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Matched Legal Cases: ['§ 342', '§ 342', '§ 109', '§ 707', '§ 548', '§ 548', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 12', '§ 12', '§ 544']

Bankruptcy Attorneys Archives | Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney
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You are here: Home / Arizona Bankruptcy & Foreclosure Blog / For Attorneys / Bankruptcy Attorneys
Lose Your Tax refunds in Arizona
April 13, 2019 /in Bankruptcy Attorneys, Consumer Issues /by Diane Drain
By Russ Wiles, Arizona Republic, 2/25/19 (reprint) For many Americans, income tax refunds are the largest single chunk of money they receive all year. Imagine losing most or all of it to a debt collector or in a bankruptcy proceeding.
https://dianedrain.com/wp-content/uploads/2019/02/hunger-family-child-starving.jpg 299 448 Diane Drain https://dianedrain.com/wp-content/uploads/2017/01/DianeDrain-logo-2.png Diane Drain2019-04-13 17:57:002019-04-21 00:32:54Lose Your Tax refunds in Arizona
Supreme Court Finds Debt Buyers Free to Collect on Old Debts
May 21, 2017 /in Bankruptcy Attorneys, Chapter 13 Bankruptcy, Collection companies & Debt buyers, Consumers /by Diane Drain
May 15, 2017: Resolving a split of circuits, the Supreme Court held 5/3 in Midland Funding LLC v. Johnson 6-348 (Sup. Ct. May 15, 2017) that a debt collector who files a stale claim that is “obviously” barred by the statute of limitations has not engaged in false, deceptive, misleading, unconscionable, or unfair conduct and […]
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Sample of Property Sold by Bankruptcy Trustee
September 13, 2015 /by Diane Drain
The information contained in this web site, article or link may be outdated, incorrect or not applicable; it is your obligation to confirm the accuracy.
It is very important that you obtain legal advice from an experienced foreclosure or bankruptcy attorney regarding your particular situation. Consultation before you take action will certainly cost you less than it will cost to fix your unintentional errors.
The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship.
SEPTEMBER SALES
CHAPTER 7 BANKRUPTCY TRUSTEES
When: September 25, 2015 Time: 8:30 am
Where: 230 N. First Ave., Room 102
Phoenix, AZ 85003 (1st Ave. & Van Buren)
Next Month Sale Date: October 30, 2015
To bid by telephone call: 1-888-525-3182 Conference Code: 7413896997
MUST CONTACT TRUSTEE/ASSISTANT/COUNSEL PRIOR TO BIDDING ON CONFERENCE LINE***
*Trustee: Maureen Gaughan
Debtor’s name and case number:
Estate’s interest in the following:
Estate’s interest in Genworth Life Insurance Annuity Contract Number K000501701 Annuitant Debtor. Debtor is scheduled to receive a payment in the amount of $32,671.23 on February 13, 2019.
Current offer and Bidder:
$21,000.00 with buyer being responsible for all costs of sale, including all costs associated with obtaining any court approval – Catalina Structured Funding Terms of Sale: Cashier’s check.
The sale will be free and clear of all liens. There is not an appraisal of the property. Contact Trustee
1) 2000 Ford Expedition Eddie Bauer
2) 1994 Weier Flatbed Trailer
1) $2,000.00 Debtors
2) $ 500.00 Debtors
Terms of Sale: Cashier’s check. The sale will be free and clear of all liens. There is not an appraisal of the property. Contact Trustee
*Trustee: Jill H. Ford
On December 11, 2013, the Court entered its Combined Order Granting Chapter 7 Trustee’s Motion to Compel Turnover [Doc. 37] and Chapter 7 Trustee’s Second Motion to Compel Turnover [Doc. 39] awarding Trustee $4,542.01 with post-judgment interest accruing at ten percent (10%) per annum. The Trustee received the following payments via wage garnishment: $100.05 on 04/09/2014;
$157.29 on 04/09/2014; $90.18 on 04/09/2014; $161.93 on 04/21/2014; $112.05 on 05/02/2014; $90.23 on 05/16/2014; $341.11 on 05/30/2014; $91.33 on 06/13/2014; $48.43 on 06/27/2014; $50.84 on 07/11/2014; and $84.87 on 07/18/2014. The value as of 08/01/2015 was $3,747.21.
Current offer and Bidder: $250.00 William Reeser
Terms of Sale: Cashier’s check within 5 business days of sale. There is not an appraisal of the property.
Contact Trustee
2004 Hyundai Accent
Current offer and Bidder: $1,000.00 Debtors
Terms of Sale: Cashier’s check within 5 business days of sale. Viewing: September 24, 2015 from 8:00 a.m. to 12:00 p.m. XXXX, Apartment 2080, Scottsdale, AZ 85251.
The property is subject to liens or interests of record. The Trustee does not know of any liens at this time. There is not an appraisal of the property.
*Trustee: Roger W. Brown
Estate’s interest in a narrow strip of land (driveway) adjoining residential property located in Maricopa County, Arizona, and described on Exhibit “A” attached.
Current offer and Bidder: $2,500.00 ME Capital, LLC
The proposed purchaser is the creditor which holds a lien on the adjoining residential property and has commenced foreclosure/eviction proceeding.
Terms of Sale: Cashier’s check day of sale.
There has been no stay relief as to the property. Trustee is not aware of any other entities holding an interest in the property being sold. The Trustee is not aware of any recent appraisals on the property being sold. There are no broker’s fees/compensation related to this sale.
Trustee: David A. Birdsell
2005 Land Rover, VIN #SALAE25495A321901
Current offer and Bidder: $1,000.00 Debtor
Viewing: September 24th 2015 from 9:00 a.m. – 1:00 p.m.
Avalon Auto Group 3620 E. Broadway Rd Suite #1 Contact Trustee Assistant
2005 Ford Focus
Viewing: September 24th 2015 from 9:00 a.m. – 1:00 p.m. Avalon Auto Group 3620 E. Broadway Rd Suite #1 Contact Trustee Assistant
2004 Chrysler PT Cruiser,VIN #3C4F448844T220752
Current offer and Bidder: $1,000.00 Ian Hanager
Terms of Sale: Cashier’s check day of sale. Viewing: September 24th 2015 from 9:00 a.m. – 1:00 p.m. Avalon Auto Group 3620 E. Broadway Rd Suite #1 Contact Trustee Assistant
2004 Polaris Trail Boss 330
Current offer and Bidder: $500.00 Ian Hanager
Terms of Sale: Cashier’s check day of sale. Viewing: September 24
th 2015 from 9:00 a.m. – 1:00 p.m. Avalon Auto Group 3620 E. Broadway Rd Suite #1 Contact Trustee Assistant
2003 Nissan Maxima
Current offer and Bidder: $925.00 Debtor
A QUARTERLY GIFT ANNUITY OF $516.26. RELEVANT DOCUMENTS ATTACHED ALONG WITH CASH FLOW FOR PAST 4 YEARS
Current offer and Bidder: $2,511.00 Bob Anderson
Terms of Sale: Cashier’s check within 3 days of sale Contact Trustee Assistant
1) Gluck 19
2) SG Sauer P250
1) $150.00 Debtor
2) $150.00 Debtor
Terms of Sale: Cashier’s check within 3 days of sale Viewing: September 24, 2015 9:00 a.m. – 11:00 a.m. David A. Birdsell’s Office
Viewers must ring the doorbell and state their full name and what they are here to see. Contact Trustee Assistant
2000 Buick Regal
Current offer and Bidder: $750.00 Debtors
Terms of Sale: Cashier’s check within 3 days of sale Viewing: September 24th 2015 from 9:00 a.m. – 1:00 p.m. Avalon Auto Group 3620 E. Broadway Rd Suite #1 Contact Trustee Assistant
1) H&R 12 gauge shotgun
2) Marlin Model 60 22 LR rifle
3) Golf Clubs
4) Jewelry
1) $70.00 — Debtors (all items)
2) $50.00
3) $25.00
4) $55.00
Terms of Sale: Cashier’s check within 3 days of sale Viewing: September 24, 2015 9:00 a.m. – 11:00 am. David A. Birdsell’s Office
1993 Subaru Legacy Station Wagon
According to the debtor the vehicle does not run
Current offer and Bidder: $350.00 Debtor
Terms of Sale: Cashier’s check within 3 days of sale Viewing: September 24th 2015 from 9:00 a.m. – 1:00 p.m.
2003 Honda Accord
Current offer and Bidder: $1,800.00 Debtor
Terms of Sale: Cashier’s check within 3 days of sale
NEXT SALE DATE – October 30, 2015
PROPERTY WILL BE SOLD “AS IS, WHERE IS ”, WITH NO WARRANTIES OR REPRESENTATION MADE OR IMPLIED. PROSPECTIVE PURCHASERS ARE ENCOURAGED TO PERSONALLY
INSPECT / PERFORM THEIR OWN DUE DILIGENCE OF THE PROPERTY BE ING SOLD. ALL SALES ARE SUBJECT TO SALES TAX UNLESS THE PROPERTY BEING SOLD IS TAX EXEMPT OR A RESALE
NUMBER IS — USED AS PROOF OF EXEMPTION.*
PLEASE SEE www.nabt.com FOR NATIONWIDE TRUSTEE AUCTIONS.
