estate (and back to the debtor).

The debtor, if he or she wants to keep a timeshare, will sometimes make a lowball offer to the trustee; and sometimes a lowball offer will be the winning bid at the trustees auction, and then the debtor gets to keep the beloved timeshare.

But you can never tell about auctions. There are always those pesky Other Bidders!

Keeping a Business in a Chapter 7 Bankruptcy in Arizona, Part II

This issue will provide a ton of sequels, because every small business situation is totally different.

Kinda like snowflakes.

Today's lesson, however, will be brief.

In today's variation, the small business owner, still a haircutter, has a tiny sub S corporation, and owns 100% of the stock in that corporation. No employees except the debtor.

So if she wants to continue cutting hair at the same place, under the same corporate umbrella, with the same phone number, and the same name, that MIGHT be a doable project. Here's how: the minute the filing happens, the debtor, though counsel, files an application to abandon the stock in her tiny business as being burdensome and worthless to the bankruptcy estate.

Now, if there's a debt load of $10,000 in the corporation, mostly from the lease, the trustee should (no guarantee) take a look at the $300 replacement value of combs, mirrors, telephones, signage, carpets, and half-empty cans of hair spray, balance that against the $10,000 owed by the corporation, and then agree that there's no reason to object to the abandonment of the stock from the estate.

The stock then flies out of the estate, into the waiting hands of the debtor, and the debtor now gets to run the corporation just as though she (the individual debtor) never filed a bankruptcy.

Sounds simple.

If only it were.

First, this works much, much, MUCH better if the corporation has gone dark (no business being done, at all) prior to the filing of the individual bankruptcy. It muddies the water no end if the business is being run after the filing, because then the poor trustee has to consider going concern values, and who owns the money being generated inside the corporation, and a lot of other arcane legal issues.

If the corporation has cooperated by going dark, the analysis is much simpler for the trustee.

And we don't want, ever, to confuse or anger the trustee. A happy trustee is a beautiful thing.

Note: if the trustee objects to the abandonment of the stock, everybody gets to talk. Then the debtor may or may not decide to make some offer to purchase the stock.

Or the debtor will decide to set up shop down the street, with a new set of combs and clippers that she bought with dough from dad.

See? It's all simple, but it's never easy.

And worse, there's no way to predict which way the trustee will jump on the application for abandonment.

That's why there has to be a plan "B", and a plan "C", and a plan "D", fully formed and ready to go PRIOR to any bankruptcy filing.

Because all of the trustees are actual, factual humans; and as different as snowflakes. Ditto the Bankruptcy Judges.

And Judges differ in their opinions. You heard it here first.

And that brings us to my next area of interest: when Judges don't agree, what's the right answer?

Arizona Bankruptcy Judge Talks About Reaffirmations, Redemptions in Her Bankruptcy Cases in a Video Published on the Arizona Bankruptcy Court Website

Bankruptcy Judge Hollowell sits primarily in Tucson, so she presides over my cases less frequently than some other Arizona Bankruptcy Judges.

But she's always been smart, even before she got the robes.

She also gives a care about debtors moving through her Court, and she's generated a video discussing reaffirmation and redemption which is published on the Arizona Bankruptcy Court Website.

Whether your case is in Phoenix or in Tucson, it's a smart thing to listen to a Bankruptcy Judge who took the time to explain how she looks at reaffirmations.

You will all recall from my prior blog entries on the point that I share her concerns about reaffirming on automobile loans. In fact, I like reaffirmations the same way I like root canals.

If you listen to the entirety of Judge Hollowell's reaffirmation and redemption video, you'll understand why I feel that way. Or read my older posts on the subject; I was traumatized by a client who asked me to help her reaffirm, who subsequently defaulted on the expensive car loan.

That's why they call it the practice of law; you get to learn a lot of ways NOT to do things.

If You're Gonna Be a Bankrupt, Don't Be a Banker!

Ordinary people of all sorts just plain like to help.

And during a depression, it's hard to resist when a family member wants a loan, or wants you to pay back a loan. Or asks you to park money in your account, because some creditor is chasing the relative or friend.

If you have issues yourself, and might need to file a bankruptcy, find it in your heart to resist. Don't give a loan to a relative. Don't pay back a loan to a relative. And don't let a friend, relative, or lover park money in your account.

The reasons are pretty simple. If you repay an unsecured debt to an insider within a year of filing your bankruptcy, the trustee will simply rub his hands together and say, "Yummy!" You have unwittingly exposed your beloved mother, grandmother, dada, or memu to a lawsuit.

The polite trustees always ask if you want to pay them the amount of the preference, or if you'd rather they simply let slip the dogs of war on Grams.

If you loan money to a relative, and you don't receive that amount back prior to filing your bankruptcy, it's an ordinary account receivable. And the polite trustees will ask if you want them to sue your sister with cancer, or if you'd rather pony up that amount.

And DO NOT let somebody park dough in your bank account. It's just bad business. What if one of your creditors garnishes that dough out of your account?

Your friend becomes your former friend.

And what if you give that amount back to your soon-to-be-former friend just prior to filing? It looks just like a preference, or a fraudulent transfer.

So unless you want to learn the rules of tracing and co-mingling money, just say no!

Document Preparation Services (Docu-preps) and Bankruptcy in Arizona

Here in Arizona there is no unauthorized practice of law statute.

There are, therefore, document preparation services that will word-process wills, bankruptcy petitions and schedules, and divorce packages.

The prices for those services will vary. The prices for word processing a bankruptcy package is apparently held to a ceiling of $200, because the docu-prep services are permitted to provide typing and clerical services, but not legal advice to a potential debtor.

Have I ever referred anybody over to a typing service for a bankruptcy? No.

Would I ever do so? Ever is a long time, I suppose.

But a "no advice" service would make me nervous if I were filing a bankruptcy.

There is, after all, so much to go wrong. go wrong. go wrong.

At a Flagstaff first meeting of creditors in a Chapter 7 Bankruptcy case, I watched a debtor couple lose three vehicles that were not exempt. And that made me sad.

I knew if they had gone to somebody who knew what they were doing, and who was permitted to give advice, the couple would have sold the vehicles prior to filing and at least been ahead of the game for six months worth of food, fuel and provisions, whatever provisions are.

But it made me sad.

Gambling and Bankruptcy

Every now and then somebody drops in and discusses how much they don't like themselves, because they just bet their way into the poorhouse.

Even worse, I sometimes get a chance to talk to some poor devil who's dishonored a gambling marker from Las Vegas, and now has an ARREST WARRENT out for him, and is looking at the probability of being EXTRADITED to stand trial in Vegas for what they suggest is like passing a hot check (the Vegas view of dishonoring a gambling marker).

That's the kind of corporate stupidity that comes from being run by a publicly traded company that has to report quarterly gains.

The Mob was much smarter. They wouldn't let a schlub run up a $200,000 marker, and if he didn't pay, they just WOULDN'T LET HIM PLAY AGAIN until he made good. Or just work him over a little.

