Arizona Bankruptcy Attorney Blog

Well, of course, it might be a perfectly good business.

That is, it might be a business that has been around forever, and has just experienced a short-term downturn in business volume and gross income. But if that kind of business gets more dough in the door, it's still party time!

Then you have a business that's been going for a full five years or so and the owners have been subsidizing it during each year of its young life.

What do you call a business like that?

A hobby. And a pretty bad idea, depending on the amount of money that the poor owners have been dumping into it to keep the business breathing.

What do you call a business where the owners have dumped in all the dough they could beg, borrow and steal, and the owners have only been able to keep the doors open by the simple expedient of not paying business-related taxes?

And those taxes will give rise to personal liability on the part of the business owners?

Well, you call that business a restaurant!

Just kidding.

You call it a really bad idea.

"I just went to a seminar advertised to the general public, and the speakers seemed really smart, and they said if I filed a personal Chapter 11, I could force the secured creditors to negotiate with me! Let's file today!"

Well. Uh.

No.

I periodically talk to really smart people who have a new religion; the belief in an all-powerful, all-benevolent personal Chapter 11 Bankruptcy, which will permit an individual to manifest an all-powerful ability to force both secured creditors and unsecured creditors to negotiate!

Well, I have an actual religion.

AND The Religion of the Personal Chapter 11 With No Name is a false religion, because...where to begin?

In the first place, as you'd say if you were using the Roman system of mnemonics, there's this issue: who is your lawyer representing in your personal Chapter 11 Bankruptcy?

It sure ain't you!

What, you say, astonishment written all over your face?

Yeah, your lawyer, the guy you paid to represent you, answers to a higher authority: he represents the estate, not you, if you have filed a personal Chapter 11 case!

And you have a fiduciary duty to do the same thing, and put the interests of your creditors ahead of your own!

Does that sound like a job description that makes sense for you personally? If it involves, say, not feeding your children? For instance? If this sounds like a good idea, you go, boy!

We'll talk more about this, but Nancy Rapoport, who is far smarter than I am, has said it far better than I could:

Representing a corporation can present numerous problems for Estate Counsel, but representing individual Debtors in chapter 11 is even trickier: "The complex fiduciary duties of a chapter 11 debtor-in-possession and its counsel can become even more confused when the debtor(s)-in-possession are individuals." Obviously, there is the metaphysical challenge of realizing that the human who hired you to file his chapter 11 petition is not your client in the bankruptcy case. Even though it's fairly easy, at least in theory, to understand that the president of a corporation or the managing partner of a partnership is not your client when you are representing the business entity itself, it stretches the bounds of legal fiction to comprehend the difference between the Bankruptcy Estate of an individual (your client) and the individual himself (not your client).

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So let's think about this first reason that it's an odd decision to file a personal Chapter 11: you ain't the client!

We'll back over this one with the '54 DeSoto in the future, but this is only the first reason that it may make little good sense to use this tool in the bankruptcy toolbox with great frequency.

And, by the way, does it make the slightest sense to consider dancing in and around an area of law that requires the use of the word "metaphysical"?

p.s. You do know that a not-unusual initial retainer for any Chapter 11, assuming that your lawyer knows where the Bankruptcy Court in Arizona is located, is going to start at $25,000? If the case is really, really simple? Just checking!

p.p.s. Recently I had a lovely discussion with a guy who had gone through a personal Chapter 11 Bankruptcy. The case was highly successful. It was confirmed by the Court, which is pretty unusual for any Chapter 11 case! The guy had been billed more than half a million dollars in legal fees, and it was unclear to me whether he was, in general, a happy camper as to his personal bankruptcy experience.

But if you want me to file a personal Chapter 11 Bankruptcy for you, I'll be happy to do so; I've filed 'em, and gotten them confirmed. But it's gonna cost you an arm and two legs, and the level of predictability in them is not as high as you might like. I think there are probably going to be better tools in the bankruptcy toolbox for you, but of course that depends on your specific facts.

This post is mostly for my Arizona bankruptcy attorney buddies, and those in other places than Arizona. Note that there is a nifty consumer bankruptcy seminar coming up in Chicago, hosted by the ABI.

So go attend that seminar if you you aren't chained to your desk, like poor, poor pitiful me!



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Chicago Consumer Bankruptcy Conference

The Gleacher Center @ The University of Chicago Booth School of Business

Chicago, Illinois

October 11, 2010



ABI's outstanding consumer bankruptcy program returns this fall to the Chicago area. This day-long educational conference is entirely devoted to the consumer bankruptcy professional and will focus on current issues affecting debtors and creditors in consumer cases. Faculty members include Bankruptcy Judges Sonderby and Wedoff from the Northern District of Illinois and Prof. Ralph Brubaker from the University of Illinois College of Law, as well as experienced local chapter 7 and 13 consumer attorneys, panel trustees and an attorney from the Chicago Office of the U.S. Trustee.
In addition, all attendees will receive a copy of Reaffirmation Agreements in Consumer Bankruptcy Cases, Second Edition!

The first edition of Reaffirmation Agreements in Consumer Bankruptcy Cases addressed what to expect under BAPCPA when consumer debtors want to reaffirm their debts. The financial crisis has since significantly altered the landscape for reaffirmation, prompting renewed scrutiny by debtors, creditors and bankruptcy courts. Reaffirmation Agreements in Consumer Bankruptcy Cases, 2nd Edition, written by Don Lassman and Dan Austin, provides an expanded update of reaffirmation essentials, including the necessity, timing and content of reaffirmation agreements. In addition, the authors address cutting-edge issues such as loan modification, post-discharge litigation and increased involvement by bankruptcy courts. The handbook details the relevant Code sections dealing with reaffirmation and includes reaffirmation statistics, a sample letter for creditors and a state-by-state comparison of enforcement of ipso facto provisions. Reaffirmation Agreements in Consumer Bankruptcy Cases, 2nd Edition includes the December 2009 changes to the Federal Rules of Bankruptcy Procedure and provides guidance for both debtor, creditor and practitioner.



Approval for approximately 5.5 hours, including 1.25 hours of ethics of continuing legal education credit, is pending.



Mark your calendar and Register Online Today!
If you would like more information on other upcoming conferences, please click here.

Trouble viewing this page? Follow this link: http://www.abiworld.org/Chicago10/email.html
Copyright 2010 - The American Bankruptcy Institute

So what happens if a creditor shows up at my first meeting of creditors?

Well, that depends. But naturally, a bankruptcy blog is going to discuss that eventuality.

But usually the answer is, not very much!

On the other hand, I wrote a short discussion of the way things play out at a first meeting when a cranky, cranky creditor shows up.

There are a lot of bankruptcy blogs around these days. And somewhere out there, there's the best bankruptcy blog in the United States, and for that matter, the best bankruptcy blog in Arizona, or the best bankruptcy blog in Phoenix!

This bankruptcy blog is a labor of love, started about two and a half years ago, and the last time I checked I'd discussed about five hundred different consumer and small business bankruptcy topics, from the bankruptcy discharge to the automatic stay to the bankruptcy estate to the various bankruptcy trustees and the Judges for the District of Arizona Bankruptcy Court; and the ever popular-first meeting of creditors.