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Bankruptcy Planning: 5 Traps for the Unwary
March 21, 2015 /0 Comments/by Diane Drain
It is very important that you obtain legal advice from an experienced bankruptcy attorney regarding your particular situation. Consultation before you take action will certainly cost you less than it will cost to fix your unintentional errors.
The following is an excellent article by another attorney. I like to give credit where credit is due – so I offer to you Mr. Blades insights. These also are true for Arizona residents. In this article are some videos from me regarding Arizona and bankruptcy issues.
Written by Rock Hill Bankruptcy Lawyer, Showell Blades
A client who has a good bankruptcy lawyer usually has a calm experience once the case is filed. The idea is to, as my mentor explained to me twenty years ago, disclose everything and fly under the radar. You do not want to do anything which draws unnecessary attention to your file or your fact situation so that your creditors or the United States Trustee’s office decides to take a closer look at the file. Even if nothing comes of that closer look, the process can be stressful for the clients.
Recently I had a woman storm out of my Rock Hill bankruptcy office after a free thirty-minute consultation which she ended by calling me an unpleasant orifice. My crime: I told her she had to wait four months to file bankruptcy and she wanted to file right then. She would best be served by remembering Ovid’s quote: “Bear patiently with a rival.”
The reason a client with a good bankruptcy attorney usually has a calm experience once the case is filed is because that attorney knows of the pitfalls that can come from taking simple actions, or by not taking them, before the case is filed. If all the bases are covered properly, there is nothing for anyone to scrutinize, or the client is at least prepared for those items which will come under closer scrutiny.
Be advised: the bankruptcy system can be a system where you encounter strong, well-funded and well-prepared rivals. Ovid’s advice can come in handy.
First, Debtors need to make sure that they do not have any deposits in any banks to which they owe money, whether in the form of CDs, checking or savings accounts, or other forms of deposits. This is because a bank has the right of setoff. If you file bankruptcy and owe a bank any money, then that bank has the right to administratively freeze the account and take the funds to pay the loan which you are not likely to pay in bankruptcy. For that reason, most good bankruptcy attorneys will make sure that you move your accounts to which you owe no funds so that you do not file bankruptcy and have your checking account frozen and all of the money that you would have going to pay bills that month disappear. You will not get it back. Also, keep in mind that many clients have automatic payroll deposits which need to be moved and drafts to pay important things like life and health insurance which need to be moved (both of which often take thirty days to change) .
Second, your attorney will ask you to whom you’ve paid payments on debts within the ninety days prior to filing bankruptcy and to whom you’ve paid payments on debts within the one year prior to filing bankruptcy if the lender was a family member. Take time to think about your answers. If you say “No one” and the bankruptcy trustee finds out that you have, then you have not told the truth which means you’ve committed at least three federal crimes. Additionally, any payment on a debt which qualifies as one of the above payment can be taken back by the trustee (preferential treatment) and given to the rest of your creditors. In other words, if you gave Aunt Zelda the $15,000 you owed her eight months ago and then you file bankruptcy, your bankruptcy trustee can sue Aunt Zelda to get all of the money back and will win causing her great concern because she probably doesn’t have it. Christmas will never be the same.
Also, if you paid the four mortgage payments you were behind all at once a month before you file bankruptcy and do not wait ninety-one days after that check clears, then the trustee may be able to get all of that money back from the mortgage company. You would find yourself in bankruptcy and still four mortgage payments behind which could put you in foreclosure. Tell your attorney about these things and expect to have to wait to file bankruptcy.
Third, if you are remotely thinking about filing bankruptcy or feel overwhelmed, but you have a 401(k) or IRA or a similar investment vehicle, and are thinking about solving your problems by cashing it in, DON’T. Go talk to a bankruptcy attorney and get some advice. This is for several reasons. Initially, you need to understand that your creditors cannot take that investment from you no matter how broke you are. It is exempt, protected from the reach of creditors or the bankruptcy trustee. So leave it alone. Don’t cave to the creditors’ threats and take what may be your last or only safe asset.
Another reason to consider disposing of this asset very carefully is this: I cannot tell you how many people I have seen who have cashed in their 401(k) and paid their credit cards down only to find themselves overwhelmed and now without their 401(k) still needing to file bankruptcy. Get advice before you try to pay off your debts with your 401(k). The only way I would advise that would be if you could pay off all of your debts in full, be able to handle any tax ramifications of cashing it in early, and be able to make it on your family budget after the debts are gone so that you do not find yourself upside down very soon so that cashing in the 401(k) was a waste.
Finally, if you cash in your 401(k) within the six months prior to filing bankruptcy, this could cause you to fail the Means Test. This is one of the things that the Court looks at to see if you qualify for bankruptcy and, if so, which type and what a payment would be if you filed a chapter 13. (This reason MAY have been negated by a Supreme Court decision that came out this week, but I wouldn’t want to be the first person to try to make sure of that). So talk to your attorney before you do it.
A fourth trap for the unwary is to renew loans or taking out loans prior to filing bankruptcy. You need to tell your attorney what you’ve done with your credit in the last six months or so. This is because creditors have the right to object to your discharging, or getting rid of, their debts. There are a number of reasons creditors can use to do this but one of them involves your borrowing money right before you file bankruptcy. What IS “right before filing bankruptcy” is not defined. I have had a creditor object to charges that were made four and a half months prior to my client filing bankruptcy. If this happens you have to pay me extra money to defend that lawsuit or you have to settle it by paying back the creditor. It can be avoided by figuring out when you last used credit, telling your attorney, and waiting to file. Renewals of loans before filing count also.
The fifth and final trap involves not making sure you know what your assets (your property) is worth. Your attorney is going to be asking you all kinds of questions. Many of them deal with the value of your house, your cars, your furniture, antiques, an other property. The Court expects you to know what they are worth. If you do not it could have bad results for you for several reasons.
Most of the reasons involve the trustee’s selling your stuff because he can make money by selling them, paying off the liens on them, paying you your share of the money (your exemption) and, if he still can make more money after all of that, it is his to use pay to your creditors. If you make sure that you have an accurate value for your assets, then it will be close to what a trustee could get by selling them and your attorney can claim the correct exemptions and protect your assets. Since sometimes you have to make choices about what you want to protect and what you don’t, knowing a good value is important.
Also, a recent U.S. Supreme Court opinion (“Schwab” exemption case) says that, if a debtor undervalued his assets when he claimed his exemptions and a trustee can sell them for more, the Debtor cannot get the money that the trustee made over the debtor’s exemption amount even if he could have claimed more but did not. Thus, you need to know the value so you can claim the full amount of protection.
Another reason value is important is that, in some cases, if your collateral is worth less than you owe, you can pay the value of the collateral to the creditor and not the larger amount that you owe. If you undervalue your stuff and file a motion to value and the property turns out to be worth close to what you owe, then you wasted everyone’s time and you and your attorney look stupid.
Finally, if you undervalue your assets and they turn out to be worth significantly more, not only could you lose them but you could find yourself being criminally prosecuted for bankruptcy fraud. This could happen even if you did not intentionally undervalue them; rather, you were too lazy or irresponsible to try to find out a good value. Debtors have the burden of investigating their affairs and reporting everything truthfully and completely to the Court.
In summary, there are many considerations which must be addressed before you file bankruptcy. Attorneys know that everyone who needs to file bankruptcy wants it done as soon as possible. However, it also is their job to help Debtors make the best decisions. Debtors must understand that sometimes they must fully apprise their attorneys of the facts and think about what they are telling their attorneys (and of what their attorneys are telling them). They also need to understand that, sometimes, they are going to have to be patient before they enter Bankruptcy World because the wolves are at the door.
How Does Bankruptcy Work and What is it Intended to Accomplish??
Dramatic Increase in Elderly Filing Bankruptcy
Student Loan Debt Mounting Daily
What is Pre-Bankruptcy Planning?
Click here for steps to your free bankruptcy consultation.
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Chapter 7, plus information about the means test and exempt property
March 6, 2015 /0 Comments/by Diane Drain
A Chapter 7 bankruptcy is a tool to help individuals start over. Some of the information in this article is specific to cases filed in Arizona, but the majority is bankruptcy law and applies to all Chapter 7 bankruptcy. This basic information should assist you in understanding how bankruptcy works, but please understand that the information on this website is not all you need to know to file Chapter 7 bankruptcy. Video explaining chapter 7 basics.
Chapter 7 bankruptcy is designed to give an individual a “fresh start”. This includes eliminating or discharging all your unsecured debts after you have liquidated and paid to your creditors all of your non-exempt assets. Certain unsecured debts cannot be discharged in Chapter 7. Chapter 7 bankruptcy has no effect on secured debts. That means if you want to keep your home or car, and there are debts owing on that home or car, you need to keep the payments current.
Who Can File Chapter 7 Bankruptcy in Arizona?
A permanent resident of Arizona can file bankruptcy in the Arizona bankruptcy court. But, you must have lived in Arizona for at least half of the last 180 days (6 months) in order to file in Arizona.