Now lemmie ask you: are you more likely to use a marker (gamble on credit at the casino) if the consequence is that they might sue you, or refuse to let you keep playing, OR if the consequence is that you'll GO TO JAIL FOR TEN OR TWENTY YEARS for failure to pay?

Yeah, that's what I thought.

So I have a very strong suggestion for you.

Do not ruin your life with compulsive gambling. Find a different, less expensive compulsion with fewer bad side effects.

Compulsive swimming, maybe. Compulsive blogging. Compulsive fingerpainting.

But compulsive gambling is now plain out, especially if you're asked to sign a marker at the casino so you can keep going.

Just say no.

How Can You file a Chapter 7 Bankruptcy and Keep Your Small Business?

Well, you can't. It's absolutely impossible.

Except when you can.

I'm going to write about this topic and start with the very smallest and simplest business, and work up to more complex and larger businesses.

Our first example in this topic area is the haircutter/dog groomer. Same business, different species. But we'll stick with the haircutter to keep it simple.

She's cut hair in a tiny little place that is her pride and joy; she came here from a different country, and loves having the freedom to own a business, which she didn't have back in East Mumbledy-mumble. The government there was too big, and had too many regulations to make it possible for an ordinary person to open a business and thrive.

Like many legal immigrants from East Mumbledy-mumble, she's willing to work sixteen hour days, nine days a week, because that was common in the state run factory that was formerly her boss back in the old country.

She's had a ten-year great run cutting hair, and now she's hit a rough spot on the pavement. And that's for three reasons.

One is that she doesn't know how to advertise on the internet, so she's invisible to customers. But she still has almost all her old customers, because she does such good work.

One is that her customers, one and all, are also affected by the economic depression currently gripping the United States. Therefore, while she's lost very few customers, they now come in for cuts only every other month, rather than every month.

For the numerically challenged, that means that her gross income has been cut in HALF, through no fault of her own; BUT HER OVERHEAD IS THE SAME AS IT WAS BEFORE THE INCOME WAS CUT IN HALF.

The final reason that her income is down is simple, brute competition. There are now haircutters who'll work for very little indeed, just to keep their doors open.

So how does she get to dump the debt and keep the business?

Watch!

First, the business sort of exists, and sort of doesn't, depending on your perspective.

She didn't incorporate her business. It's a dba ("doing business as...").

Therefore the physical plant, her chairs, and her clippers, and her stuff, all belongs to her, rather than to some other legal entity, like a corporation.

Here in Arizona, there's a "tools of the trade" exemption. It's only $2,500 or so, but we can aggregate her tools of the trade exemption with her husband's (he brings in no money, and cooks well and keeps the house clean. That's to keep the example simple).

And the tools are going to be valued at replacement value, and since they're all old and used, and used tools are a drug on the market right now, all of her stuff (clippers, brooms, bins, half-empty hair spray cans, mirrors, combs, and so on) are going to be exempt, or worthless, which is almost as good.

Now, you'd think that just filing for her would be good enough. But no. Because the trustee in her case will quite reasonably ask about the good-will value of her tiny business if it's open on the day that she files a Chapter 7, and the trustee will attempt to obtain payment from her to buy back her own tiny business, where she works many hours a day, on her feet, with no help. Because a going concern has value over and above it's asset value.

Fact.

So she closes the business, because under the best of all possible worlds, she would not have money to "buy back" her own business, nor would she even be able to survive the process of evaluation of the value, or fight with the trustee's very smart and aggressive lawyer when he or she decides on a value that the trustee DEMANDS.

Because if the debtor doesn't cough up the dough, the trustee, as a fiduciary, must sell the business, along with the client list, minus the tools of the trade.

Fact.

But now there's no business. Our heroine has decided that she needs a mental health break, because she's close to a breakdown because of creditor phone calls and letters and threats, so she closes her business.

Now she inventories her tools and all her other assets, and she lists her debts.

Now she files her bankruptcy.

And then she rents a much smaller, much nicer place down the street. For no money down. Because this is a depression.

And she puts up a sign with a different name for the business, because the old name is property of the bankruptcy estate (although it has exactly zero value).

And she has a new telephone number, because the old telephone number was property of the bankruptcy estate.

And she lets her old clients know about the new place by sending them invitations to her not-so-grand opening of the brand NEW business, and she'll also tell them about it when she goes to her five Church services on Sunday, at five different churches, because she may not know how to market using the internet, but she sure knows how to shake hands at the pancake breakfast!

And now she's back cutting hair, minus a lot of debt, and has kept everything she wanted to keep.

And my next discussion of the topic will be the same haircutter, plus the complication of a pre-existing corporate shell drenched in debt.

Stay tuned!

Apparently, the Best Bankruptcy Lawyer in Phoenix, Arizona Doesn't Work at that Pre-Paid Legal Services Firm

So there I sat, like you do when you're a bankruptcy lawyer in Phoenix, Arizona, and this nice couple sat down.

I said, "So how can I fix all your problems?" Because I always want to fix all their problems. And sometimes I can.

She said, we were a little uncomfortable with the advice we got before, so we thought we'd shop bankruptcy lawyers. I said that I was happy that I was on her shopping list.

I also asked what advice made her uncomfortable.

She said that the last bankruptcy lawyer she'd talked to hadn't been board-certified.

I said, no biggie. There are several very good lawyers in the area who are not board-certified in bankruptcy law, and I was still happy to refer them cases appropriate to their skills.

She said she had $20,000 worth of non-exempt real property, and his advice had been "Sell the non-exempt piece of real property to your daughter for $1,000, then wait for six months and file your Chapter 7 Bankruptcy."

I said that was a remarkably, incredibly, seriously bad piece of advice for everybody in sight. Your daughter would get in trouble. You'd get in trouble. You might actually go to jail. At a very minimum it would have been a fraudulent transfer, just as though you had sold a car to your daughter for a dollar prior to filing.

And I also pointed out that I was mystified by the suggestion that waiting to file for six months would somehow help. There are two relevant fraudulent transfer statutes that jumped out of my head when I heard the story, and one has a one-year reach back, and one has a four-year reach back.

So no matter what the nice couple decides to do, at least they aren't going to be committing bankruptcy fraud on my watch, because they're waay too nice for orange jumpsuits.

And I still need to find out what pre-paid plan that was, and what amazingly bad Arizona bankruptcy lawyer that was, so I never refer a client to him by mistake.

Auctioning a Debtor's Dreams, Hopes, and Beanie Babies in Bankruptcy Cases

In Arizona, about once a month, there's a sale by the trustees of property that the trustee believes is not exempt in that trustee's Chapter 7 Bankruptcy cases.

The trustees have slightly different ways of approaching the sales.

The physical plant for the sales is Room 102 at the District of Arizona Bankruptcy Court, and it's an ordinary room with a phone in the middle of a folding table. There are perhaps fifty chairs in the room.

The trustees differ in their approaches in many ways, but not in one: they don't take cash. Normally it'll be a cashier's check within three days of the sale.