And recently I've started producing a series of educational consumer bankruptcy videos, and that's been an interesting process, spelled remarkably frustrating and embarrassing! Because some of my first educational bankruptcy videos were awful, with a capital awe! But they've been getting better, I'm told, and I plan to keep working on that bankruptcy law education and resources project by way of educational bankruptcy videos.

And my potential bankruptcy clients have said some nice things about this little amateur bankruptcy blog, so I'll probably keep at it, during my plentiful spare time during this economic depression.

That said, there are a lot of other folks out there who generate useful bankruptcy information on a daily basis, and I'm going to try to spend a little more time tracking down other bankruptcy lawyer's bankruptcy blogs, and introducing you to their takes on bankruptcy law and practice during a depression, even if they aren't in Arizona!

And there are also a good number of excellent educational bankruptcy videos for consumers being produced by other bankruptcy lawyers around the country, and when I find a particularly good bankruptcy video by some other lawyer, I'll let you know, and I'll let you know why I like it!

Now, one primary reason for you to read a bankruptcy blog is simple; if a bankruptcy blog is written by a real, live bankruptcy attorney, and not by Casper the Bankruptcy Ghost Blogger, you'll be able to figure out who the lawyer is and whether you can stand their personality after reading their blog, or watching their educational bankruptcy videos.

And that's a useful thing, because even though you don't need to be a fan of your Arizona bankruptcy attorney, you probably ought to have a halfway decent level of ability to communicate with him or her, because insolvency and bankruptcy are just plain stressful for everybody involved, from a great bankruptcy paralegal, like Heidi the Bankruptcy Angel, to a brilliant young bankruptcy lawyer in Arizona, like my associate Nina the Unpronounceable, and even on occasion to mature and experienced bankruptcy attorneys in Arizona.

Like Yours Truly.

But if we all try hard, and work hard as a group, and if you do your part, we'll try to do our part to get you through the stressful process and on to your fresh start.

That's the goal; let's see how it goes.


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Recently a nice small business owner dropped into my office to talk.

As is often the case these days, he was initially greeted by Nina, my associate, the smartest young lawyer I've trained in Arizona bankruptcy law in many years. She was Summa Cum Laude undergraduate, you know? Passed her bar exam first time, and soaks up information like a tiny sponge.

She talked to him for a little while, attempting to elicit information from him, so that my discussion with him would be more productive, and ultimately he said, "I didn't come in here to talk to you!"

And that sorta put the kibosh on that conversation.

So when I dropped in to talk, Nina had not accumulated a lot of information to make my talk with him efficient, but it didn't take a long time to discover the skivvy.

He had a great business, and he was bringing in lots of dough.

But the gross was half what it had been a few years ago.

So far, nothing new, no problem.

But he wasn't making his nut, the amount he needed to keep the doors open on a weekly basis.

Because he hadn't reduced his overhead at all from the glory days a few years ago, before the depression hit.

So he had a staff that was perfectly okay to handle twice the work that was now available.

So what kind of bankruptcy did I prescribe?

Frequent readers will know that I often get to talk to nice people and then send them on their way, reassuring them that they or their business don't seem terminal to me at this point; on the other hand, what do I know?

So it was on this day.

I told him it looked to me as though his medicine was simple: go sit down with his bookkeeper, and figure out how much dough was coming in per month.

And then fire half his employees.

And then put some money in his pocket every month, then rinse, then repeat.

NOTE FOR THOSE WHO HAVE NOT EVER HAD TO MAKE PAYROLL: THIS GUY was on a collision course with complete, total, I-couldn't-fix-it-insolvency.

His business would have died the true death if he did not make those changes, and he may be too soft to make them, in which case ALL OF HIS EMPLOYEES WILL BE OUT OF WORK, NOT JUST HALF OF THEM.

Let's back over this topic again; it's not dead yet.

Business owners love their employees. It's hard not to love them, and it's the dirty little secret of small business that nobody ever talks about.

Because business owners normally love their employees (because running a small business is a lot like running a family, no kidding), firing one of them is like kicking your kid out onto the street to starve.

As a general rule, these employees would come in to see the boss and ask for an advance because Lucille was expecting and she had to get off her feet, and couldn't make much from her waitress job when she couldn't walk, you know?

Firing people who have been with you twenty or thirty years is very, very difficult.

But, heed me well, business owners: harder times are coming.

You may take the course that causes you the least pain, short-term. You may decide to keep all twenty employees with you until the end.

But then all twenty are out of a job.

Putting it another way, every business owner runs a little-bitty lifeboat. It has, depending on the volume of business and the profit margin, a maximum number of people it can support and keep out of the cold, cold, briny deep.

And when the volume of business goes down, or the owner has to cut prices to get some business in the door, the number of people the lifeboat can support goes down.

And if somebody doesn't get tossed overboard, everybody in the lifeboat will go down into the briny, including the business owner.

Over the last thirty years, I have seem many business owners who could not bring themselves to fire Harry, and Susie, and Jimmy, and Bob, when business volume dropped.

And therefore, there was a bankruptcy ultimately filed for the business owner, as well as for Sam, Jacob, Theodore, Willy, Allison, LaVerne, Julia, Robert, James, Willy II, and Tricksy.

Sometimes you gotta be cruel to be kind, and, just so you know, there's no easy way to do it.

There is a wrong way to fire people, which is to do it one at a time, in tiny increments, because it's so hard for you to do.

When a business owner does it that way, the employees are all spending their time sending out resumes, because they're not stupid, and talking to your competitors. That's not good.

While there's no good way to fire employees so you can continue to support your remaining employees, I've heard from my small business clients that it works best if you do it all at one time, and cut to the bone, so you don't have to keep firing the survivors at irregular intervals.

Makes morale and productivity fall through the floor.



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Divorce, and bankruptcy, and love, and confusion, and creditors all make an odd omelet in Arizona.

Here in Arizona, we have some remarkably capable, well-qualified, compassionate and experienced Bankruptcy Trustees. I've known a bunch of 'em forever, and some of them I've met more recently.

It's hard to be a Bankruptcy Trustee, because their natural human compassion toward those who suffer through an Arizona bankruptcy case is counterbalanced by their fiduciary obligation to collect non-exempt assets to the full extent of Arizona bankruptcy exemption law and Federal bankruptcy law.

And they do a good job, and like everybody else, they have good days, and less good days. Remember, they'll spend eight hours getting a hundred debtors through first meetings of creditors in Arizona, and doing so with precision, courtesy and efficiency.

Often, a couple with a baby gets bumped to the front of the line by the trustee, to make things easier for the baby and the parents. By and large, trustees are good people in a difficult job.

One recently stood out in my estimation because of her overall attitude toward her job; she was going to do what she had to do under the law, but she wasn't going to make any debtor suffer a bit more than she had to!

Now, that doesn't mean you can be uncooperative with a bankruptcy trustee in Arizona; that would be bad. Putting it a different way, in a bankruptcy case in Arizona, let the Wookie win!

But here's a bankruptcy video in which I talk about the plight of the poor trustee, who has to do hard, technical work, and try to do it without causing more pain than necessary. And understanding that the trustee doesn't want to make you suffer may make the process a little easier for a debtor in an Arizona Chapter 7 bankruptcy case.

Or not.