Exempt Property
An important concept in both Chapter 7 and Chapter 13 bankruptcy is “exemptions” or “exempt property.” When you file a Chapter 7 bankruptcy, the Chapter 7 Trustee takes all of your “non-exempt” property and sells it for the benefit of your unsecured creditors. The Trustee cannot take your exempt property and you may keep all of your exempt property regardless of its value and amount. What property is “exempt” and what property is “non-exempt” depends on the exemption laws of the applicable state. Each state has its own exemptions for bankruptcy purposes. For a link to Arizona exemptions go to the primary menu, Bankruptcy, Arizona Exemptions. There is a download PDF of the exemptions. Only Arizona residents are able to use Arizona exemptions (YouTube video).
Just because you are an Arizona resident when you file for bankruptcy does not mean you are entitled to Arizona exemptions in bankruptcy. Therefore, before you file bankruptcy you and your bankruptcy attorney must determine which state laws will determine your exempt assets. The state exemption law applicable to your bankruptcy is determined by the state in which you have been domiciled for the 730 days (two years) immediately prior to filing your bankruptcy. If you have not been a resident of Arizona for the two-year period before filing your bankruptcy, then your bankruptcy exemptions will be those allowed by the state in which you lived for 180 (6 months) days immediately before the two year period, or the state in which you lived for the longer portion of that 180-day period. Confused yet? I recommend making a diagram of where you lived and when.
For example: a person filing bankruptcy in Arizona today may use the Arizona property exemptions if he or she lived in Arizona for more than two years. But, if that person did not live in Arizona for two full years, then that person will need to look to the exemptions of the state where he or she lived in that last two years. It is possible that the exemptions of the prior state are limited to residents only. Therefore, the person filing for bankruptcy will need to use federal exemptions. In many cases, the state where the person moved from will provide better bankruptcy exemptions than Arizona law.
Consider John. John sells his residence in Georgia for $100,000 and moves to Arizona in January. In March of that year John purchases an Arizona homestead for $100,000; he gets an Arizona drivers license and registers to vote in Arizona. Then, 14 months after moving to Arizona, John loses his job and files bankruptcy. Under the bankruptcy law, Georgia’s relatively limited exemption laws would apply to John’s bankruptcy, and John would not have the benefit of Arizona $150,000 homestead protection.
Means Test:
The means test is a formula established by Congress to determine who may be eligible to file Chapter 7 bankruptcy. People under their state’s median income and people whose debts are primarily not consumer debts are exempt from means test qualification. This means if 51% or greater of the debts are related to business obligations then the potential debtor does not need to worry about the means test.
Secured or Unsecured Debts.
In the bankruptcy documents you list secured debts separately from unsecured debts. Unsecured debts include personal loans and credit cards issued by banks, such as Visa, MasterCard, American Express, or Discover, and other credit cards used to purchase consumable items. Vehicle leases, medical bills, and personal loans are also unsecured debts. Secured debts include those debts where the creditor has a security interest in your property to guarantee payment. Examples of secured debts include mortgages, car loans, loans from finance companies (usually secured by household items), furniture, computers or electronics. If you purchased goods at a store using a store credit card, such as a card from Home Depot, Best Buy, etc., the store probably has a security interest in certain items purchased, which makes the store a secured creditor.
Secured Property
After filing a Chapter 7 bankruptcy, you will have to choose to either reaffirm or redeem secured debts or surrender the secured items to the creditor. You are entitled to keep any secured property as long as you continue to pay the loan for that property in a timely manner. If, however, you elect to surrender secured property, the secured creditor may not sue you for and try to collect any money from you. Some mortgage companies recently have required borrowers to sign cross-collateralizated agreements. This means that the borrower agreed to allow their bank or savings union to seize their bank accounts in order to pay delinquent payments for the vehicle. If you are unsure whether you signed this type of documents, you should review the papers you signed when you purchased your vehicle and/or when you opened your account. You may want to move your money to a new bank before defaulting on a vehicle loan. Do not bank at Wells Fargo — they will freeze your account even if you did not sign a cross-collateralized agreement.
The Bankruptcy Estate
Your bankruptcy estate refers to your non-exempt assets that are subject to administration by the bankruptcy trustee. Exempt assets, such as your homestead and IRA, are not part of your bankruptcy estate.
Reaffirmation Agreements
The creditor, you and your lawyer or judge must file a reaffirmation agreement for all secured personal property you want to retain within 60 days of the first scheduled meeting with the trustee (the meeting of creditors or 341 meeting). If you do not sign the reaffirmation agreement or redeem the property within 60 days, the automatic stay is lifted as to that property and the creditor is permitted to take all legal action allowable under the law to repossess the property, but in most cases they do not. Signing a reaffirmation agreement means that you will be personally liable to pay the debts after your bankruptcy is over.
Your attorney may choose whether or not to sign your reaffirmation agreement.
Issues such as negative disposable income, no concessions by the creditor as to principal or interest or the attorney believes there is a presumption of undue hardship. If your attorney does not “approve” reaffirmation, you must prepare and sign a Reaffirmation Agreement Explanation explaining why you now have the financial ability to pay a reaffirmed debt. The bankruptcy judge will review your explanation and either deny or approve the reaffirmation. The bankruptcy judge will deny reaffirmation if he believes that reaffirmation is not in your best interest for a “fresh start.”
If the reaffirmation is denied you still may be able to keep your property if payments are current, or you could request a hearing with the judge. If the court refuses to approve your reaffirmation many creditors will let you keep your property if maintain current payments. (A creditor usually will not provide a reaffirmation agreement if you are delinquent in your payments.)
The bankruptcy stay is the bankruptcy tool that stops creditors from contacting you in any way after you file bankruptcy. This could be a problem because the lender o your home or car may stop sending monthly statements. It is your responsibility to make sure you pay these debts on time, otherwise the lender may ask the court for permission to take your home or vehicle.
Executory Contracts
An executory contract is a legal term referring to an agreement between parties and an obligation due by at least one of the parties (such as a car lease or a residential lease). The most common example is a lease agreement for a car or a residence.
Chapter 7 bankruptcy permits the debtor, or the trustee, to assume or reject an executory contract. A debtor has to decide what to do about an executory contract before the court issues a bankruptcy discharge which usually happens about 90 days after filing.
An example of an executory contract is a vehicle lease. If the debtor does not want to keep the leased vehicle then he can surrender the vehicle to the leasing company and has no further liability. If the debtor wants to keep the vehicle then will need to assume the lease and keep the payments current. The debtor and creditor must sign the lease assumption, but it is not necessary for the judge to approve the lease assumption. If the debtor cannot make the lease payments the leasing company can repossess the car, but cannot sue the debtor for any deficiency.
A debtor’s tool in bankruptcy is to “redeem” secured personal property such as furniture, computers, automobiles, or other property purchased on credit. To redeem means to purchase the property from the secured lender at its current fair market value considering its age and condition. If the property is worth less than the secured debt then this may be a good option. The problem is that most redemptions require payment in full at the time the redemption is accepted or approved by the court..
Start with the understanding that student loans will not be discharged in a bankruptcy. But, there are always exceptions to every rule. In some circumstances student loans can be dischargeable if you can show that your loan payments impose “undue hardship.” This issue must be filed as a separate action within the bankruptcy. This separate action is called a adversary. You must appear before the bankruptcy judge with proof of your hardship. Most likely this will be hotly litigated by the student loan creditor. It is wise not to assume you will be one of the very few who receive a partial or full discharge for their student loan. Each bankruptcy judge, in each bankruptcy district, in each federal court has a different opinion what is an “undue hardship”.
Contingent and Disputed Liabilities
Make certain you provide your attorney information about all liabilities, no matter how remote. List any claim that anyone might have against you even if you are certain that claim will never arise. If you are a co-debtor on a note, have personally guaranteed any debt, or are liable on any mortgage, the debt should be listed and explained in the bankruptcy. You also must list debts you dispute. This includes any past obligations to any mortgage companies for a foreclosed home or even a short sale, make sure to include any mortgage insurance company (such as a VA loan). You should also include any obligations that someone promised to pay for you, such as selling your home to someone who promised to pay you, but the sale was done without paying off the entire debt.
Bankruptcy Discharge
The discharge is the legal process that eliminates most of your legal liability to your creditors. Creditors who have been discharged in bankruptcy can never again try to collect debts that you incurred prior to filing bankruptcy. There are certain debts that remain even after the discharge is entered. These debts include child support, alimony, student loans, most taxes, and several other obligations. A good bankruptcy attorney can guide you as to what debts are discharged and what are not. Video explaining the discharge.
By Jon Alper, as edited by Diane L. Drain
To schedule your Free Bankruptcy Consultation with Diane
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Individual Bankruptcy Questionnaire
November 26, 2014 /0 Comments/by Diane Drain
Individual Bankruptcy Questionnaire Complete
1 General Information
2 General Questions
3 Financials & Means Test
We realize you are extremely nervous about your financial situation. Most likely you jump every time the phone rings and lose sleep because you are terrified about your financial future. Let us help you get your life back on track. Our commitment is to provide excellent assistance for very reasonable fees.
Estimated time to complete the entire form is 30 to 40 minutes. Most of these questions can be answered without the need of your financial documents, but some will require a little more detailed information. Step three deals with income so is a little more complicated, but very important. IN ORDER FOR THE FORM TO MOVE TO THE NEXT PAGE IT IS VERY IMPORTANT YOU FILL IN ANY QUESTION WITH AN * (asterisk) NEXT TO THE QUESTION - EVEN IF YOU NEED TO PUT "NONE" OR "1).