There is normally a lowball bid first made by the debtor.

There are people present on the telephone, often including the debtor, and the folks on the phone, and the folks in Room 102, can bid.

The increments of price differ a bit depending on the trustee and the value of the asset being disposed of at the sale. The increments might be $1,000 for real property (20 acres in Casa Grande, for instance), or $10, for the exercise bike.

The assets being sold are broken out individually by some of the trustees, so that trustee might show a sale of five different cars, all with different initial bids made by the debtor.

Another trustee might have a sale of "one pool table, three guns, two exercise bikes, and a pearl necklace and earrings" all lumped together, with a starting bid of $500.

Yet another trustee will list the items for sale with great particularity, showing a Glock 9mm pistol with case and two 16 round magazines and two 50 round boxes of ammunition with a starting bid of $100 (note: the Glock, sight unseen, was bid up to $300; nobody wanted the 22 pistol, which was bought back by the debtor for $100. The 22 pistol was therefore "Sold As Bid", which happened about half the time.

The debtor, especially with wedding rings and cars, had the privilege of bidding in the exemption to which the debtor was entitled.

Note: I didn't notice any particular bargains for anybody.

Also note: auction fever caused some items to go for more than a careful buyer might have paid.

The Best Bankruptcy Lawyer in Arizona!

For what purpose?

Lawyers are like golf clubs; there are clubs for sand, there are clubs for distance. There is no best club for every situation.

There are lawyers I think of as the best in Arizona for specific purposes. There are clients I won't take for various reasons. I try to send them to a good home.

For instance, there are folks who must file a "big box bankruptcy". They are, either because of a failure of education or emotional issues or personal preferences, folks who want to bring in a big ol' box of jumbled, crumpled paper and never talk to their lawyer again until the First Meeting of Creditors at the Bankruptcy Court for the District of Arizona.

I have a friend I'll refer 'em to. Dangling participle and all.

Generally, before I'll refer a case out to another lawyer, I want to know that they are board certified as a Specialist in Bankruptcy Law by the Board of Legal Specialization in Arizona. I would also like them to be peer-review rated AV by Martindale.com. I would also consult with their AVVO.com rating.

There is also the issue of personality and experience, and since I've been doing this so long, I have a pretty good idea what many knowledgeable lawyers in Arizona are all about, at least in the bankruptcy arena. I have only worked closely with a few divorce lawyers, for instance, and a large double-handful of high-end litigators.

One guy, for instance, will take anybody as a client if they have the retainer; this distinguishes him from most of my buddies, but it's a useful characteristic. He's the bankruptcy opposite of the little kid in the cereal commercial who hates everything (Mikey, remember?). He's a resourceful lawyer, and I respect him; but he's taken clients who would turn your hair white!

I have a few friends who wouldn't dare touch a complex case, and that's good; you MUST know your limitations.

And I never get angry (okay, a little frustrated, maybe) when I call a buddy and find out that they can't take a complex matter now, because they're swamped. Okay, got it. Next!

But there are very good lawyers for Chapter 13s, for Chapter 7s, for Chapter 11s, and even the seldom-used Chapter 12 cases. And if the case isn't a good fit for me, I look at my laundry list of lawyers who are former Chairs of the Bankruptcy Section of the State Bar, or board-certified as specialists in bankruptcy law, or "pre-eminent" 5.0 AV rated by Martindale.com, or rated a "superb" 10.0 by AVVO.

Here's something else.

I don't ever refer to a law firm. There are no good law firms. There are only good lawyers.

There are law firms that have a deserved good reputation, and bankruptcy law firms that have two dozen ethics violations where you wouldn't send your worst enemy (okay, maybe your WORST enemy, but not your second-worst!).

But I once made a recommendation to a great law firm, and watched as a guy in the bankruptcy department did a lousy job because he was the wrong lawyer for that situation; mind you, the right lawyer was down the hall, in the same department. I was frustrated, but the gentleman I referred over really liked that lawyer, so he rode the case all the way down.

And a great lawyer may be having a bad week, because of the intervention of life-events. Nobody is at their best immediately after a massive heart attack, not even lawyers. Note: I want all my lawyer buddies and all of my clients and all of my friends to take plenty of Vitamin C, because of the study published in the Lancet in 2001, and everything that Linus Pauling wrote. According to the Lancet-published study, the folks who have the largest amount of Vitamin C circulating in their blood live, on average, about nine years longer than those in the lowest quartile.

So when I look for the best bankruptcy lawyer in Arizona for a case that isn't a good fit for me, I think about a lot of different variables; competence is the entry ticket, and personality fit counts, too. And if he's a serious Arizona bankruptcy lawyer, another thing that counts is whether he can even SEE the poor devil of a client within a month, because many of us are getting booked up.

Bankruptcy debtors no longer say, "I really don't want to do this."

Over the course of the last thirty years or so of working in bankruptcy law, I've found goofy ways to amuse myself. One was waiting for my consumer clients (who are utterly different than my business clients) to say, "I really don't want to do this."

Some took until the very last moment of the interview to get it out; and some said it before they said their names. But 99.9 per cent of all potential consumer bankruptcy debtors said it eventually during their first talk with me. Although some would wait until I was walking them back out to the entry area to utter the inevitable phrase.

But I recently noticed a sea change.

Potential debtors no longer say it.

I think I know why.

Whether they're the half of the debtor population who sees the bankruptcy as blessed relief, or the half that sees bankruptcy as a damned failure, debtors now know that we are in the middle of a depression, and that they have no other way out but to file a bankruptcy of one sort or another.

I think that my potential clients are a good deal smarter and better educated, as well; since I want them all to read and do the homework on my blog before they come in to visit with me for the first time, they may well have concluded that they pass the means test AND the Joseph C. McDaniel Rule of Inevitable Bankruptcy Filing, and that there is a bankruptcy in their future, regardless.

And for the record, even though I'm seeing a remarkable number of clients these days, I usually see a lot of clients just because I've done this so long, and during an economic upturn, there are plenty of debtors who tried to start a goofy business, or who found a "can't lose" investment vehicle, and those provide me with a lot of clients no matter the economy.

So for my part, enough already! Knock it off with the depression!

Will My Creditors Be Angry if I (fill in the blank)?

First, most of your creditors are gigantic institutional entities, and they have no emotions whatsoever.

They do, however, like primitive organisms, have responses.

When you don't pay creditors, they will, depending on the type of creditor and the stage of collections, either sue, garnish, foreclose, set up a debtor's exam, or write mean letters. And sell your debt downstream so the creditor can get a federal bailout or a bad-debt tax benefit, which is roughly the same thing.

Now, the creditor doesn't care if you have cancer, if your mother just died, or if you are unemployed. It's just not something the institution is equipped to register, like color to a blind man. It's not that the creditor institution rejoices in your sorrow; it only sees your economic profile, not the details of your life or your dreams or your aspirations.

So don't pine for the love of your creditors; you never had it, ever. When you paid your bills on time, they might have sent you a calendar at Christmas, but that didn't mean they loved you. They just sent you a calendar because that was their response to the stimulus of current payments on a 12-month cycle.