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Folks walk into talk to me, and often, they know just enough about bankruptcy law to be dangerous (kinda like me in my first year of practice, you know)?

There are a lot of bankruptcy alternatives that sound wonderful, and there's a lot of obsolete bankruptcy information floating around in the form of out-of-date books, and out of date analysis on the Internet.

There's even perfectly accurate information that doesn't mean what you think it means, because you haven't watched the entire slow-motion train wreck play itself out multiple times; that's been my privilege.

In today's video I sound like a smart-alec, because on some days I just can't stop myself.

So here's a video about Chapter 13, with a little different approach than most Chapter 13 bankruptcy videos.



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Getting older is the pits. Your joints creak, your back aches, your hair thins, and don't even talk to me about your energy levels!

On the other hand, getting older beats the alternatives, as I point out in my health blog of the same name.

Bankruptcy, post 2005 amendments, is similar.

It's no fun. Really. Am I sugar-coating this?

Bankruptcy involves a process that nobody likes, and that includes making complete lists of what you owe and what you have, and being held to a very high standard indeed as to completeness and honesty, and the anxiety-provoking first meeting of creditors.

But even though bankruptcy is no fun, it sometimes beats the alternatives.

Actually, most people wait far too long before consulting a board-certified, AV rated, AVVO 10 bankruptcy lawyer in Arizona. I talked recently to a very nice, very smart couple with five children who defined hard working: "after his lung collapsed, I made him quit his second job".

They're going to experience bankruptcy as a relief, and their fresh start may let them spend more time together and with their kids; and that's a good thing.

But remember. Bankruptcy is no fun, and you have to understand that as you make a decision to file a bankruptcy. But often, in this economy, there are no effective non-bankruptcy alternatives, and although bankruptcy may hurt (like a penicillin shot), sometimes it is the best alternative and the best choice for you.

Here's a scary video that's probably a little too scary; I just want my clients to know that it's not much fun, so they don't think I sweet-talked 'em into filing.



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Well, that depends.

I once saw a very nice couple lose four vehicles with a combined value of about thirty-five thousand dollars, but they had received exactly zero legal advice, because they had filed a bankruptcy that had been typed up for them by a document preparer.

Now, there might be some people who would be well-served by using a document preparation company (essentially, a specialized typing service that is prohibited from giving legal advice), but these poor folks certainly were not; and an Arizona bankruptcy attorney particularly hates to see scenes like that.

In most Arizona bankruptcy cases, a debtor loses exactly zero; and accordingly, the statistics reflect that more than 95% of cases in Arizona are "no-asset" cases, where the trustee takes away nothing from the debtor.

The debtor, after all, gets to keep all his exempt assets in a bankruptcy case; and all her over-encumbered stuff, assuming that she's current, and she jumps through a few other hoops; and he also gets to keep anything that is essentially worthless, like the 40th largest string collection in the State of Arizona.

The usual items I see trustees take include a non-exempt automobile, a piece of unencumbered real property, jet-skis and boats, time-shares, and tax refunds that arrive after the date of filing the bankruptcy.

I have noticed, over the years, that Harley-Davidson Motorcycles and diamond rings are the topic of many discussions with an Arizona bankruptcy lawyer. Nobody has the same kind of emotional charge on their BMW.

Note that comic book collections and beanie baby collections have values that are easier to determine than the value of diamonds, so don't think that your Golden Age All-American Comics #16 (which introduced the first Green Lantern, whose ring was operated by magic, and affected anything unless the object was made of wood, as opposed to the Silver Age second Green Lantern (Hal Jordan), whose ring works on anything except yellow-colored objects) will stay yours unless you are willing to buy it back from the Trustee after you file.

Of course, if you have an All-American Comics #16, or an Action Comics #1, you probably don't need to file a bankruptcy. Just sell your comics!

Note, however, that all those assets, whether exempt, over-encumbered, or worthless, all need to be listed on the schedules.

Note as well that non-exempt assets are often sold prior to filing to buy food, pay on a mortgage, and for other living expenses, although there are risks that need to be understood ("pigs get fat, and hogs get slaughtered") prior to that process.

But here's a short video about the issue, and I'll generate a longer one when I get a Round Tuit!


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So what's a bankruptcy insurance policy?

Well, if you fail to list a particular creditor who believes you owe it money in your bankruptcy, and the creditor lacks actual knowledge of the bankruptcy filing in time to file a complaint or fight about your discharge, you may be sued after you receive your bankruptcy discharge by that omitted creditor.

And if you think groceries are expensive these days, try hiring a litigator to defend that lawsuit!

It'll make you grateful that your bankruptcy lawyer was so reasonable by comparison!

So get a bankruptcy insurance policy; when you're filling out the online forms for me so that you can file your bankruptcy, get three credit reports to supplement your own memory and your records.

Have I ever talked to a client of mine about this issue?

Well, you can hear me get a little crazy around the edges in this video about listing all your creditors.

It's a topic close to my heart.

Or the place where my heart would be if I weren't a lawyer, you know?


p.s. Have I recently told you to list all your debts and all your assets? Just checking. Well, I'm telling you again!

p.p.s. Do I seem a little obsessive on the twin topics of listing all your creditors and all your debt? Well, I am. Live with it. I want you to get the maximum benefit out of your bankruptcy that the law permits.


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Recently I've seen several smart clients who had suddenly awakened and smelled the coffee.

They had figured out, independently of anybody else, that if they kept making payments on their credit cards the way they had been, they could never retire.

Never.

Period.

So, taking a hint from their analysis, I've talked about the issues, which are pretty simple: if you want to see how much money you're going to need to save to retire, go to an online retirement calculator.

And then find a debt repayment calculator and figure out how long, at your present rate of payments, it'll take you to pay off the bundle of credit card debt you have currently.

Get the picture?

It's an ugly picture, right?

So some smart people are coming to see me so they will, in ten or twenty years, have a chance to retire.

And sometimes they come see me before they've spent every dime in their 401(k), and sometimes after.

I prefer when they see me before they've turned themselves into penniless beggars, because that makes me sad.

Anyway, here's a video where I talk about that very thing!

And by the way, since I'm an Arizona bankruptcy attorney, I really like the idea that someday you can retire!

Here's a short video discussing the debt limits, and some other aspects, of Chapter 13 Bankruptcy Cases, and why I prefer Chapter 7 Cases for my clients when I can shoehorn 'em in. It wasn't always like that; over my last 30 years as an Arizona Bankruptcy Attorney, I've filed hundreds of Chapter 13 cases.

Just not since 2005, when the cost/benefit ratio for Chapter 13 cases changed radically.

I point out that Chapter 13 cases are waaaaaaaaaaay more expensive in the five years (or three years, if you're lucky) that you're stuck in debtor purgatory before you get your Chapter 13 Discharge in Bankruptcy Court in Arizona, and that Chapter 7 Cases are, by comparison, a walk in a pretty, pretty park.

Now, some Arizona bankruptcy lawyers will, I've heard, try to stick you in a Chapter 13 no matter how painful for the debtor; the fees are higher, you see, and the bankruptcy lawyer can get paid the higher fee over time, through the Chapter 13 Plan. But frankly, there are few cases these days where a superior result for the debtor is obtained in a Chapter 13 bankruptcy, since the Superdischarge vanished from the Chapter 13 list of benefits.