GENERAL INFORMATION FOR AN INDIVIDUAL OR MARRIED COUPLE
Complete Middle Name*
Last 4 digits of your SSN*
Your age*
Have you lived in Arizona for*
More than 2 years
Less than 2 years
When did you move to Arizona?*
Approximately the month and year you moved here.
Since you did not live Arizona for the last 2 years where did you live and for how long?*
Are you married?*
Information about your Spouse
Spouse's First Name*
Spouse's Complete Middle Name*
Spouse's Last Name*
Spouses primary contact phone number*
Spouses e-mail address*
Last 4 of Spouse's SSN*
Spouse's age*
Year you were married.*
Do you and your spouse live together?*
Spouse's street Address*
Do you have people who live with you or that you deduct on your taxes?*
Individual #1
Age?
Relationship to you
Is this person living with you?
1 - Do you have additional people who live with you or that you deduct on your taxes?
Individual #2
2 - Do you have additional people who live with you or that you deduct on your taxes?
Individual #3
3 - Do you have additional people who live with you or that you deduct on your taxes?
Individual #4
How did you find out about our services?*
We are always flattered when a prior client, friend or fellow attorney refers a potential client. Please let us know their name so we can thank them. Instead, if you did a search on the Internet please let us know how you found us. Thank you for this information.
Briefly tell us who referred you or how you found our office.
How do you believe that bankruptcy may help you find financial stability and peace of mind?*
Bankruptcy is not always the answer so it is important that I understand what you want or need to accomplish. That will help me provide counsel as to whether filing bankruptcy will accomplish your goals.
Have you ever filed bankruptcy before?*
What year did you file, what chapter, where were you living and the bankrutpcy case number.*
Are both you and your spouse filing this bankruptcy together?*
If you are considering filing bankruptcy without your spouse then briefly explain why.*
Did just one spouse incur the debts before the marriage?*
If so, please explain.*
Have you used any other names during the past 6 years?*
(Example: maiden name, last name from previous marriage, legal name change, etc.)
Name Used*
Dates Used*
Thanks, you're doing great so far!
Please proceed to Step 2 General Questions in the questionnaire so we may get a better understanding of how we can help. WARNING: TO AVOID LOSING YOUR INFORMATION DO NOT TURN OFF YOUR COMPUTER OR LEAVE THIS SITE UNTIL THE FORM IS SUBMITTED (YOU WILL RECEIVE A CONFIRMATION WHEN IT IS SUBMITTED). PLEASE NOTE - WE DO NOT HAVE ACCESS TO ANY INFORMATION UNTIL THE FORM IS SUBMITTED.
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SOME REQUIREMENTS OF THE BANKRUPTCY LAWS ARE "JUST MEAN AND SCARY FOR NO OBVIOUS BENEFIT" TO QUOTE A PROMINENT BANKRUPTCY JUDGE
Effective October 17, 2005, the Bankruptcy Code was amended in such a way as to try to interfere with the relationship between attorneys and clients. Clients are now described as “assisted persons” and attorneys are referred to a “debt relief agency.” To quote a prominent Bankruptcy Judge [the new legislation provisions] “require debt relief agencies to give notices and warnings that are not relevant in many of the circumstances in which they must be given, that will be false in some required contexts and that are just mean and scary for no obvious benefit.” This legislation (sponsored at great expense by the lobbyists and executives of the consumer credit industry) shall not stop me from rendering the proper advice and information to which you are entitled to. Particularly, I question the assertion that filing a bankruptcy is “routine.” I advise you to question me about any provision of these forms that contradicts anything that I may have said to you.
Your answers to these general questions will help me to understand your unique situation, including what you have done or has been done to you. Many people make decisions that do not lead to problems outside bankruptcy, but in a bankruptcy those same innocent decisions can be disastrous. Based on your answers I will customize my advice with the goal of helping you avoid problems, if possible. I realize this is a lot of information, but accurate information will be your best friend. A friend of mine says “garbage in, garbage out”. He is correct because if I get the wrong information from you I will most likely give you the wrong legal advice.
I/We watched the educational videos about the bankruptcy process. It is important to note that these videos are instrumental in helping you undersand how bankruptcy works. Therefore, if you did not watched all 9 videos, please do so before sending this form to our office.*
THE FOLLOWING ARE GENERAL QUESTIONS REGARDING YOUR CURRENT SITUATION. IF YOU ARE MARRIED PLEASE ANSWER THE QUESTIONS THAT ARE APPLICABLE TO EITHER YOU AND/OR YOUR SPOUSE.
Is there an emergency requiring immediate filing?*
If so, why?
Is there a foreclosure or trustee's sale pending?*
Do you understand there are two on-line courses required as part of a bankruptcy? The first, a credit counseling course, must be completed before filing, The second, a financial management course, must be completed after filing the bankruptcy.*
Are creditor calling at work/home/neighbors?*
Do you owe any back child support or alimony?*
If so, do you understand that your exempt property could be sold to pay back child support and/or alimony Section 522(c)(1))?*
How much do you owe in back child support and/or alimony and to whom?
Is a law suit pending or completed?*
What is the status of the lawsuit? When was it served or approximately when was it completed and a judgment entered?
Have your wages or checking accounts been garnished?*
If so, by whom, approximately how much and when?
Is a landlord trying to evict you from your property?*
If so, did your landlord obtain a Forcible Entry & Detainer Order? When?
Do you participate in any Internet or social media sites where you offered expensive items for sale or discussed items you own or debts you owe?.*
NOTE: If the social media setting is set to "public" then anyone, including creditors and collection companies, can see all your posts. Consider using "private" settings in order to protect you and your family from unwanted stalking.
Briefly explain the sale of property or discussion via social media.
Other debt problems?*
Please Explain
THE FOLLOWING QUESTIONS RELATE TO CERTAIN ISSUES THAT DETERMINE WHETHER OR NOT IT IS APPROPRIATE TO FILE A BANKRUPTCY AND, IF SO, WHEN TO FILE.
Do you ever expect an inheritance in the next 20 years?*
Understand that you may be required to surrender any inheritance after a bankruptcy to your creditors. In a chapter 7 that surrender period is 6 months; in a chapter 13 it is probably the life of the plan.
Briefly describe what you expect may happen.
Do you understand that every debt you owe or might owe must be listed in the bankruptcy?*
Understand that only the debts you owe on the day of filing the bankruptcy will be dealt with in the bankruptcy. So any new debts you incur after bankruptcy will be your obligation.
IMPORTANT: Do you normally receive a tax refund?*
Understand that any refunds you have not collected by the date a bankruptcy is filed will be sent to the bankruptcy trustee.
List the year and approximately how much you received or expect to receive.
Does anyone owe you money or you have a right to any assets? Explain even if you never expect to collect the money or receive the asset.*
Explain how much you are owed or what rights you may have.
Do you have a right to sue anyone for anything (this includes vehicle accidents, wrongful termination, collection company abuse or any other type of right)? If so, explain what for and how much you might be owed.*
Briefly, what happened which you believe gives you a right to sue someone?
Such as: a car accident. How much are you owed and for what?
In the last 4 years have you sold, traded or gave away any item of value?*
This would include houses, land, cars, businesses, generally any items of value. It is best to explain the circumstances so we can discuss any issues.
What did you transfer (sell, trade or use as collateral)? How much was it worth and how much did you receive?
In the last 4 years have you used your property to obtain a loan? (like those terrible title loans)*
For instance: using your vehicle to obtain a loan, such as a title loan. It is best to explain the circumstances so we can discuss any issues.
What did you use as collateral for a loan? How much was it worth and how much did you receive?
Do you owe any money to any friend or relative?*
How much do you owe to family or friends?
In the two years have you paid family or friends back on any loan they made to you?*
How much did you repay family or friends in the last two years?
If you repaid any loans from family or friends we must discuss the ramifications.
CREDIT CARDS, BANKS AND OTHER DEBTS:
Are there any debts which are business or non-consumer debts?*
Business debts include student loans, taxes, or loans, credit card charges or leases used for business purposes.
Approximately how much do you owe which is business or non-personal debts. Make sure to include both secured and unsecured*
*Make sure to include debts for investment properties as secured business debts. *Also include any monies you charged on your personal credit cards but used for business purposes.
Do you owe money on any credit cards or signature loans (this includes old debts)?*
Answer "yes" if you had credit cards in the past that you did not pay off. Answer "yes" even if the creditor "wrote off" the debt. To write off a debt does not mean the debt is gone, it means the creditor will mostly likely sell it to a debt collector.
Approximately when did you last use a credit card, signature loan or balance transfer?*
You only need to provide the year and approximate date and month. It is okay to guess as to the day and month, but not the year.
If bankruptcy is in your future do you understand that you must stop using credit cards now?*
This is very important.
In the last 6 months did you make any charges/cash advances/balance transfers of more than $500 on a single credit card or signature loan?*
It is better to include all transfers or charges so we can discuss the specifics in more detail.
Have you charged more than $500 (total) on one credit card in the last 3 months?
Briefly explain how the funds were used.