And they don't hate you; they're just sending debtors who are current one type of paper (a calendar at Christmas) and debtors who are not current a different type of paper (a lawsuit).

Creditors are a simple life-form, with limited and simple responses to stimuli. Kinda like the things you studied in high-school biology class.

So don't worry about whether they like you or hate you. They don't. They live in the eternal now and send out calendars and lawsuits with no reference to any emotion whatsoever. If they were Buddhists, they'd be very good Buddhists indeed; they act with no attachment to the fruits of their actions.

On the other hand, certain employees of creditor entities are perfectly capable of being the south end of a donkey going north.

That's what bankruptcy is for.

p.s. note that there are things that you wouldn't do anyway, because you're neither a bad person, nor dumb as a stump. But institutional creditors will be a little cranky with you if you steal from them (run up your credit cards like a fiend just prior to filing) or if you destroy their collateral for fun (smash the toilet and sink and bathtub in the house you must leave because of the foreclosure).

Don't steal from creditors, and do not intentionally destroy a creditor's collateral. Even if the institutional creditor will not be angry in the same sense that you might get angry, the institutional response will seem a lot like an angry response.

What's a Good Result in a Chapter 7 Bankruptcy?

Well, that depends.

Generally, what an Arizona bankruptcy lawyer wants to see in a case (at least, what I like to see) is a case in which the debtor (the "bankrupt") passes the means test, or is an exception to the means test, and gets to get rid of all the debt, and to keep all the assets. Pretty simple.

Except that everybody is different. Everyone has a different matrix of assets, liabilities, income, and preferences. And some people really need to wait to file, until the insider preference falls off, or the tax refund comes in.

Some folks don't care about optimizing a result; they just want to file NOW, regardless of the precise outcome. That's okay, but my experience is that if somebody pushes me to file for them regardless of the consequences, because they want emotional relief NOW, they still don't like the outcomes. Because they wanted the whole thing to be over, you know?

So I prefer trying to get as close to a good result as I can, since I know that emotions shift in fairly predictable ways before, during, and after a bankruptcy filing.

The other element I hope we can achieve in a bankruptcy case, which I have the least control over, is a debtor who becomes clean of all debt, who then has more dough than needed to live on a day to day basis, who is now able to contribute to some sort of retirement vehicle, so that someday they'll have the one-in-each-hand Margarita experience on white sands with the waves rolling in, after retiring.

Now, that's just me.

The client is the dog, and I'm the tail, you know?

So if a client really, really wants to stay in a house that's two hundred grand upside down, and really, really wants to keep paying on a car that's waaaay to much car, or just much too expensive, the client is right, and I'm wrong.

Because life is short, and you have to take happiness where you find it. Some people love their houses so very much, or their cars, that they will cling to them under any and all economic circumstances.

And who am I to stand in the way of love?

Is Getting to Your Bankruptcy Discharge Heaven or Hell? Your Choice!

There's a movie called Jacob's Ladder. The interesting part of the movie (which is one long hallucinatory flashback) has to do with a philosophical analysis that is delivered by Danny Aiello, quoting the 14th century Christian mystic Meister Eckhart:"Eckhart saw Hell too; he said: 'the only thing that burns in Hell is the part of you that won't let go of life, your memories, your attachments. They burn them all away. But they're not punishing you,' he said. 'They're freeing your soul. So, if you're frightened of dying and... you're holding on, you'll see devils tearing your life away. But if you've made your peace, then the devils are really angels, freeing you from the earth.'"

The concept that attachment, excessive holding on, can cause suffering, isn't merely a part of Christian theological tradition. It shows up as the central concept of Buddhism, that desire causes suffering.

So a part of bankruptcy may involve letting go in order to experience the bliss that is the bankruptcy discharge. Now, a bankruptcy discharge isn't heaven, nor is it nirvana.

But if you're squashed flat by debt, and you spend sleepless nights worrying about how you can possibly pay your debts AND feed your family, then letting go of your dignity, and your credit rating, and your non-exempt assets when you can't sell them prior to filing, and your pride, can sometimes give people a good deal of psychological rest and comfort.

And I am constantly surprised, for no good reason, that some folks make a decision to suffer through each and every moment of the bankruptcy process, and some folks decide to rejoice.

Fortunately for me, I'm perfectly willing to lead a band of bankruptcy tourists through bankruptcyland whether they are crying or laughing. As long as they listen to me, and don't step into the quicksand.

Filling Out the Dreaded Lists and Schedules!! Daaa-daaa-daaa-DUM!!!!!!!!!

This is designed to help my clients fill input information in their forms. This is not legal advice for somebody in New York, because the local rules, folkways, and practices, as well as the exemptions, are going to be different in New York. If you're not my client, for heaven's sake, don't read this and think you can be your own lawyer. My clients have the dubious benefit of talking to me and asking questions of me and of Heidi, the Bankruptcy Angel.


BEFORE YOU START TO FILL OUT YOUR FORMS FOR MY OFFICE, READ THIS ENTIRE POST COMPLETELY! THEN HAVE A CUP OF COFFEE, AND READ IT AGAIN. THEN ASSEMBLE THE INFORMATION YOU'LL NEED, AND THEN and only then YOU CAN START TO FILL OUT THE FORMS.

At my office, we use a commercial package to facilitate getting the information needed to file your bankruptcy from your brain and records and fingers into a set of schedules and lists and statements that can be filed with the Bankruptcy Court in Arizona.

That system is called Rapid Imports, and it also goes by the name "Stopmybills.com".

As my first instruction to you, DON'T HIT "SEND" UNTIL YOU HAVE FINISHED PUTTING ALL YOUR INFORMATION INTO THE SYSTEM. THAT WILL DELAY YOUR FILING AND CAUSE ALL SORTS OF PROBLEMS.

Here's the good news about it; your schedules will not contain a typo put there by a typist in the pool, working at minimum wage.

Here's the bad news: your schedules will have the information that you provide. No more. And since it's a crime (no kidding) to fail to list assets, or to fail to list creditors, you need to list 'em all. Now, if you don't list an asset or a transaction like the sale of a car, or you fail to list a creditor, you may very well not go to jail. You might get lucky and only lose your discharge, or have your case dismissed.

We don't want that, and neither do you. So get serious about the project. Note that you can save what you've input into stopmybills.com, and come back to it in another session, until you hit the dreaded "SEND", which you WON'T do until the information is complete and correct.

Let's talk first about why you need to get serious about filling out your forms accurately. On the one hand, if you want debt relief in Bankruptcy Court, that relief comes only after the filing of your petition with the accompanying lists and statements and schedules.

So if you want the automatic stay, and then the discharge, which are the usual reasons that people want to file a Bankruptcy Petition, then you'll want to fill out the forms.