And heeeeeere's the video!


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Probably. Either you'll wait to file your Chapter 7 Bankruptcy in Arizona or you'll lose the tax refund.

On the other hand, the Chapter 7 Bankruptcy Trustee may decide to give back your tax refund. But not for the reasons you think! Remember, the Pity Pitch doesn't work very well in the Bankruptcy Court, because everybody there has a pretty decent Pity Pitch!

But I talk about a couple of the ways that you may be able to keep all or some portion of your tax refund in this educational bankruptcy video; on the other hand, the hands-down most effective way to keep your tax refund is to wait to file until you receive it, spend it for food and a rent or mortgage payment and to pay your bankruptcy attorney, and then file!

Here's a video where I discuss the issue (and I'm including an url, which looks funny, but some of the sites where my bankruptcy blog is syndicated don't seem to do a good job of picking up my links or my videos!): http://www.youtube.com/watch?v=e7nVbUzsZfQ

Here's a short educational bankruptcy video. In it, I talk about why the high-end debtors like doctors, cpas, dentists, and lawyers are filing for the precise reasons that they became high earners; they have a long "time horizon".

And therefore they invested their hard-earned money and incurred huge debts in real estate vehicles that looked wonderful! And were!

For a while.

But here's the video.

Here's an answer to the musical question, can I keep my spouse out of my bankruptcy in Arizona by getting a divorce, and then filing a bankruptcy?

Well, not usually. But in this educational bankruptcy video I talk about the issues involved, and point out that it normally won't work very well.

But it just might work out okay for the couple I talk about in my bankruptcy video!

I have a new blog, and I'm building it for a simple reason; I'd rather you did not have to file a business bankruptcy or personal bankruptcy of any sort.

You heard me; I don't want you to have to file a bankruptcy.

Now, in many cases, you're already halfway down the ski slope and gaining speed each second, so it's too late to prevent a bankruptcy filing of some sort or another for some entity or person or another.

I hate those personal guarantees, don't you?

But I decided that since I'd worked hard to figure out how to develop an online presence for My Favorite Price, I'd pass along what I learned.

What are friends for, you know?

And here's the entire first post, because it seemed like a good idea at the time.

Enjoy!

Bankruptcy, or Online Marketing? I GUARANTEE That Online Marketing for your Business is More Fun!


My name is Joseph C. McDaniel, and I don't want you to need to file a bankruptcy personally, or for your business.

Now, this is a depression. One out of six of people with jobs call themselves "the working poor"; and a lot of people out there (it looks like around 20% to me, but that's an unscientific guesstimate) don't have jobs.

And that means that a lot more small businesses are going to be closing their doors, and many of those will file bankruptcy, and some won't even bother filing a business bankruptcy.

They'll just file a bankruptcy themselves, to deal with their personal guarantees.

But some businesses are still thriving.

While it doesn't seem fair, there are wonderful, well-run, efficient businesses out there that are going out of businesses, and their owners wonder why their business failed, and their competitor down the street is still running full blast, with customers hanging from the rafters!

Well, there's a reason, and it may not be what you think.

The reason that the competitor stayed open, and the competition didn't need to file a bankruptcy, is simple: buyers could find the competitor online when they searched for what they wanted to buy!

Note: there are two kinds of businesses right now: there are those that market effectively and economically on the Internet, and those that are going to file a bankruptcy, eventually.

And you get to decide which kind of business you want to own, simple as that.

Either the Quick, or the Dead.

Now, you may well ask who I am, and why you should bother to listen to a word I have to say. And that's a fair question, and more than fair.

There's a simple reason, and the most interesting man in the world said it in a Dos Equis Beer Commercial: "Some people know more than you. Listen to those people!"

And why am I so sure that I now have the Keys to the Kingdom of Internet Marketing on the Internet for My Favorite Price?

Because about two and a half years ago my biggest and richest client decided that it could live without me, after they'd made me fat and happy and...well, soft, for the seven years before that.

If you're getting paid very well, and you have one giant client that loves you, you don't need to market on the Internet!

Until that client decides it doesn't need you anymore.

Gasp.

Now, I'm a bankruptcy lawyer, and I have been all my adult life.

So I wasn't worried. I knew a lot of lawyers who had referred me much business over the years, and I had a lot of nifty credentials, and I'd been Chairman of Everything.

So I was going to get plenty of business, right?

Well, no. Wrong. Because seven years is a long time in lawyer gratitude years. The guys I'd referred cases to long ago hardly remembered my name.

But I still had kids in school, and a mortgage to pay, and groceries to buy.

So I needed to learn how to market on the Internet.

Fast.

And for My Favorite Price.

And as I was sitting around, despondent, listing to my phone not ringing, my office was contacted by a guy who has become a good friend, Alex Morris, my Findlaw Representative.

And he wanted to take me to lunch to sell my on Internet Advertising with Findlaw, a directory for lawyers.

And I told him that I hated advertising salesmen, because I'd paid one of his competitors about fifty thousand dollars five years ago, so they would develop a website, banner, and directory entry for me on their website.

And you know how many clients I got from my gigantic investment with that lawyer directory?

Yeah, you see where I'm going; and I told him that I hated online advertising salesmen.

Instead of being offended, he gave me a two hour seminar at lunch about everything I could do on the Internet to educate the public that I was still practicing bankruptcy law, and that I was a pretty darn experienced Arizona bankruptcy attorney.

For My Favorite Price.

Free.

And it took a lot of work, but I did, and it worked.

Beyond my wildest dreams.

Today, for instance, here's my Martindale Visibility Profile (which goes up and comes down, from day to day):


Profile Visibility
#3 in weekly profile views out of 5,850 lawyers in Phoenix, Arizona
#126 in weekly profile views out of 1,009,925 total lawyers Overall


The last time I hit #2 in weekly profile views, I gave Alex trouble because I wasn't #1; he pointed out that #2 wasn't all that bad for somebody who had been invisible on the Internet two years earlier. With no advertising budget. Who wasn't very photogenic.

And I had to agree!

And #126 in a field of more than a million lawyers is also not perfect, but it's a pretty good start!

As time moved forward, I did buy some online advertising from Alex, with Findlaw, and it has been very effective indeed.

And I've also found some other friends who teach lawyer marketing, and I've learned a lot from them: one is Jay Fleischman, who is also a bankruptcy lawyer in New York, and another is Stephen Fairly, and I talk about them all on my Just for Lawyers Blog, which I wrote for the same reason that I'm writing this: to keep people (in that case, lawyers) from needing to file bankruptcy.

This blog, however, I'm writing for a very specific reason: I have friends who have small businesses.

And those small businesses have been hit hard by this depression.

And I don't want my buddies to have to file bankruptcy for their businesses, or for themselves.

So I figured that if I was going to teach them what I had learned about quick, free or cheap online marketing techniques, I might as well teach you at the same time.

And if that sounds like a plan to you, well, it also sounds like a plan to me; so watch this space for your first class in online marketing, for My Favorite Price!

And here's a preview. Your first class is going to be about a quick, easy, free and wildly effective online marketing vehicle.

Google Maps!

Sometimes a potential debtor will ask whether it matters whether there is a judgment against them.

The answer, as in so many areas of the law, is that it depends.

In general, you can discharge a judgment about as easily as any other debt.