Did you use a store credit card to finance expensive items at that store? For instance: using a Best Buy credit card to finance a computer at Best Buy.*
What did you buy and how much is still owing on the credit card.
We will talk about secured debts.
Do you have any cash reward cards, gift cards, etc worth more than $100?*
Where do you bank (list all banks)?*
BEWARE: I DO NOT RECOMMEND THAT ANYONE BANK AT WELLS FARGO IF THEY ARE CONSIDERING BANKRUPTCY (THEY WILL FREEZE YOUR ACCOUNTS). BEFORE CLOSING YOUR ACCOUNT(S) MAKE SURE TO GET 12 MONTHS OF BANK STATEMENTS (YOU WILL NEED THESE LATER).
Do you owe any money to your current bank (credit cards, car loans)?*
If bankruptcy is in your future please move to a new bank now. Request and use a debit card. DO NOT PUT YOUR NAME ON ANY ACCOUNT WITH SOMEONE ELSE AND DO NOT PUT YOUR MONEY INTO SOMEONE ELSE'S BANK ACCOUNT.
Unable to open a bank account?
Try: PayNearMe. It is an easy way to use cash for making online purchases, paying bills and more. You can pay by scanning a barcode in one of 28,000 stores near you. Once the payment code is scanned by the store cashier, simply hand your payment in cash to the cashier and you will receive a receipt as proof of payment. www.paynearme.com/en
Is anyone an authorized user on your credit card?*
If yes - you should remove them as an authorized user prior to filing a bankruptcy. Talk to Diane about this issue.
Is your name on anyone else's debt (credit card, land, vehicle, etc.)?*
If so, please explain what type of debt.*
Do you owe any federal or state taxes?*
Back taxes: list who you owe (IRS or state), approximately how much and for what tax year.
In the last 5 years did you file any tax returns late?*
In other words, were the returns filed after the date they were due, including extensions.
List year of the returns(s) and approximately when the return(s) was actually filed.
For instance: 2013 federal return, no extension, filed November 2014. Owe $2,400.
In the last 2 years did you use a credit cards to pay taxes?*
When and how much did you charge on a credit card to pay taxes?
Has the IRS/or any state taxing authority garnished your wages or recorded a lien? A lien is a document recorded with the County Recorder’s office.*
Garnishment for back taxes or liens. Explain the year the taxes were due, when they were filed and how much was garnished or liened.
Do you have any payday loans?*
If so, do you understand that you should close any bank account the loan company may be able to access.*
Do you have any loans with a credit union?*
Beware of an cross-collateralized accounts with your credit union. I will explain what this means when we talk.
List all loans with the credit union (vehicle, signature or credit cards).*
If so, do you understand that it is best to move ALL your money out of the credit union so they will not off set (take) your money.*
Beware of an cross-collateralized accounts with your credit union.
Do you have any student loans or did you guaranty a student loan for another person?*
If so, do you understand that your student loans or student loans you guaranteed are not discharged in bankruptcy without bringing a separate action?*
A separate action is filed in the Bankruptcy Court and will involve additional legal assistance. This firm does not prosecute student loan complaints. We will try to provide you with recommendations of attorneys who may be able to help. WARNING - 3/9/18 - In direct violation of 11 USC 525, I have received distressing news from other lawyers across the county that the Department of Education and its student loan servicers are kicking bankruptcy debtors out of their Income Driven Repayment plans. This can happen if debtors file Chapter 7 or Chapter 13 and regardless of whether they were current on the student loan payments. This potentially illegal expulsion, even if temporary, can upend the debtor's progress towards getting a Public Student Loan Forgiveness or other cancellation of their loans.
In the last two years did you pay any tuition for dependants over the age of 18?*
If so, do you understand that the bankruptcy judge may require the school that received the tuition repay it to your creditors?*
The school that had to surrender the tuition may then require the student to pay the tuition or they may withhold the diploma or information regarding the status of classes until the tuition is paid. This is a changing area of law.
In the last 3 months have you paid any warranty (such as a vehicle warranty), or pre-paid for any medical/dental procedure or other deposits?*
If so, the trustee may go after these funds.
Do you have any outstanding fines or penalties? (e.g.: court fines or tickets)*
If so, these may not be discharged in a bankruptcy.
Are you renting or leasing anything (cars, apartment, house, equipment, land)?*
What are you leasing: an apartment, vehicle, or other?
HOME, LAND AND VEHICLES
Do you (or your spouse) own a home, mobile home, timeshare or land anywhere in the world?*
Describe (e.g. 2 bed/3 bath, 1340 sq ft):*
How much is your home worth at this time and in its current condition?*
The name(s) on the title of the house or land:*
Are there any loans on this property?*
Name of first Lender.*
What is the total amount owed to your first lender?*
Are you behind on payments to your first lender?*
Approximately how much is owed to your first lender in order to being the loan current?*
Is there a second lender on this property?*
Name of second lender.*
Debt owed to second lender.*
Are you behind on any payments to your second lender?*
Payment arrears to second lender?
How much must you pay in order to bring the payments current?
Are there any other loans on this property?*
Name of third lender:*
Total amount owed on any other loans secured on this property*
Are you behind on any other mortgage payments besides your first and second mortgages?*
How much would you need to pay in order to bring another others debts, not including the first or second mortgages, current?
Is there a foreclosure or trustee’s sale pending?*
If so, what is the date and time of foreclosure?*
If there is a trustee's sale pending, please provide us a copy of trustee sale documents.
**It is your responsibility to confirm the trustee sale date and at all times to keep track of that date and any postponements; including the entire time your bankruptcy is pending. This office will not monitor the date of sale for you, but we be happy to answer your questions regarding the trustee sale process.
Are any of the home loans a VA loan?*
VERY IMPORTANT!
If so, do you understand that you have personal liability for the debt because the Arizona anti-deficiency statute does not protect you from a deficiency action.*
Is there or has there been a modification of any of the home loans?*
If so, was this a permanent modification?
Is there a homeowner's association?*
Are the homeowner's association payments current?*
When was the last payment made?
Approximately how much is due in order to bring this HOA current?*
Has the homeowners' association filed a lawsuit?*
Do you understand that the bankruptcy will not allow you to keep your home unless you pay the homeowner's dues?*
Do you understand that as long as you own the property the bankruptcy will not protect you from being sued for homeowner's dues owed AFTER filing the bankruptcy?*
Was there a short sale or foreclosure in the last 6 years?*
Please describe:
In the last 10 years have you made any large mortgage payments in addition to the regular monthly payment?
Do you own another home, land or timeshare?*
Fair Market Value?*
Are there any loans on this second property?*
First Lender:*
Debt Owed*
If you are behind on payments how much is due in order to bring the loan current?
Name of the second lender*
What is the total amount you owe to the second lender?*
If you are behind on payments to the second lender - how much do you owe in order to bring the loan current?*
Name of third lender.*
Debt owed to third lender*
If you are behind on paying another lender - how much to bring this(these) loan(s) current?
Is there a pending foreclosure or trustee’s sale on this second property?*
If so, what is the date and time of foreclosure:*
Is there a homeowner's association on this second property?*
Are the homeowner's association payments current on this second property?*
How much is owed and for how many months?
Do you own any other real estate? (e.g. house, land, timeshares, etc)*
Describe - such as is it raw land, a timeshare, summer house?*
Fair market value:*
Debt owed:*
Do you own a third piece of real estate? (e.g. house, land, timeshares, etc)*
Describe:*
Do you own a fourth piece of real estate? (e.g. house, land, timeshares, etc)*
If you are behind on your house payments: here is a link to the Home Affordable Modification Program (HAMP): http://www.justice.gov/ust/eo/public_affairs/consumer_info/docs/HAMP_Fact_Sheet.pdf (Link opens in new tab)
You can also go to: Making Home Affordable at www.makinghomeaffordable.gov (federal web site). (Link opens in new tab)
List all vehicles in your name (or that of your spouse), no matter who is driving that vehicle.
List all debts on any of those vehicles.
List the fair market value of each vehicle using the resources below.
Resources for fair market value: www.kbb.com (YOU MUST USE PRIVATE PARTY VALUE) or www.edmunds.com or www.NADA.com I cannot give you good advice without an accurate fair market value.
Do you own any vehicles? This includes both vehicles you are paying for and those that are completely paid off. This also includes any vehicles your name is on, even if someone else drives it.*
Do not list leased vehicles.
Do you, your spouse or your child have a handicapped plate or placard?*
Description and year of vehicle number one.*
Name(s) on the title of vehicle number one.
This information should be on the registration.
Month and year vehicle number one was purchased*
Fair Market Value of vehicle number one*
You must list the Kelly Blue Book private party value - www.KBB.com. I cannot help you without this information.
Do you own a second vehicle?*
Description and year of vehicle number two*
Name(s) on title of the second vehicle.*
Year and month second vehicle was purchased*
Fair market value of second vehicle.*
Total amount owed on second vehicle*
Do you own a third vehicle?*
Description of third vehicle*
Name(s) on the title of the third vehicle.*
Month and year third vehicle was purchased*
Fair market value of third vehicle*
How much is owed on the third vehicle?*
Do you own a fourth vehicle?*
Description of fourth vehicle*
Name(s) on the title of the fourth vehicle.*
Month and year fourth vehicle was purchased*
Fair market value of fourth vehicle*
How much is owed on the fourth vehicle?*
Do you own a fifth vehicle?*
Description of fifth vehicle*
Name(s) on the title of the fifth vehicle.*
Month and year fifth vehicle was purchased*
Fair market value of fifth vehicle*
How much is owed on the fifth vehicle?*
Of your current vehicles, did you refinance any vehicle after it was originally purchased?*
Refinancing a vehicle includes a title or registration loan. Which vehicle, who is the lender and how much are they owed?