Start by collecting all your information so you have it next to you. Put together your list of assets and your list of debts and all the financial information you can find, so it'll be easy for you to find. I strongly suggest and advise that you pull three credit reports on yourself or selves, so you have a data "safety net". The credit report won't have all your debts, but once you have listed all the debts you remember, and that show up in your records, the credit report may alert you to debts you have forgotten. GET THREE CREDIT REPORTS BEFORE YOU START TO FILL OUT YOUR FORMS, GO IT?

AND DO NOT PRESS SEND UNTIL THE INFORMATION IN YOUR SCHEDULES IS COMPLETE. COMPLETE. ENTIRE. COMPLETE. REALLY!!!!

That means that you're going to list all your stuff, with values, and all your debts, with account numbers, and a lot more things than that, as well, including transactions, like the sale of your non-exempt car to Jimmy Smith and the amount you were paid for that car. Remember that your trustee will want to know where money coming in to you for the last year or so came from, and where it was spent.

When you start the process, you'll see fields for questions about general information; that will include name (include all names you've used over the past eight years), phone numbers, address, and mailing address if that's different from your residence.

Then you'll start filling in data concerning real estate (real estate includes bare land, and houses, and apartment houses, and any other property attached to the dirt) in which you have an interest. Note that you need to include the month and year you purchased your interest in the property.

You'll also need to enter your estimate of the value of the real property. One site you can use to get a guesstimate (they call it a Zestimate; I couldn't make this stuff up) is Zillow.com. It's free. Other sites you can use are housevalues.com, azmarketanalysis.com, or smartervalue.com. I don't care what estimate you use, as long as you have some reasonable basis for the value on your schedules. I suggest you print out the sources you used to find your values and stick 'em in a three-ring binder, so you can show them to the trustee if she asks. In fact, I don't just suggest it. I demand it.

You'll then need to input information about your personal property. The values there are going to be replacement values. Go look at e-Bay, or craigslist, or yard sales to see what it would cost to replace your 9-year old couch (the one that has helped five kittens grow up, and the St. Bernard). Look for replacement values that are similar to the items you have.

Specifically, if your end table was a personal possession of King Louis IVX and has a market value of $9,000,000.00, don't get cute and list it as though it's an end table from Wal-Mart and worth $3.67 because of the stains left by the, you know, kittens.

HOW SPECIFIC MUST YOU BE? Well, that depends on the category of asset.

I'll try to provide guidance as we move through the list of categories. In some categories (checking, savings, or other financial accounts, excluding IRAs), you'll be completely detailed. Ditto with cars and motorcycles. But clothing generally gets lumped ("used clothes and costume jewelry, value $500", because unless you're the singer known as Cher, your used clothes are not worth more than $500 maximum, and the trustees all know that). Furniture gets listed piece by piece, because the exemption gives you $4,000 for furniture, but it has to be specific pieces of furniture.

The categories:

1) Checking, savings, and other financial accounts (excluding IRAs): like I said, the more detail, the better. On the date of filing, you'll probably only have $300 (the exempt amount for a couple in Arizona) in one savings account). You will have used the rest of the money that was in there to buy food, for instance, or make a payment on your mortgage, using debit cards, prior to filing.

2) Security deposits that have not been returned to you.

3) Household furnishings; this is the category where I want you to list all your furniture, PIECE BY PIECE, because the trustee needs to see whether the items are exempt! Note that everybody has five televisions, and the first one and the second one are exempt for hubbie and wifie in Arizona. But you'll also figure out when you check e-Bay or craigslist that your twenty year old black and white analog television is worth very, very little indeed.

---Yes, I said list all your furniture!!! With used-furniture replacement values. One of you gets a $4,000 exemption in Arizona, and the other gets another $4,000 exemption. But list 'em! And by the way, the trustees generally don't have the slightest interest in your third couch, either, unless a king or queen previously owned it. Ditto your non-exempt footstool.

4)Books, music, collectibles, or other art: here, count all your books, cds, and dvds; see what ten of your used cds are worth on e-bay or craigslist, and do the same for your used books and used dvds. Then give us the value of your home library. Generally everything will exempt. If you have posters framed on your walls, do a similar analysis. If you have original artwork on your walls, that your bought when you thought you were rich, go on the internet and figure out, as best you can, what it's worth, and list it. If it's worth a big chunk of money, you might want to consider whether it's worth trying to sell it for fair market value and use the money to buy food. If you sell it, or anything else significant prior to filing, that'll need to be reported on this form, and you'll need to be able to show how you spent the money if the trustee asks you. And she probably will.

5)Clothing--as I said, we usually suggest that unless you're Cher, you list clothing and costume jewelry, $500; that's much more than it's worth, of course, but if the trustee wants to take your clothes and sell them...oh, well, that's just silly. She won't want to try to sell your used clothes.

6)Furs and Jewelry - list your watches separately (the Arizona exemption is one for each of you, up to a value of $100), list wedding/engagement rings separately, and list all of your other non-costume jewelry, which is not exempt in Arizona, separately. Before you go nutty as a fruitcake about your wedding ring, read my discussion of wedding rings and whether you get to keep them. The short answer is simple here in Arizona. You keep them if you want to keep them, and you're willing to do what it takes to keep them. See the post.

7)Firearms or other hobby equipment; just itemize them with a description. Do not list "gun", however, because the trustee can't tell what that's worth and whether it is exempt. List "Smith and Wesson .38 hammerless snubnose revolver, stainless, 20 years old, value $350", or whatever else is a correct description. Ditto with exercise equipment; the trustee needs to be able to tell whether your weight set is from Sears and made of plastic and concrete or is an Olympic standard weight set worth $15,000.

8)Interest in Insurance Policies; the trustee wants to know what the face amount of the policy is, and whether there is any cash surrender value. List 'em all, of course.

9)Annuities: if you have one, list it. If you don't know what it is, you don't have one.

10)interest in education IRAs; list 'em.

11)interest in other IRAs and Pensions. Most of these are exempt.

12)Stock or interests in any business; if you own any stock, no matter whether it's worth very little, you list it!

13)Interests in partnerships or joint ventures: you got 'em, you gotta list 'em!

14)Government or Corporate Bonds: if you have these, why didn't you sell them to pay your attorney's fees? But list 'em if you got 'em. If you sell them to buy food or to make a mortgage payment, make sure you list that transfer.

15)Alimony or support that you are entitled to but have not received: list it.

16)Any other debts owed to you. Even if you didn't ever expect to collect the debt. Even if you think it can't be collected, list it!

17)Future interests, life estates, special rights or powers: if you don't know what these are, you probably don't have them. If you have them, list them!

18)Death benefit plans, life insurance policies or trusts; list 'em if you got 'em.

19)Unliquidated claims; that means that if you have a claim against somebody and you can't tell exactly how much the claim is worth, it'll go here. For instance, if you have a wrongful death claim against somebody, and you can't precisely calculate the amount of those damages, that'll go in here.

20)Patents, copyrights, or other intellectual property; list it if you have it. Value it as precisely as you can. If you've been trying to sell your patent for a decade, it may not be worth a lot. But estimate the value as closely as you can.

21)Licenses, franchises, or general intangibles. List if you got.