Except. There are those issues with judgments liens, and the fact that it'll make defending a little more troublesome if the judgment creditor files a Complaint to Determine Dischargeability of Debt in your case.

So don't let 'em take a judgment if you can avoid it; but don't throw yourself off a bridge if they do take a judgment against you before you come to see me.

Here's a brief discussion of this very issue, by nothing but coincidence!

Here's another educational consumer bankruptcy video, because I want my clients to know as much as humanly possible about the process that they'll be experiencing in a Chapter 7 bankruptcy case (note that about 82% of all cases filed in Arizona are Chapter 7 cases, and there are good reasons for that).

Anyway, here's another bankruptcy video, and the topic du jour is "what is the status of my bankruptcy case".

Enjoy!

We seem to be making progress on the consumer bankruptcy video front, although it is agonizingly slow.

The video quality here is a great deal better than my prior, horrific attempts at cinematography.

And the audio quality seems a bit better, as well; we don't have a barking dog in the background.

This is about a new, odd, bankruptcy myth that I ran into when talking to some smart bankruptcy clients recently, who actually believed this myth!

OUR EXPERIENCED TEAM OF ARIZONA BANKRUPTCY ATTORNEYS IS KIND, AND KNOWLEDGEABLE, AND COMPASSIONATE, AND CARING!


Is anybody who practices bankruptcy law in Arizona really as nice as they sound on their Arizona bankruptcy attorney websites?

Could anybody who practices bankruptcy law in Arizona be as nice as they sound on their Arizona bankruptcy lawyer websites?

I mean, based on their paid-for advertising websites, all bankruptcy lawyers in Arizona have the following benevolent personality characteristics: they are kind, compassionate, respectful, dedicated, aggressive (no particular concern for consistency, would be my guess), experienced, knowledgeable, talented, caring, responsive, honest, and...what, thrifty and brave? And modest?????

Eagle Scouts don't have all those characteristics, and even St. Francis would have been hard pressed to claim all that without gagging!

I will tell you in advance, I am not that nice. Especially not at the end of a twelve-hour day on a Friday. I do the best I can to get a good result for all of my clients, and I try hard to return my phone calls within 24 hours, or to have one of my troops return them, but I am not a Saint on Earth, nor am I the Second Coming of any Messiah of any religion whatsoever.

Perfect? Puh-leeeze!

I will admit that on a good day I have moderately good personal hygiene.

But am I a full-on saint? Uh, not after I get to talk to opposing counsel twenty times a day!

I just do the best I can on any given day, same as everybody else.

p.s. Are You A Non-Judgmental Bankruptcy Attorney in Arizona?

No, actually; when I talk to somebody who has more than a million dollars in unsecured debt, I can't help but think, "very impressive"!

This is just a recap of a post on my Just for Lawyers blog, but it has this relevance to my small business owner clients: the general population apparently understands that small business owners and people who start their own businesses are the most important spark-plug (remember those?) in our economy.

And my guess is that the general population understands that, because when a small business opens, it gives people jobs. And when a small business in Arizona has to close its doors and file bankruptcy, jobs are lost. As they have been in Arizona and all across the United States in the last couple of years.

So in a field of nine professions, people who own their own small business come out first in terms of popularity.

And for once, lawyers did not come in dead last, which made me feel better.

Small business owners, read and enjoy:

We're Not Number One! We're Not Number One!

If you're like me, you are resigned to the fact that lawyers, as a group, are not generally listed in opinion polls as the most respected people in the United States.

If you're like me, you remember at least one opinion poll that was very well publicized, and suggested that lawyers were the least respected folks in the United States.

So it is with mixed emotions that I have noted that lawyers are no longer the least respected and most poorly thought of profession in the United States, according to Rasmussen Reports.

On the other hand, the group least well regarded in the United States is to a large part made up of lawyers, so maybe it's a distinction without a difference! And, yes, when you see the group at the bottom of the list, it's almost like the punchline to a joke. But sort of a sad joke, you know?

Here's the list in order, for your enjoyment and entertainment, and let me say in closing that We're Not Number One Anymore!


1. Small Business Owners

2. People Who Start Own Business

3. Pastors and Religious Leaders

4. Bankers

5. Stockbrokers and Financial Analysts

6. Lawyers

7. Journalists

8. CEOs

9. Members of Congress

This is just me being a big old whiny-baby.

Has anybody else tried to make educational videos for consumers about bankruptcy topics involved in Chapter 7 cases? Or Chapter 13 or Chapter 11 or Chapter 12?

It's a lot harder than it looks when you watch those folks on television, like weathercasters and newscasters.

They make it look easy. My guess is that it is easy.

For them.

First you have to have content, and you need disclaimers as well.

More of those after the 2005 Amendments to the Bankruptcy Code, by the way.

And you want the videos to be a little entertaining, so that your reputation as the most boring man on earth doesn't get a new boost.

And you want the videos to answer most asked bankruptcy questions, or otherwise, why bother?

But when the camera starts "rolling"(and they don't really roll anymore, do they?), the fun starts.

Either you get an itch that you have to scratch, or you burp, or hiccup, or gosh knows what. Or the dog starts barking.

So you try making consumer bankruptcy videos at the office.

And the fun begins.

Some folks have families.

No kidding.

Some people love their kids and their parents.

You heard it here first.

So there are a lot of things that people do to try to make things easier for Mom, or Sonnyboy, or their beloved daughters.

One of the common mistakes that I get to hear about is the parent who has a joint account with Sonnyboy.

Sonnyboy is 16, but he has a job. And he works hard flipping burgers.

And then, when he has a lot of money saved up, it gets garnished from the joint account by a judgment creditor who has a judgment against DAD, not Sonnyboy!

I know there are problems getting everything straight when you're out of work, but in general, you don't want money that belongs to your sweet, gray-haired mother and to your darling daughter to get grabbed by a creditor's lawyer with a writ of garnishment.

Can you get the money back for Sonnyboy, Mom, and Darling Daughter after it's been garnished by the evil creditor?

I have an answer. Absolutely, positively maybe.

But then there's the more important question: how much got wrongfully swiped by the garnishing creditor from Sonnyboy, Darling Daughter or Gray-haired Mom?

And how much do you have available in legal fees to pay to unscramble the omelet?

And those legal fees are a clear waste of money, because the problem should never have come up in the first place.

So don't have joint accounts. Just don't. Think of an alternative, because you'll be so angry with the bank about your mistake that the anger could rub off on me, and nobody wants that. Least of all me.

So don't do it, right?

Commingling bad. Separate accounts good. Hulk smash bank.

Actually, Hulk doesn't smash banks; just doesn't happen.

And don't be a co-signer on Sonnyboy's account, or Darling Daughter's, or Gray-haired Mom's account. I know that may cause some problems, but ask yourself this question:

Do you want to tell your Mom that her money is gone because there's a judgment against you?

Yeah, I thought that would be your answer.

A lot of people give other people advice about bankruptcy and non-bankruptcy alternatives in Arizona.

And a lot of people don't know what they're talking about.

Recently I heard about a very nice lady who had been advised to ignore a major bank credit card debt totaling a bit more than $10,000.

