Arizona Bankruptcy Attorney Blog

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.

 

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.

 

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.

 

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!

 

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.

 

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?


 

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.

 

This is designed to help my clients fill information into their forms. This is not legal advice for somebody in New York, or anybody else, 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 the clear benefit of asking questions of Heidi, the Bankruptcy Angel. And Nina the Unpronounceable, for that matter.


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 Bankruptcy Discharge, and to keep your Exemptions, 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!!!! Capeesh?

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 helped five kittens grow up, and the St. Bernard). Look for replacement values for items 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. And don't list your Wal-Mart end table at a value as though it was a personal possession of King Louis IVX. Go for accurate.



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 checking 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. In the vast number of cases, the trustee has exactly no interest in your three non-exempt old televisions.

---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, 25 years old, value $250", 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 sued for $100,000 on a note just after their Discharge was entered. 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 ADDRESSES 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 ______________"

The exact amount you owe to creditors is the least important number on your schedules; do the best you can to estimate this moving target, but it's always changing, and everybody knows that. 

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Dependents: 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. It ain't happenin'. There are people in line ahead of you, and we have to review the darn thing to make sure it's fairly safe to file for you!!!!

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).

 

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.

 

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.

 

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!

 

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).