Did you finance any of these vehicles with a credit union?*
ASSETS, INCLUDING BUSINESSES:
Other than vehicles or houses, are there any valuable items that you are concerned about losing?
If so, describe the items(s) and include their fair market value.
Do you have any interest in any business that is operating today?*
This includes a business that does not have a formal LLC or corporate name "sole proprietorship".
Briefly describe the business.*
What would a third party pay for that interest in the business?*
Normally you can value a business by subtracting liabilities (debts, including leases) from assets (including accounts receivable). Just provide us with a general guess.
Does the business have any assets, inventory, or contracts?*
Briefly describe, make sure to include accounts receivable, etc.*
Does the business have any leases on anything (cars, equipment, land)?*
What property is leased?*
Did you sign any personal guaranty for any company debts (includes leases, credit cards, or other extensions of credit)?
Such as signing on the business lease or credit card.
Do you understand that by filing for bankruptcy you may surrender your ability to control your business?*
This result will differ if filing a chapter 11 or 13
Did you have any interest in any business in the last 8 years, even if it is no longer in operation?*
Do you have a trust?*
If so, is it revocable or irrevocable? Revocable means you can change the trust.
Describe the assets in the trust.
Could your name(s) be on someone else's trust?*
Please describe the trust your name is on.*
For instance - my name is on my mother's trust, but she is in excellent health and does not have valuable property.
Do you have stocks, bonds (including savings bonds) or mutual funds?*
Please Describe
Do you have any retirement accounts?*
In the last 120 days have any contributions be made into those retirement account(s)?*
It is important to discuss if these contributions were required as part of your employment.
Important questions:How long have you had the IRA? How was it setup? Was it a rollover from another retirement account? Did you cash out your retirement plan and then roll it over? What have you used withdrawals on?
It is important that you talk to your plan administrator or CPA in order to determine if all changes following the regulations governing the retirement plan. Failure to follow the regulations could result in losing your retirement plan in bankruptcy.
Do you have any health savings accounts?*
Did you inherit any retirement accounts?*
Do you have any annuities or other such accounts?*
Please Describe, make sure to include the date the annuity was established and if the beneficiary is a family member.
NOTE: it is very important to make absolutely certain that your retirement accounts are ERISA qualified. You can talk to your employer, HR, or plan administrator, or the word ERISA may be on your plan summary..
Do you have any pre-paid tickets, vacations, dental or other services?*
If so, how much was paid and what is it for (for instance prepaid dentist for braces, or bought plane or cruise ticket for next month).
At this time have you pre-paid tuition to any school?*
If so, how much was paid, what period of time does the payment cover and the age of the child:
Do you have any education IRA or a qualified state tuition program (521c)?*
Have you deposted any funds in the last 12 months?
Were those funds deposted more than 12 months ago, but less than 24 months?
Were the funds deposited more than twenty four months ago?
Are you in the middle of a divorce or separation?*
In the middle of a divorce or separation? Briefly explain your situation.
Have you (or your spouse) been divorced in the last 10 years?*
Are there any assets that are still to be delivered to you (or your spouse)?
List the assets, their value and when you are to take control.
Are there any sole and separate assets?*
Sole and separate assets are those brought into the marriage, given to you (or your spouse) during marriage by someone who is not your spouse, inherited, or purchased from income of your sole and separate property and THAT WERE NEVER COMINGLED. Make sure to include the resale value.
List items, including fair market value:
Are there any co-debtors?*
In otherwords did anyone else (parent, friend or ex-spouse) sign on any of your debts or you signed on their debts. For example a parent is a co-debtor if they sign a loan on a vehicle along with their child.
List the co-debtors, include what you signed for and the current debt amount.
In the last twelve months were there any bounced checks which have not been paid?
Were any household furnishings, jewelry or vehicles used as security for a loan?*
Like those horrible title or registration loans.
What items were used as collateral for a loan? Make sure to include the fair market value of the item and the total debt owed.
(If so, YOU MUST -- USE ACTUAL REPLACEMENT VALUE (506(a)(2)) and additional legal action will be necessary in Bankruptcy Court.)
Do you have property in pawn?*
Has the redemption period expired to reclaim your property?*
IMPORTANT: IF ANY OF THE FOLLOWING SITUATIONS APPLY TO YOU THEN WE WILL NEED TO DISCUSS THE CONSQUENCES OF FILING FOR BANKRUPTCY.
Were all the loan applications signed in the last 10 years truthful?*
Are there any judgments or threatened lawsuits for destruction of property or for injury inflicted (like DUI)?*
Do you understand that any debts from obtaining money, property, or services by fraud may survive the bankruptcy?*
Do you understand that debts based on fraud while acting in a fiduciary capacity (such as embezzlement) may survive the bankruptcy?*
Thanks, only one more section to go!
Please proceed to the final step of this financial Information and we will have all we need to schedule your free consultation. WARNING: TO AVOID LOSING YOUR INFORMATION DO NOT TURN OFF YOUR COMPUTER OR LEAVE THIS SITE UNTIL THE FORM IS SUBMITTED (YOU WILL RECEIVE A CONFIRMATION WHEN IT IS SUBMITTED). PLEASE NOTE - WE DO NOT HAVE ACCESS TO ANY INFORMATION UNTIL THE FORM IS SUBMITTED.
Financial Information & Monthly Budget
This form details how much you spend each month for basic living expenses. Be sure to include the MONTHLY (not yearly) amount for these expenses. In Arizona your utility bill is probably higher in the summer than the winter. Therefore take an average covering the last 12-month period. If you are married and your spouse does not reside with you please make a spreadsheet of their expenses and send them to our office. Make sure to include your name on the spreadsheet.
MONTHLY LIVING EXPENSES
First mortgage, mobile home payment or rent
Second mortgage (if applicable)
Third mortgage (if applicable)
Real estate taxes if it is are not included in house payment.
Home insurance if it is not included in house payment.
Homeowner's Association fees.
Other real estate payment (house, raw land or timeshare)
Average Monthly Expenses
Utilities: Electricity, gas, water, phone, garbage (monthly - just a guess is fine)
Food (Monthly)
Out of Pocket Medical expenses not paid by insurance.
Make sure to include co-pays, pharmacy, eye-glasses and dental expenses. This is a monthly average based on what you have been spending. This amount does not include insurance premiums.
Do you have any children?*
Child Care Expenses
School Expenses (do not include lunches)
Taxes that are not deducted from your wages, Please provide amount and short explanation (such as "self-employed")
Do you owe back taxes?*
Back taxes*
Please list each year and amount owed for each year.
Monthly payment for back taxes.*
Life Insurance that is NOT deducted from a paycheck
Health Insurance that is NOT deducted from a paycheck
Disability Insurance that is NOT deducted from a paycheck
Make sure to list all vehicles you own (whether paid in full or not); include any vehicles you own with someone else. List all payments, including leases.
Vehicle 1 Monthly Payment
Vehicle 2 Monthly Payment
Vehicle 3 Monthly Payment
Is vehicle 1 leased?
Is vehicle 2 leased?
Is vehicle 3 leased?
Monthly average for all vehicles: gas, oil changes, maintenance, tags:
Other Monthly Expenses
Alimony or Child Support
Payments for someone outside your home
For instance, sending Grandma $200 per month to help pay her utility. We will need a history in order to show why this should be included as an expense.
Professional Dues or Union Dues not deducted in a paycheck
This may be an annual expenses, but you should divide it by 12 in order to determine the average monthly expense.
Student Loan Repayment(s)
College Tuition (do not include student loans)
Charitable Giving (if claimed on taxes)
(include church, Goodwill, etc.)
MEAN'S TEST ANALYSIS
MEANS TEST - INCOME FROM ALL SOURCES RECEIVED IN THE LAST SIX MONTHS
Note on this income and means test
This test comes from the 2005 changes to the bankruptcy law. Neither you nor I like going through this analysis, but it is the law (somewhat like taking nasty tasting medicine).
Please read the directions below because this is the most complicated area we will be discussing, but it is extremely important. If you provide me with accurate information I can give you good legal advice. Please call if you have any questions.
Thanks in advance for your understanding and patience.
Are you a disabled vet?*
Are you currently or within the last 18 months on active duty or performing duties for homeland security?*
Is your Spouse a disabled vet?*
Is your Spouse currently or within the last 18 months on active duty or performing duties for homeland security?*
All income must be GROSS (before taxes and other deductions).
List income from each employer separately.
List all income in the month it was received, not the month it was due.
Include tips and bonuses in the month they were received.
If you receive a commission, list the amount earned in the month it was received.
Other income:
If income is earned as a sole proprietor - list all income in the month received.
If you receive a salary from your own company list that income in the month you receive it, not when the business received it.