Now she's been sued by the bank for the credit card debt, which simply complicates the repair job I'll need to do a bit; kinda like trying to patch the roof during a Monsoon. You can do it, but you'd really rather it wasn't so dark, and rainy, and windy. And that lightning seems to be getting closer! But you really don't get to do it at your leisure, because the rain is coming down now!

And a second alternative that I personally dislike is smacking the hornets nest and then standing still while they sting you. That is, some people make the bank cranky, because the bank doesn't want to negotiate in exactly the way the debtor wants to negotiate.

So the debtor gets sued, and instead of answering the complaint on the credit card or the complaint regarding the unpaid second or third mortgage, or the deficiency after the trustee's sale in Arizona, and then negotiating during the litigation process, the debtor does nothing, and a judgment is then taken against him, her, it or them.

That, too, complicates things a bit more than I would like, although consumer bankruptcy practice in Arizona is a little like golf; you get to address the ball where it is, not where you wish the ball had stopped.

And the FTC made today's consumer bankruptcy education article for Arizona easier than usual, because they gave me the next eight non-bankruptcy alternatives and non-bankruptcy options that don't work, all in one tidy bundle!

So now I have today's top ten bad non-bankruptcy alternatives wrapped up, along with a very nice FTC Press Release discussing the non-bankruptcy options that didn't work in Arizona or anyplace else!

Turns out that a lot of the operations that say they attempt to do "mortgage rescue" don't do much in the way of rescue, except to take money from consumers so the consumers are not burdened with all that bad, dirty, dusty money.

It's a health thing, you know?

But the FTC, when it gets enough complaints, tends to get downright cranky, and it is quite serious when it goes to war.

I note, parenthetically, that I have always been disappointed by credit repair operations that promise to remove derog credit information and improve credit scores; and there are some of those discussed below, as a bonus!

And below is the press release from the FTC that discusses the injunction against the mortgage rescue business and the credit repair businesses, and the large judgments against the individuals and the mortgage rescue scams and the credit repair scams, although my guess is that it will be difficult to collect the judgments and distribute the money to the victims of the scams:



For Release: 04/22/2010


Marketers Banned from Selling Credit Repair and Mortgage Relief Services; Ordered to Pay $7.5 Million

At the Federal Trade Commission’s request, a federal court has banned eight companies and their principals from selling credit repair and mortgage relief services, and ordered them to pay more than $7.5 million for deceiving consumers throughout the United States.

In February 2009, the FTC charged seven of the companies and three officers with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, charge-offs, collections, inquiries, delinquencies, judgments, and accounts discharged in bankruptcy. According to the FTC’s complaint, the defendants charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law. In August 2009, the FTC added defendants to the case, alleging that they and one of the original defendants falsely claimed they would help consumers get mortgage loan modifications or stop foreclosure in all or virtually all instances. The court entered default judgments against all of the defendants except Gerald Serino, also known as Jerry Serino, after they failed to respond to the lawsuit.

The credit repair defendants are United Credit Adjusters, Inc., doing business as United Credit Adjustors and UCA; United Credit Adjustors, Inc., d/b/a United Credit Adjusters and UCA; United Counseling Association, Inc., d/b/a UCA; Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions, Ltd., United Money Tree, Inc., Ahron E. Henoch, Ezra Rishty, and Gerald Serino. The loan modification defendants are The Loan Modification Shop, Ltd., Casey Lynn Cohen, a/k/a Casey Lynn Collins, and Rishty.

The court order prohibits the credit repair companies and their owners from selling credit repair services, and it bans the loan modification companies and their individual owners from selling mortgage loan modification and foreclosure relief services. The order also prohibits the defendants from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service, and credit terms other than those a lender actually offers. The order also bars the defendants from misleading consumers about any good or service, such as refund terms, government affiliation, and total cost.

In addition, the order bars the defendants from trying to collect payment from their customers, and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair defendants, and a $32,710 judgment against the loan modification defendants. Litigation will continue against Serino.

The default order was entered in the U.S. District Court for the District of New Jersey on February 4, 2010.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Frank Dorman
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Sara DePaul
FTC’s East Central Region
216-263-3429

(United Credit Adjusters)

Let's look back over the last half-century: we started with more than enough jobs for everybody in the United States, and they were good jobs that paid well, because they were in industry or agriculture or other areas that actually produced a product that people needed to buy, and workers in our auto plants spent their money buying clothes and food and televisions produced in the United States, and everybody was happy.

And employers were making money, and so they provided health insurance as an inducement to obtain and keep workers in their various factories and retail establishments.

Fast forward to today: we know that the last television factory has long since left our shores, and that the last automobile plant has closed in California.

And we know that the real unemployment rate is around 20%, and it ain't gettin' better.

But recently the American Bar Association has made things a lot easier for workers, and also for the economy in general.

If we're talking about the economy and workers in India!

Because the American Bar Association has recently issued an ethics opinion that permits the outsourcing of lawyer jobs to India, and elsewhere.

Now, what could be good about this?

Well, it means that the large-firm, big ticket lawyers of the old days are going to be a thing of the past sooner rather than later, or at least their armies of well-paid associates.

And that's good for everybody who hates lawyers, which is a large segment of the population.

But lawyers in large firms, and baby lawyers working on big cases involving lots of discovery, also took the money they made and bought dinners at local restaurants, and tipped the staff. They bought spiffy cars, some of which were manufactured in the United States. They bought clothes at the local department stores, and even if the clothes were manufactured elsewhere, that provided jobs for citizens here in the United States.

But as of today, it appears to me that the depression in the United States will continue without letup, and that things will continue to get worse, because one more source of money for small businesses across the United States has just swirled around and down the drain.

Now, what could be good about this?

Nothing!

But if there were something, what would that be?

Well, all citizens of the United States who previously had great jobs, making good money, can all sing "Kumbaya" together now.

Including doctors!

And that's gotta be good, right?

And finally, if everybody's poor, then nobody's poor, right? Although that sounds like the supervillain named Syndrome in the cartoon movie "The Incredibles".

p.s. I will be fascinated to see if lawyers across the United States immediately demand a return of their membership dues from the American Bar Association, and resign those memberships in protest.

Now, it makes no particular nevermind to me, because I'm just a white-haired small-town bankruptcy lawyer; the law students (with gigantic student loans) who now can't get jobs because those were outsourced to India may, however, be a little cranky. Maybe.

And the restaurants that close because there are no jobs for the baby lawyers at Rich, Greedy and Powerful won't even know what hit them, so they won't be cranky at the ABA, but they didn't like 'em much to begin with!

p.p.s. Oh, yeah. As time moves forward, I'll be handling more lawyer bankruptcy cases for experienced, excellent, top-ten rated lawyers who are not bankruptcy lawyers. They'll have to get in line with my accountants and chiropractors and dentists, who are in line with my restaurant owners and real estate broker and mortgage brokers and truck drivers and constructions workers and construction company owners who all get to file bankruptcy now. Because this is a depression.

And now another industry has had it's jobs outsourced.

And if you think that I think any of this is funny, well, you're thinkin' wrong.

When people come in to see me to talk about a bankruptcy of some flavor for the family business, they often say that the business has supported two or three generations of their family, and they never expected it to file a bankruptcy.

And they never expected to file a personal consumer bankruptcy because of the debt they guaranteed with the Small Business Administration; and a lot of 'em don't even realize that the SBA took a mortgage on the family home when it gave 'em the dough.