22)Customer list from any business you operated in the last eight years. Getting a value for this will be interesting. Note that if you owned a corporation, the customer list is probably owned by the corporation, and not by you. You own the stock in the corporation.

23)Automobiles, trucks, trailers, or other vehicles. The online bluebook may help you; trustees in Arizona are generally looking for high private party values, not trade-in values. There are a ton of other sites you may use if you have trouble with the bluebook, including carquotes.com and edmunds.com.

24)Boats and boat motors and boat accessories: list if you got.

25)Aircraft or accessories. Don't ask me where to find the value for a used wooden Fokker Propeller. I don't know either.

26)Animals. Note that most animals are either exempt or worthless. Trustees generally don't want to take custody of assets that eat or require care. Horses are generally a big issue. If you have horses, find out how much they're actually worth, however you do it, and convince me and Heidi that you're correct before we file.

27)Any other personal property that isn't listed above. Note that if you have a big collection of hand tools that you use in your job, those need to be inventoried and valued at replacement value. There is a $2,500 tools of the trade exemption in Arizona, and we can double that if you're married.

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NOW WE GET TO THE DEBTS SECTION!

YOU NEED TO LIST ALL YOUR CREDITORS. WHEN I SAY ALL, I REALLY, REALLY MEAN ALL. INCLUDING YOUR RELATIVES, WHO YOU DON'T WANT TO KNOW ABOUT YOUR BANKRUPTCY. OR THAT GUY WHO'S SUING YOU, WHO YOU THINK ISN'T ENTITLED TO A DIME. IF YOU DON'T LIST 'EM, THEY WON'T GO AWAY. AND THEN AFTER THE BANKRUPTCY, YOU'LL GET SUED BY SOMEBODY YOU DIDN'T LIST, AND IT WILL BE YOUR FAULT. NO KIDDING. AND IT'S EVEN A CRIME TO FRAUDULENTLY AND INTENTIONALLY FAIL TO LIST CREDITORS.

Here's a practice pointer; pull three credit reports on yourself, and those credit reports will act as a safety net for you. They aren't going to list all your debts. But if you have forgotten about a creditor, the credit reports are a safety net for you. For that matter, if you pull a credit report and see that somebody stole your identity and racked up debt, you're better off listing those debts as disputed than failing to list them and trying to prove after your bankruptcy that you didn't owe them.

I'm begging you now.

I don't want any of my clients to be sued after a bankruptcy, because there's little I can do to help you. It happened to a lovely couple who were clients of mine. They were sure for $100,000 on a note after their case was closed. I asked what happened, and they told me, "We forgot about that one!"

Do NOT let that happen to you!!!!

What address should you use for your creditors? All of them!!

I'd rather have one creditor with five different addresses than for you to leave out the correct address.

IN SPECIFIC, INCLUDE THE ADDRESSES FOR EVERY CREDITOR THAT SEND YOU MAIL WITHIN 90 DAYS OF FILING. AND THERE ARE USUALLY TWO OR THREE CREDITORS ON EVERY BILL! LIST THEM ALL!

You must list the account numbers for each of the creditors.

If there is a collection agency for a creditor, you should separately list that collection agency, and note that they may be using their own internal account number.

As to who is responsible for the debt, the general rule is that if you incurred the debt while you were married, it's a joint debt. If you weren't married at the time the debt was incurred, indicate that it was incurred by either husband or wife, as the case may be.

The date incurred usually relates to when you opened the credit account, and that date may show up on your credit report.

As to the amount due, that's the least important number you are going to be listing. The amount due is a moving target, because the creditor is constantly adding interest and fees.

The type of debt relates to why you owe the money, and the answer may be house, or car, or credit card, or medical bill or general unsecured debt if it's a credit card and you can't remember what you purchased.

List any collection agency that sent you a letter as an assignee of the original creditor.

List any law firm that contacted you or sued you as an assignee of the original creditor.

CO-DEBTORS: ALSO LIST co-debtors as creditors. They may very well have a right to sue you if you defaulted on the debt.

YOU WON'T HAVE ENOUGH ROOM TO ENTER ALL THE ADDRESSES FOR ALL THE LAWYERS AND COLLECTION COMPANIES OF SOME CREDITORS; LIST THE LAWYERS AND COLLECTION AGENCIES AS "COLLECTION AGENCY FOR _________________" OR ATTORNEY FOR ______________"

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Dependants: you'll be listing everyone who is your dependent. That is partly because of the means test. From the perspective of the means test, the more dependents, the better. Note that unless you listed the individual as a dependent on your income tax return as a dependent, you may not be able to benefit from them on the means test analysis.

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Income: You will be required to disclose all the income you and your spouse have received for the last six months for means test purposes. Note that you will also need to scan and email your last six months of pay stubs to Heidi, the Bankruptcy Angel, so she can check your numbers. If you received other income in the last six months, list it.

You will also be filling out information including your occupation, employer's name, employer's address, how long you've been employed, and a current pay stub.

You will also need to fill out information about amounts you earned in two prior years, both from your employment and from other sources.

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Expenses: You are going to be listing all your normal monthly living expenses. Make sure you list as well expenses that you only pay on a annual, quarterly or semi-annual basis. This is an extensive section. You'll need your checkbook or check registers, and a calculator to help you with this.

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FINANCIAL AFFAIRS:

You'll be listing the following sorts of information:

----payments to any unsecured creditor totaling more than $600 in the last 90 days


----debts repaid to relatives, partners, close friends, or other insiders within the last 12 months, so the trustee can sue them for what's called an "insider preference";

----lawsuits you've been involved in over the last 12 months (note that in Arizona, if you file a Chapter 7, any suit you have in a car accident case belongs to the bankruptcy estate for the benefit of your creditors);

----property taken by a creditor or money garnished within the last 12 months;

----property that was repossessed or foreclosed on or that was returned voluntarily to the seller within the last 12 months;

----rights signed over to a creditor within the last four months;

----you'll report whether a fiduciary took custody of your property within the last year;


----you'll report losses due to fire, flood, theft, other disaster, or gambling within 12 months;

----you'll report money paid for debt counseling or to any attorney (including me) within 12 months;

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READ THIS--READ THIS--READ THIS!!!!!!!!!!!!

DO NOT PRESS COMPLETE UNTIL YOU ARE REALLY, REALLY DONE FILLING OUT THE FORMS!!!!!

OUR OFFICE GETS AN EMAIL that tells us you are done filling out forms. After that, do NOT try to enter additional information, BECAUSE IT WON'T WORK!! Email Heidi at my office and tell her about the additional information or corrections that must be entered.

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Sit back and relax. You've done a buncha work and you deserve a break today. Relax as much as you can.

DO NOT EXPECT THAT YOU WILL GET AN IMMEDIATE, BREATHLESS CALL FROM MY OFFICE CONGRATULATING YOU! This was a ton of thankless work. Welcome to my world.