Include retirement income.
Include disability income ; BUT MAKE SURE TO IDENTIFY IF IT IS SOCIAL SECURITY DISABILITY
Include Social Security, BUT MAKE SURE TO IDENTIFY IT AS SOCIAL SECURITY
Include all monies received from any source, including cashing in retirement accounts, sales of large items and tax refunds, etc. Identify the source.
RENTS: include money from rents (after deducting amount paid for mortgage/HOA/utilities, etc).
If someone is living with you - include their net income even if they do not give it to you. To calculate net income deduct their own expenses such as: taxes, insurance, expenses related to vehicles, medical, credit cards, student loans, other housing, business debts, etc.
Include all monies regularly received from gifts or loans from friends or relatives.
The income must be for a full month; therefore use the last full 6 months, do not include the current month.
It is better to list everything and then we can remove what does not apply to your situation.
The following chart is an example of how to fill out the means test form:
***NOW IT IS YOUR TURN. DO YOUR BEST!*** WITHOUT ACCURATE INFORMATION IT IS VERY DIFFICULT FOR DIANE TO GIVE YOU GOOD ADVICE ABOUT BANKRUPTCY AND HOW IT WILL HELP YOU, OR EVEN IF IT WILL HELP YOU.
PLEASE CALL IF YOU HAVE ANY QUESTIONS at 602-246-7106:
Information about you - Please take your time and accurately fill out information about your income.
I cannot give you good advice without this information.
I ask this in order to keep income from multiple sources organized.
Are you working or do you have income from any source (like retirement)? Is someone paying some of your bills? All of this is "income" and must be listed so we can do our best to give you good advice.*
If dad is paying your phone bill this is "income" and must be listed.
You said you DO NOT have any income, so please explain how you are eating, how you have a place to sleep or the ability to take care of yourself.*
Such as" I live with my parents and they pay for everything." If you are paying your own bills then go back to the question above and chose "yes" to the question "Do you have any income",
Employer name or other source of income*
Month 1*
Month 2*
Month 3*
Month 4*
Month 5*
Month 6*
Do you have a second source of income?*
Employer/Other*
Do you have a third source of income?*
Do you have a fourth source of income?*
Are you married or living with a significant other?*
Your spouse or significant other.
Spouse or significant other's name
Is your spouse or significant other receiving any money from any source?*
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Employer/Other
NOW STOP!
Finish the following page ONLY if your average gross income (ANNUAL income before taxes and other deductions) exceeds the amount permitted for the number of people that live in your home. Normally that means the number of people you deduct on your tax returns, but there are always exceptions. The more accurate job you do here the more accurate legal advice I can give you.
For now include income for everyone who lives in your home. Prepare an explanation if your family has unusual income. Do not include anyone’s social security income as part of the following calculation.
Annual Gross Income (before any deductions): Family of 1 - $48,369 Family of 2 - $62,055 Family of 3 - $63,334 Family of 4 - $75,900 Family of 5 - $84,300 each additional person: $8,400
Does your average gross income (income before taxes and other deductions) exceed the amount permitted for a family of your size.*
Instructions for the following questions:
IMPORTANT: The following expenses are monthly, not annual and not per pay check.
These questions pertain NOT to what you were actually paid or received over the last six months. Instead, these are for expenses you will spend or should spend in the future. In other words, unlike income this is a forward looking review of your expenses.
(e.g.: what is the correct amount you should be deducting from your paycheck(s). Or, if you want but do not have life insurance, disability insurance, or health savings plan, etc. Make sure you talk to Diane about this.
Include all expenses, those deducted from your paychecks AND those that you pay directly in cash or by check.
How to calculate monthly expenses:
TAXES: If your income fluctuates then add all taxes for the 6 months above, including anticipated taxes on 1099 income then divide by 6.
Are you paid the same amount every week? If so, multiply the taxes from one paycheck by 52 and divide by 12 to determine your monthly taxes.
Are you paid the same amount every two weeks? If so, multiply the taxes from one paycheck by 26 and divide by 12 to determine your monthly taxes.
Monthly average taxes (federal, state, FICA, social security, Medicare and self-employment). If you include income for two people (spouse or signficiant other) then add taxes from all income and enter one number.*
Monthly MANDATORY payroll deductions (employer forces you to pay: e.g. union dues or forced retirement)
These are expenses that you are required to pay in order to work for this employer. For instance - if you work for the government they usually require you to contribute to a retirement account.
Monthly life insurance. This may be deducted from a paycheck or you pay the premium directly.
Monthly Court ordered payments (such as child support/alimony)
Monthly education expenses for employment or physically/mentally challenged child.
Monthly childcare costs.
Monthly health insurance deducted from paycheck or paid directly to the insurance company.
Make sure to include dental and all other insurance.
Monthly health care such as co-pays, pharmacy, eye-glasses, dental, etc (out-of-pocket, not paid by insurance)*
These expenses need to be averaged over 12 months, then divided by 12 in order to give an average for your "out of pocket" expense. Make sure to include all health care expenses (diabetes medication, eye exams, etc).
Monthly disability Insurance (deducted in paycheck or paid directly)
Monthly health savings account (flex accounts)
Monthly expenses for the care of elderly, chronically ill or disabled member of your household who cannot pay their own expenses:
Monthly education expenses for children under 18 (such as uniforms and books)
Calculate these expenses over a 12 month period and divide by 12 in order to determine the average monthly expense.
Monthly charitable contributions - see your prior tax returns.
Monthly amount withheld to repay loans from retirement accounts.
Additional issues:
Do you owe any back taxes?*
Amount of back taxes owed.
Year(s) tax debt due:
Are you behind on payments to secured creditors (house or car)?
Name of Lender. Indicate if home or vehicle.
Amount owed to bring the loan current:
Are you behind on any other payments to secured creditors (house or car)?
Lender's name and state type of property: home or vehicle
FABULOUS JOB, BUT BEFORE YOU TAKE A WELL DESERVED BREAK, PLEASE READ THE INFORMATION BELOW AND SIGN (checkbox) WHERE INDICATED.
I REALLY APPRECIATE YOUR COMMITMENT TO PROVIDING ACCURATE INFORMATION WHICH WILL ALLOW ME TO GIVE YOU LEGAL ADVICE TAILORED TO YOUR UNIQUE SITUATION. I LOOK FORWARD TO TALKING WITH YOU. PLEASE CALL IF YOU DO NOT HEAR FROM US WITHIN 24 HOURS AFTER SENDING YOUR FORM. YOU ARE VERY IMPORTANT TO US AND WE DO NOT WANT YOU TO FEEL UNNECESSARY STRESS JUST BECAUSE YOU ARE WAITING TO HEAR FROM US. WE ARE REALLY HERE TO HELP YOU.
IMPORTANT NOTICES REQUIRED BY LAW:
The following notices are required pursuant to 527(a)(2). By signing below you acknowledge that: 1) You understand that all information that you are required to provide to complete any documents filed with the Bankruptcy Court must be complete, accurate and truthful; 2) You will fully and completely disclose all assets and all liabilities in the documents filed with the Bankruptcy Court; 3) You have fully disclosed all sources of income on any documents filed with the court; 4) You understand that any information set forth either in the documents filed with the Bankruptcy Court, or testified to under oath may be audited and that failure to provide accurate information may result in the dismissal of your bankruptcy case or other sanctions, including criminal sanctions; 5) You agree that a faxed or e-mailed signature shall be sufficient to indicate agreement to these notices.
UNITED STATES BANKRUPTCY COURT NOTICE TO INDIVIDUAL CONSUMER DEBTOR UNDER § 342(b) OF THE BANKRUPTCY CODE
In accordance with § 342(b) of the Bankruptcy Code, this notice: (1) describes briefly the services available from credit counseling services; (2) describes briefly the purposes, benefits and costs of the four types of bankruptcy proceedings you may commence; and (3) informs you about bankruptcy crimes and notifies you that the Attorney General may examine all information you supply in connection with a bankruptcy case. You are cautioned that bankruptcy law is complicated and not easily described. Thus, you may wish to seek the advice of an attorney to learn of your rights and responsibilities should you decide to file a petition. Court employees cannot give you legal advice.
1. Services Available from Credit Counseling Agencies
With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis. The briefing must be given within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. The clerk of the bankruptcy court has a list that you may consult of the approved budget and credit counseling agencies.
In addition, after filing a bankruptcy case, an individual debtor generally must complete a financial management instructional course before he or she can receive a discharge. The clerk also has a list of approved financial management instructional courses.
2. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors
Chapter 7: Liquidation
1. Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.
2. Under chapter 7, you may claim certain of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.
3. The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does, the purpose for which you filed the bankruptcy petition will be defeated.
4. Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.
Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income
1. Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.
2. Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.
3. After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.
Chapter 11: Reorganization
Chapter 11 is designed for the reorganization of a business but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.
Chapter 12: Family Farmer or Fisherman
Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.
3. Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials
A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a fine, imprisonment, or both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General acting through the Office of the United States Trustee, the Office of the United States Attorney, and other components and employees of the Department of Justice.
WARNING: Section 521(a)(1) of the Bankruptcy Code requires that you promptly file detailed information regarding your creditors, assets, liabilities, income, expenses and general financial condition. Your bankruptcy case may be dismissed if this information is not filed with the court within the time deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the court.