But I understand. If you have a rice bowl, and working half days (twelve hours, get it?) for nine days a week has kept that rice bowl full for you, your family, and all your employees, for twenty or thirty years, you're going to be sad when the rice bowl is broken by a depressed economy.

And the formerly friendly bank has been replaced by the currently unfriendly collection lawyer.

Heck, the most frequent symptoms that I hear from folks contemplating a bankruptcy for the family business start with sleepless nights, move to high blood pressure, and go on from there. Anxiety breeds physical symptoms, and they aren't pretty.

Some businesses have historically been fairly resistant to rollercoaster economies in the United States.

Sin of all sorts generally seems to make for a profitable business, because many of us gotta be bad to have a good time, at one level or another.

So tobacco stores, liquor stores, massage parlors, gentleman's clubs, gambling dens of all descriptions, and pornography businesses often continue to do well even when there are dips in the economy.

But this is no ordinary dip in the economy. The real jobless rate is around twenty and climbing, and the official jobless rate is hovering around 9.5%.

So I have written about pole-dance palaces and booze castles pulling up their drawbridges and closing court.

And when you can't make money peddling hootch and sex, you know it's a depression.

One other item generally sells pretty well during good times and bad: life.

Fear of the darkness impels spending on medical stuff when there are many other bills to pay, because if you're not going survive the end of your long-playing record, what do you care whether the car payment gets paid?

You know?

Putting it another way, you may put off fun, however you define it, but you are somewhat unlikely to put off treatment for your heart attack.

So when I heard that The Arizona Heart Institute had filed a bankruptcy, I knew that the economy in the United States had hit a new low, and wasn't going up anytime soon.

You can put off your next drink until it's five o'clock somewhere, right? You can ration your ciggies; you can let Amber buy her own drinks at the Gentleman's Club (I know it's difficult, guys, but man up!).

You can put off the trip to Vegas, especially because they'll literally, actually put you in prison for years for non-payment of a gambling marker, as though you had written a bad check; I love it when a business that sells loss of control cops a judgmental attitude. About your bad behavior, you bad person! How dare you gamble with money you didn't have!

After all the advertising we did to entice you to gamble with money you didn't have!

Sorry, got carried away.

But you can put off buying a new car, a new bottle of booze, a new date with Summer at the pole-dancing emporium, or a new cigar.

It's a little more difficult to put off your next heartbeat.

So if the Arizona Heart Institute filed a bankruptcy, we know it's a depression.

And if bankruptcy is good enough for the best chance you had to survive when the big one hit, why should you expect your rice bowl, which doesn't even sell sex, or life, or booze, to survive well during a depression?

Do not let shame keep you from making a good decision about filing a bankruptcy, either a personal consumer bankruptcy or a small business bankruptcy, whether a Chapter 7, a Chapter 13, a Chapter 11, or a Chapter 12. The stigma of bankruptcy is now over and done.

If bankruptcy was required at the Arizona Heart Institute, you have nothing to be ashamed of.

Even dangling participles.


p.s. seems to me if the Arizona Heart Institute filed a bankruptcy, other health care options may start getting a little on the iffy side. I have a little health, antiaging and longevity blog that talks about vitamin c and fish oil, and doesn't try to sell you anything. So if you want to look at it, bear in mind that it's My Favorite Price: Free!

But always talk to your doctor, not some Arizona bankruptcy attorney, about health issues!
.

EDUCATIONAL CONSUMER BANKRUPTCY LAW VIDEOS ARE EXPLODING IN NUMBER!

So pretty soon this will be a popcorn sort of legal area.

That is, a potential bankruptcy debtor under either Chapter 7 or Chapter 13 or Chapter 11 will pop some popcorn, get some soda, and then watch ten hours of educational videos about bankruptcy law in Arizona (or some other state), and learn how it all works, and better understand their personal consumer bankruptcy options and bankruptcy and non-bankruptcy alternatives.

And that will be magnificent!

I am always delighted when clients visit with me for the first time and know the answers to the questions I ask in my homework, which are primarily simple questions about the values of assets and the amounts of debt and income, and have read enough of the most asked questions I have in my homework so that we can move forward.

Because then the initial client discussions are much more useful to the potential client.

Soon I plan to have a lot of my blog entries turned into videos, and I'm planning on buying something my current consumer and small business bankruptcy videos do not have today: something called production values!

That is, I'd love it if potential clients could actually see me talk, hear me talk, and generally not need to squint and cup their ears to keep up with the bankruptcy videos.

Most of my upcoming consumer bankruptcy videos are still a twinkle in my eye, so I'm looking around the internet to see if other experienced and qualified bankruptcy attorneys have bankruptcy videos that I can use as a stopgap to educate my potential bankruptcy clients.

So here's one of those videos by an experienced bankruptcy lawyer who isn't me; and I don't know if James Moroney is board certified in bankruptcy law as a specialist, or is rated AV by Martindale peer review, or if he is rated 10 by AVVO.com; and in this context, I don't care.

What I care about is that he was willing to share some experiences his clients have had over many years of bankruptcy practice.

And like the bunny, he keeps going!

So until my videos are back from editing, enjoy the consumer bankruptcy videos from Jim Moroney; I'll post more when I get a Round Tuit!

And note that this consumer bankruptcy video is one part of a tutorial on the dreaded means test, and that's important to know about if you are considering bankruptcy in Arizona. The numbers won't be identical, because the means test considers the means test in the location where you live.

But here you go, with one part of a means test tutorial!

I'm just sayin'.

Because the bank just grabbed $40,000 from a nice man who would have preferred to use some of it to keep his business alive and to provide rehab for his wife, who can't move her arms and legs very well right right now.

So let's ask ourselves this question: if you are in default, even a little bit, and you have a lot of money in a bank account in that same bank where you owe money, do you think there's some chance that your bank account will read zero in the near future?

Well, do ya?

p.s. even if you are not in default, do you think that if you get sued by a non-bank creditor, a bank might "deem itself insecure", and grab all the dough in your account?

And suppose the bank is in the wrong, legally. Exactly what are you going to do about it?

I have a great buddy who was a tough, tough in-house bank lawyer. And when I negotiated with him twenty years ago, he said, "Go ahead and sue my bank! We sometimes lose at trial. But we've never lost on appeal."

I thought that was a useful legal seminar, in three sentences.


.

I recently read an interesting article about using credit cards to pay taxes prior to bankruptcy, then waiting until the debtor is well outside the 90-day presumption period prior to filing a bankruptcy.

There's a specific statute that makes credit card debt incurred to pay taxes nondischargeable. It's one of the sub-sub-subs at 11 USC 523:

(14) incurred to pay a tax to the United States that would be nondischargeable pursuant to paragraph (1);
(14A) incurred to pay a tax to a governmental unit, other than the United States, that would be nondischargeable under paragraph (1);

Now, the idea of using credit cards to pay off what would otherwise be nondischargeable debt, and then filing a bankruptcy to discharge the credit card debt, is clearly one that has arisen independently in many creative minds, because Congress specifically built a statute to make the credit card debt incurred to pay off taxes non-dischargeable.

And other lawyers have written about this topic, including Rob Rickman, in the excellent GA Bankruptcy Blog.