Feel free to email me and Heidi and let us know that you're done with Phase One, and that you'd like to file in a month, prior to the trustee's sale on your house, or after you've gotten your tax refund and spent it on food so your children don't starve, and AFTER you've done the "Spend Down", and have spent your most recent paycheck on your mortgage, food, car payment, or whatever you spend your check on.

Do not plan to punch "send" and to file the next day.

We now have to do the real work of reviewing it and seeing how much you'll lose to the trustee as non-exempt property, or how much you'll be buying back from the trustee. We'll also need to see what crazy, obvious mistakes you made (like listing car washes as an expense, but not listing a car, for instance).

When Trustees Attack!

Over the course of the last thirty years, I've had the privilege of seeing more things than I would have expected when I was in law school.

One is the occasional bankruptcy trustee exhibiting extreme rudeness, prejudice, or ignorance.

I've seen it about a dozen times.

Since I've worked on thousands of cases, that's a pretty good percentage; that is, I've worked on thousands of cases where trustees showed exemplary characteristics.

But think about being a trustee: you get the privilege of telling people that they're going to lose a car, a tax refund, or a house, when the tears are running down their faces.

That's gotta be tough. And they almost always do it with compassion and sensitivity, which they don't have to do.

Now, trustees are always overworked.

This is, after all, a depression.

So some trustees sometimes (and others, always) use threats to get debtor compliance.

That is, they start their first meeting by trying to scare the already terrified debtor into apoplexy. They thunder that if the schedules have omitted an asset, this is the time to come clean! And they use the word perjury as a noun, verb, and another noun. And talk about jail time.

In those first meetings, debtors really ought to come prepared with Adult Diapers.

Others don't do the thundering, but use threats to ask for documents: "and if I don't get those within twenty days, I'm going to file to dismiss your case!"

Now, there's an easy response to all the above.

"The debtor will have those documents to you by the date you've requested."

If they're not available from the bank for a month, of course, the trustee has to get a nice explanatory letter prior to the lapse of his drop dead date, just because.

But whether you get Santa Claus as a trustee, or a close relative of Scrooge, don't take it personally. The poor trustee has to process a zillion cases, and has time pressures imposed by Washington, and a trustee is a fiduciary, so it is a job that has a lot of pressure.

It's not personal; it's only business.

And if you give the trustee the documents she needs to administer the case, that case will usually work its way through the system and a good time will be had by all.

Generally, if the case is prepared with care, there aren't a lot of speed bumps or disasters.

And sometimes something blows up (it's better when all the assets and creditors are listed. Really.)

In cases where something blows up, it becomes a matter of damage control, and that normally works pretty well.

And if not, then there's more damage control.

Remember, even when you have your appendix out, there's a small risk of an infection. But then the doc does damage control. It may require further surgery to clean out the wound. It will certainly require antibiotics, and may require intravenous antibiotics.

But you don't ever want to give up, because then the results are bad.

Do Not Commit Suicide! IT'S ONLY MONEY!

Most people think money is pretty important. In fact, somebody said that money is like a sixth sense, without which we cannot make full use of the other five.

Which is one way of looking at it.

Another way that I've sometimes heard is this: I have an insurance policy, and the exclusionary period has run. If I kill myself today, my family can eat tomorrow.

Now, I don't hear that, or it's variations, with great frequency. But I hear folks nibbling around the edges of that analysis every now and then, and it always makes me sad.

Because money, when had, is spent quickly. I've read that folks who win large lump sums gambling are usually dead broke one year later.

I don't know if that applies to insurance proceeds, but it wouldn't surprise me.

Generally, when I hear people talking about sacrificing their lives to cash in for their families, it's guys who always made a good living and have never been out of work before.

And I routinely tell 'em to get medical help, counseling from a qualified professional (which I'm not), and I also tell 'em that my friends who have committed suicide have in every case regretted it.

Confuses them some, and they sometimes laugh thereafter, when they figure it out.

It's also true that there are still jobs to be had, and that it's possible to start over, even if this is a depression.

And a family needs a dad more than it needs a paycheck; but if you work 40 hours every week looking for a job every single way you can possibly look for a job, you should be able to find a lousy job at minimum wage. And that'll provide beanie-weanie money while you're looking for a better job.


On a slightly different note, I've read that Vitamin D and fish oil are both somewhat useful in reducing depression. But that's a topic for another blog.

Why Am I Going to Build "The Talking Bankruptcy Blog?"

Some folks would prefer to get their information through their ears instead of through their eyes; that is, they'd prefer to listen rather than read.

I can live with that.

So for my potential clients who hate the idea of reading a lot of pages, but can live with clicking on my pretty, pretty picture (white hair, white beard and all), I'm going to talk into the camera and see how that works for them.

Now, part of the reason I'm doing it is this: I was at a first meeting recently, and my client asked, "What Happens Next?"

As frequent readers know, that's the title of a blog entry upon which I lavished much time and love.

But this client wanted to hear it, not read it.

So okay! I accept defeat!

And now I'll run and get a camera and start the camera rolling!

So Is the Depression Over, Bankruptcy Lawyer?

No.

The depression is not over.

I'll get back to you when it is, and I'll buy the Champagne.

By the way, this depression is bad enough that even the French are buying less Champagne.

Note that during the Great Depression, the then-government announced 32 times during the course of the depression that it was over.

It was actually over the thirty-second time it was announced.

And if you're curious, a good bankruptcy lawyer is happier during a boom than a bust. During a boom, bunches of clients drop in to scrape off the debt incurred in starting their goofy business that almost worked. So they need to get rid of the debt so they can start over with a slightly different goofy business.

And eventually, IT WORKS, and the bankruptcy lawyer has a client for life, but now a business client.

For a potential debtor with no income, no assets, no wedding bells, and no prospects, there's no particular motivation to file a bankruptcy case. It's not going to get a lot worse.

The motivation crops up when there's a job or a marriage on the horizon that provides a cash flow that will be garnished by the existing crop of creditors.

And there are fewer marriages during a depression, because men aren't as stupid or shiftless as we look (we couldn't be, now could we?).

The reason there are fewer marriages is simple; guys don't want to promise things they can't deliver, if they can avoid it. The marriage rate (and age of first marriage) in Ireland was the lowest and oldest, respectively, in Europe for many years. When Ireland became the Celtic Tiger of the European Economy, the marriage rate went up and the age of first marriage went down.

Note that in the current U.S. economy, it's so bad that DIVORCES are down. That's pretty obvious if you think about it. If you can't support one household, it's that much more difficult to support two.

And there are some indications that Mexico is about to run out of oil. When and if that happens, Mexico will face massively rising inflation because it will become a net importer of oil, not a net exporter.

Do you think that will be better for Mexico?

Probably a bad thing for the economy of any country. Certainly a bad thing for the stability of any country to depend on other countries to supply energy for it.

Now, the current depression puts people to a rough decision. Normally, it would make sense to get another college degree or certificate of some kind if you can't find a great job now. On the other hand, if this depression lasts long enough, a college graduate will have one heck of a time finding money to pay off the student loans that can't be scraped off in a bankruptcy.