And Rob Rickman has pointed out that in his experience, credit cards often don't notice.

Nota bene: I am not suggesting or advising that you run out and use ten different credit cards to pay off a big non-dischargeable tax debt, and then wait six or seven months to file a bankruptcy.

For one thing, I am forbidden by the 2005 Amendments to advise a client to incur new debt prior to a bankruptcy for any purpose whatsoever.

But I can easily see how a debtor might prefer owing money to a credit card company to owing money to the IRS, and how a debtor might make that decision independent of any bankruptcy advice from any experienced or inexperienced bankruptcy lawyer in Arizona, in Georgia, or in Tokyo.

You know?

Or to paraphrase Ghostbusters, "Who Ya Gonna Owe?"

Maybe it's because it's monsoon season, and the barometric pressure and humidity are wacky, but we've been getting a lot of phone calls recently from people who have cases that are subject to dismissal by the U.S. Trustee's Office for Substantial Abuse of the Bankruptcy Process.

Now, that makes it sound as though the poor devils are close relatives of John Dillinger, but it's not like that.

It's more like they flunked the means test by five dollars a month.

Or fifty cents.

Either way, they now get to communicate with the lawyer who filed the pleadings to dismiss the case, and try to explain why their case shouldn't be dismissed (not an easy pitch for a non-lawyer to make to a lawyer), or they get to try to convert their case to one under Chapter 13 (with a five-year payment plan), or they get to appear in Court against an experienced lawyer for the U.S. Trustee's Office who goes to Court on these issues several times a week.

Not a lot of fun choices.

Previously I had told my phone guys that I didn't want to waste time with people who had already messed up their cases, especially if they had had the bad judgment to file without a lawyer, because that's just a bad idea, you know?

I've changed my mind; at this point, my plan is to set 'em up for a quick phone call and see if there's a way that I can easily fix their problems, or, in the alternative, send them to a different experienced bankruptcy lawyer in Arizona who is a better fit, if I'm the wrong tool for the job.

But three in one day? What are the odds?

So Greenspan says we've recovered, but official unemployment will stay around 9.5%; and you and I know that means real unemployment is at 20% or higher.

And why should I keep getting advertisements for seminars to help lawyers enforce judgments?

Yeah. That's right.

The depression is still with us.

And every day, I want it to go away.

Because my consumer and small business bankruptcy practice in Arizona has some days with back to back doctors, lawyers and cpas, I've had to figure out how to address a series of issues relating to the dreaded Means Test and high income, high debt professionals in bankruptcy.

Note: don't panic when you read this. I also represent students, teachers, cops, firemen, waitresses, and the currently unemployed former mortgage brokers.

And I was contemplating writing about bankruptcy for professionals and high earners.

But an attorney in Long Island, Craig Robbins, beat me to it.

So here is his take on high-income consumer bankruptcy debtors, and I'll put in my two cents worth the next Round Tuit I get.

Yes.

I always know when somebody doesn't do their homework before they come in to see me, because this is one of the questions that crops up with some frequency. In fact, it's probably one of the top ten most frequently asked bankruptcy questions in Arizona.

Does that make it a FAQ in consumer bankruptcy law in Arizona? Probably, but that's less important than the consequences of failing to list a creditor or asset in your Chapter 7 or Chapter 13 Bankruptcy filing in Arizona.

The short version is this: you must list all your creditors in your case; an intentional, fraudulent failure to list a creditor is a bankruptcy crime, and I'll plug in the statutory reference the next time I work on this little consumer bankruptcy blog.

With a few exceptions, of course.

For instance, you don't have to list a credit card company as a creditor if it's not a creditor.

When is a creditor not a creditor? Well, what is the sound of one hand clapping?

Sorry.

A creditor is not a creditor if that creditor was paid in full, and is therefore owed no money whatsoever; then a creditor is no longer a creditor, and does not have to be listed as a creditor.

ON THE OTHER HAND, now the credit card creditor has received a preference payment, if we file a bankruptcy case for you within 90 days (if it's an ordinary unsecured creditor, like a credit card) or within a year (if the creditor is an insider like a mother, father, brother or partner).

So what do you think the creditor would prefer? Getting listed as a creditor and discharged in a bankruptcy, or getting paid in full, and then getting sued for return of the preference by the bankruptcy trustee (and they do so like to sue for the return of preferences. Sigh.)and the trustee's bankruptcy lawyer?

How about your house loan? Do you have to list your mortgage?

Uh, yeah.

How about the loan on your car? Well, probably a good idea, because everybody is going to know about it anyway, and your failure to list it doesn't do you any good in any context (the existence of the lien on your car is public record in Arizona, and the trustees routinely check for a car listed in your name and not listed in your bankruptcy schedules), and probably does you a ton of bad. Up to and including getting you a pair of striped pajamas and three squares at public expense.

So do you get to keep a credit card after you file your bankruptcy in Arizona?

Well, an old gimmick among experienced bankruptcy lawyers worked like this: if you had a credit card with a zero balance on the date of the bankruptcy filing, you just let it sit there (no debt, so no obligation to list it) and about half the time, that credit card would still be good after the filing.

That doesn't work very well anymore. The computers of the various banks, credit card companies and mortgage lenders have apparently become buddies, and they discuss your debts and open accounts when they play Zynga Poker on Facebook during the week.

So the old gimmick of the zero balance credit card doesn't work worth a darn anymore.

What works just fine for people who are lucky enough to have friends and family is this: they wait until after their bankruptcy, and after the bankruptcy they borrow five thousand from a family member and open a secured credit card account with somebody.

A secured credit card looks just like any other credit card, but it's really more like a debit card. You deposit five thousand, and you get a "credit limit" of less than five thousand, but you have the convenience of being able to use a credit card to reserve hotels and rent cars when you travel on business.

Now, the issue of whether you have to "include" a creditor in your bankruptcy case in Arizona is a totally different question than do I get to repay a debt that I listed in my bankruptcy case in Arizona?

It's also totally different from the question, "Can I keep my house and car and dog and horse if I file a bankruptcy in Arizona?"

And I talk about those questions a lot on this bankruptcy blog, and I'll keep doing so!

Contemplating Chapter 7 Bankruptcy in Arizona? Thinking about bankruptcy? Need a laugh?

So maybe you have a high-mileage car that works well, and if it's worth less than $5,000, it will be exempt in Arizona in your bankruptcy. Or $10,000, if you're crippled. Or you may buy a car after you file your bankruptcy in Arizona, for cash, because then you don't have to make a monthly payment, and that's a good thing.

On the other hand, if you're contemplating a bankruptcy filing in Arizona, whether a Chapter 7, a Chapter 13, or even a personal Chapter 11, you may not feel perky.

Most folks thinking about bankruptcy do not feel perky, you know? Whether they're in Arizona, or elsewhere! At least not in my personal experience as an Arizona bankruptcy lawyer.

And therefore, before you ask me whether I get a kickback from Castrol, the author of this automobile oil commercial, the answer is no.

But I did get a kick out of the gag, and it had some truth to it; there's a lot to be said for a car that's paid for. And a car you buy for cash after your bankruptcy filing in Arizona will help you save money after your bk.

So if you're thinking about a bankruptcy option in Arizona, and you need a laugh, here!