And that's one reason I wrote the Just for Lawyers blog for graduating lawyers, who are not being hired in record numbers right now (it's a depression, you see).

The Means Test: Part 6,374

So when you're doing your first cut at the ball to determine whether you pass the means test, which is one of the ways to get into the doors of Paradise (labeled "Chapter 7", right above the pearly gates and just to the left of Saint Peter), consider a couple of items.

And by the way, I'll come back to this post and beat it up a lot more; it's just that contemplating the means test depresses me, because all of you paid for the drafting of it with your tax dollars, and it doesn't help you at all.

It doesn't even help the banks, which lobbied for about a decade to get it; according to a report published by the government, the 2005 Amendments don't make for more filing of Chapter 13 cases, and higher payments to creditors. They just make the bankruptcy process more expensive and difficult and time-consuming.

Who would have thunk it?

But back to today's topic: when you're first taking paper, pencil, and pocket calculator to the six month rolling lookback which is the means test, ask yourself, Do you feel lucky?

Just kidding.

Ask yourself, do I get paid twice a month, or every two weeks? Makes a difference.

If You Want to Keep It, Make the Darn Payments!

There are many reasons I hate reaffirmations a lot.

Here's one of the small ones.

No matter how smart people are, if there's a little extra money in the bank at the end of the month, they don't usually see that as an emergency.

So what about the situation where they know that they want to keep a car in their Chapter 7, and they know they have to stay current on the car, and the automatic deductions have stopped?

And the automatic payments weren't being made, so the debtor just twiddles thumbs because, after all, there's money in the bank, right?

Well, that ultimately turns into an emergency, when the discharge is entered, and the automatic stay relating to property of the debtor evaporates.

Because then, the debtor says "I didn't notice that the automatic payments weren't coming out of the account, but I really intended to say current, like I told you!"

Sadly, the creditor has no particular sense of humor of which the creditor is aware.

So the creditor will either repo the car, or tell the debtor that they are going to repo the car (less frequent, but some vultures have good table manners).

Remember, the entire area of reaffirmations is fraught with peril.

I have a strong bias: a smart debtor will walk away from the car that has negative equity, NOT reaffirm (even if the judge would permit it, and that's dicey), and then buy a BETTER car at an auction after the filing. A smart debtor will also walk away from a car, even if it has a little equity, if he owes ten or twenty thou on it.

And the smart debtor will find an auction or a private party sale.

Where will the debtor find the five thousand or ten thousand to take to the auction?

Well, that's what parents are for, isn't it?

Note: this one has the potential to be a REALLY big problem. Say the debtor actually reaffirms, and doesn't make the payments. Then the creditor repos the car, sells it at the auction where the debtor should have bought his new car, and comes after the debtor with the dreaded deficiency judgment.

Does that sound like a good idea to anybody?

And while we're on the topic, drive safe, everybody. This is almost New Year, and they actually AIM to hit your car on the roads right now!

p.s. before you borrow money from mom, dad, boyfriend, girlfriend, or an alien from the planet Neptune, become an expert on buying used cars. Go to Amazon.com, and get ten books on how to buy a used car, or how to buy a used car at an auction. Read them. Then borrow. Then buy.

I am not an expert on buying used cars. Eventually, my clients will bring me industrial espionage on the best car auctions out there. Until then, you're on your own.

p.p.s. What happens if you buy a lemon at an auction? Hey, I just work here. All the advice in the world will not protect against the reality that it's better to be lucky than smart.

What Happens Next? Funny You Should Ask!

Once you've paid the retainer and filing fee, your next question is predictably going to be, "what happens next?"

I know that because I've done this for thirty years or so.

The first phase of your case is the "pre-filing" phase. During this phase, you'll take your pre-petition consumer credit counseling, and fill out materials online.

You will also start to fill out your forms, after you've pulled three credit reports to make sure that you list ALL YOUR DEBTS, because the law says you must, and if you make us amend because you didn't bother to list all your debts the first time, I will charge you more. Now, when I say all your debts, I mean you're going to list all your debts. Lately folks have failed to list business debts in their personal cases, even though they personally guaranteed those debts, or MIGHT have personally guaranteed those debts. If you're my client, list all your business debts in your personal bankruptcy! One reason is that you won't remember all the personal guarantees that you signed. One is that you may not have a corporation or llc in good standing. One is that vendors often put personal guarantee language in their agreements; it's hard to read, but they'll sue you anyway if you fail to list them.

You will also list ALL YOUR ASSETS, also because you must. Filling out forms is a pain. But you must. Use e-Bay or Craig's list to get a handle on the replacement value of your personal property, Zillow.com for your real property, and Blue Book Online for your vehicles, using the highest private party sale value for your cars, because the trustee in your case will do just that.

You will also list other bits and pieces of information including a description of transfers (which includes that sale of your car so you could buy food) and bank accounts on which you were a signer, and much, much more.

After your have FULLY AND COMPLETELY filled out your forms online, you will press "send", and Heidi will review your materials and email you back for clarifications and corrections. And when the schedules and lists are done, I will review them prior to filing, and then, on a day when Heidi and I and you are fully prepared, and when your bank account has been used to buy food and pay living expenses like your house payment or rent, and the bank account has been spent down using debt card or cashier's checks to $150.00 for you and $150 for your spouse (if you're married), and after you tell us that your schedules are true, correct and complete, we press "send".

Mind you, in some cases, there are many other projects to be done. If you have a non-exempt antique hookah, we may all talk about selling it for fair market value to buy food so your family doesn't starve, but that's a discussion that happens on a case by case basis.

After my office presses "send", and only then, your case has been filed with the Court, and your hearing date will be about 40 days thereafter.

But it is absolutely predictable that you will ask "What happens next?" at least three more times during the process, and I want you to be the best educated, best prepared bankruptcy client in the universe, so I want you to know in advance what's going to happen next.

Here's how that will happen. After you have told us that your materials are complete and true and accurate to the best of your knowledge after you've worked HARD to make them complete and accurate, and we press send and file for you, you'll ask "what next" several times, based on several triggers.

You'll ask, what happens now that I've filed a bankruptcy? So here's the answer.

Then you'll ask "What happens at my upcoming First Meeting of Creditors?" Here's the answer.

Then you'll get your order of discharge (unless there's a Complaint filed in your case, which is pretty rare, or some other speed bump or brick wall), and you'll sort of say, "Great. It's over now, right?" But it is NOT all over now.

Finally, your case will be closed for administrative purposes, and that will complete the timeline of your Chapter 7 Bankruptcy.

If you are a client of mine and I've sent you this in an email, I'd like you to hold onto this, so you can read it now, and read it at the various points when you would say "What happens next?", and if you have additional questions, please let me know, because I like to answer questions. It makes me feel smart.


p.s. if some way, or somehow, you have gotten to this point without reading and doing the homework assignments on my blog, go back! Go back now! Do your HOMEWORK! If you want to be my client, you must do the homework, which means reading all the posts in the homework section, and doing what those homework assignments ask you to do!