“THE FOLLOWING DOCUMENT IS INTENDED TO BE ON A SEPARATE PAGE”
Notice required by Bankruptcy Code Section 527(b)
IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY
If you decide to seek bankruptcy relief, you can represent yourself, hire a qualified bankruptcy attorney, or you are able to answer all questions related to bankruptcy – hire a bankruptcy petition preparer that is not an attorney. Under Arizona law the Arizona Supreme Court must license all Bankruptcy Petition Preparer and they may not give any legal advice, including explaining most of the terms contained in the bankruptcy forms. The law requires that any Attorney or Bankruptcy Petition Preparer give you a written contract specifying the work to be done and the fees to be charged. Before filing any bankruptcy case you and your attorney should analyze your eligibility for different forms of relief available under the bankruptcy code and which type of bankruptcy relief is most beneficial for you. Be sure you understand that relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention, must be prepared correctly and filed with the bankruptcy Court. You will have to pay a filing fee to the court. Within a few weeks after your case is filed with the Court you will be required to attend a meeting of creditors where the Trustee assigned to your case will swear you to tell the truth and ask you a few questions. Creditors, should they be present, can also ask questions. In most cases no creditors are ever present. If you choose a chapter 7 case, you may be asked by a creditor who has a lien on your car, computer, appliances or furniture to reaffirm a debt. You should first obtain legal counsel before making any decision related to reaffirming any debt. A creditor is not permitted to coerce or bully you into signing a reaffirmation agreement. If you choose to file a chapter 13 in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan. A chapter 13 case can be used to pay arrears on your home, back taxes, child support, or your ca. Normally you will also need legal assistance in planning for a successful chapter 13 filing and the confirmation process, which is part of every chapter 13 case. It is very rare for anyone to successfully complete a chapter 13 filing without being represented by an attorney. If you select another type of relief under the Bankruptcy Code other than chapter 7or 13, you will want to find out what should be done from an attorney familiar with that type of relief. Your bankruptcy case may also involve litigation. This is usually rare in a chapter 7 case. You can represent yourself - but it is a complicated process and one that you will rarely succeed in without legal counsel. Only an attorney can give you legal advice.
Check the box below and submit your form.*
I Confirm I have read and understand the above legal notices
If the form does not submit when you press the button then you need to scroll through the form looking for red paragraphs that need answers. If it is successfully submitted you will receive a notification. Therefore, if you do not receive that email it was not successfully submitted and you need to go back and check what was not completed in the third section.
https://dianedrain.com/wp-content/uploads/2018/05/Bankruptcy-questions.jpg 213 300 Diane Drain https://dianedrain.com/wp-content/uploads/2017/01/DianeDrain-logo-2.png Diane Drain2014-11-26 21:43:322018-11-17 09:38:01Individual Bankruptcy Questionnaire
Inheritance and Bankruptcy
November 17, 2014 /0 Comments/by Diane Drain
This area is intended for the exclusive use of attorneys. You know the drill – do your own due diligence. We make no representations as to the accuracy or current status of any information cited herein.
If you are NOT an attorney it is important to educate yourself, but this is not the place to do it. You must obtain legal advice from an experienced attorney familiar with your unique situation. Fixing unintentional errors will cost far more than doing it right the first time; if it can be fixed at all.
IMPORTANT: This firm makes NO representations as to the accuracy or current status of any law, case, article or publication cited herein or linked to.
Warning – some of these references are pre-BAPCPA.
DISCLAIMER OF INHERITANCE PRE-BANKRUPTCY
In re Costas, 06-16520, 555 F.3d 790 (2009) (BAP 9th Cir. 2008) Costas inherited $34,800, but refused to accept it and, on November 7, 2002, executed a disclaimer under Arizona law to relinquish her claims to the Trust property.
December 3, 2002, Costas filed a Chapter 7. Maureen Gaughan, trustee, sought to avoid Costas’ disclaimer of the Trust property under 11 U.S.C. § 548 as a fraudulent conveyance within a two year pre-petition. The question in this case is whether an Arizona disclaimer qualifies as a “transfer … of an interest of the debtor in property.” BAP decided “not a transfer”Arizona’s relation-back rule says that a disclaimant neither transfers nor possesses an interest in disclaimed property and thus creditors cannot reach the disclaimed interest. We hold that a disclaimer, properly executed under Arizona law, is not a “transfer … of an interest of the debtor in property” for purposes of § 548.
DEBTOR TRANSFERS INHERITANCE POST-PETITION
In re Brown, Brown vs Barclay, BAP No. SC-17-1068-AKuS (5/21/18) BAP for 9th Circuit affirmed summary judgment entered by bankruptcy court (SD Cal.) in favor of plaintiff-chapter 7 trustee avoiding debtor’s postpetition transfer of inheritance proceeds to his brothers. Because of debtor’s bad faith, postpetition receipt of inheritance proceeds while in chapter 13 remained property of chapter 7 estate under 11 USC 348(f)(2). Because debtor’s transfers were not ordinary and necessary expenses, 11 USC 348(f)(1) did not safe harbor transfers of inheritance proceeds from estate. Consequently, postpetition transfers of property of estate were avoidable.
https://dianedrain.com/wp-content/uploads/2018/05/Inheritance-grave-stone.jpg 420 600 Diane Drain https://dianedrain.com/wp-content/uploads/2017/01/DianeDrain-logo-2.png Diane Drain2014-11-17 16:30:152018-11-17 09:46:58Inheritance and Bankruptcy
Lawsuits, Liens and Judgments
JUDGMENT PROOF v COLLECTION PROOF
“Judgment-proof” is a legal concept and refers to those individuals, such as minors and those not legally competent, against whom a judgment may not be entered, or if entered, is not enforceable. “Collection-proof” is a factual concept and refers to an individual who does not have sufficient non-exempt assets against which a creditor could levy execution.
Typically unsecured liens do not exist after bankruptcy because the liens did not attach to anything before bankruptcy. The judgments are void per 11 USC 524(a)(1). A void judgment cannot create a post-petition lien. Therefore the judgments do not attach as liens to property acquired post-petition.
It is true that pre-petition liens on nonexempt property survive bankruptcy, but that requires that the liens have attached pre-petition to property owned pre-petition.
524 (a) A discharge in a case under this title—
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;
Article: Will My Judgment Get Discharged in Bankruptcy? Ward and Smith, P.A. – Lance P. Martin
WARNING: Talk to an experienced bankruptcy attorney in order to know your rights and obligations.
A.R.S. Section 33-964: B. Except as provided in section 33-1103, a recorded judgment shall not become a lien on any homestead property. Any person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien. The protection of A.R.S. Section 33-964(B) is good, but not necessarily all-encompassing when the homestead’s equity exceeds $150,000.00. In Judge Haines’ Rand v. United Auto Group decision 400 B.R. 749 (Bankr. Az 2008), he mentioned creditors had another possible recourse, specifically A.R.S. Section 33-1105 whereby the creditor can require an execution sale and obtain a bid in excess of the consensual liens plus the homestead amount and the allowable costs of sale under Title 12. Also see, ARS 33-1103 (A)(4). Except – To the extent that a judgment or other lien may be satisfied from the equity of the debtor exceeding the homestead exemption under section 33-1101. See also Evans vs Young, 661 P.2d 1148 (Az Court of Appeals, Div 1, 1983) (“In conclusion, we find that a judgment lien obtained pursuant to A.R.S. § 33-964 does not extend to homestead property. Given the special protection of the homestead statutes, a judgment creditor can reach excess value in the property over the amount of the homestead exemption only by first invoking the appraisal procedure set forth in A.R.S. § 33-1105.”)
Note: The recorded judgment lien survives the bankruptcy. The creditor can go after real property the debtor owned at the time of filing the bankruptcy that secures that lien. This is the reason why these liens must be avoided under 522, irrespective of the Haines decision in Rand that the lien does not attach to debtor’s homestead. 522 addresses an “interest” in debtor’s property in support of a lien avoidance. Irrespective of the fact as to whether there is equity in the property, or that the homestead exemption is not affected by a lien, a debtor’s interest is impaired, and thus avoidance is appropriate, otherwise, what is the point of 522? The point of 522 is to give the debtor a fresh start and that is not achieved by the refusal to avoid a lien which will remain in place post discharge and could eventually be foreclosed when property values increase.
It appears that the judgment lien and the right to enforce that lien survive a Chapter 7. If the judgment creditor seeks to enforce its lien prior to the expiration of that lien, perhaps the owner could file a Chapter 13 and pay the creditor the value of the excess equity. Sales to enforce Judgment liens are done by Sheriff’s sale and somewhat rare. The expense in the form of bonding the Sheriff of this procedure make it very price prohibitive.
Pacific, et al. v. Castleton, et al. December 27, 2018 – 1 CA-CV 17-0667 – Whether a judgment creditor may attach a judgment lien to homestead property, or whether it may execute on its judgment only by way of a forced sale of the property under Ariz. Rev. Stat. section 33-1105.
§ 33-964 A RECORDED JUDGMENT DOES NOT BECOME A LIEN ON HOMESTEAD PROPERTY:
Section 33-964 thus establishes the general rule that a recorded judgment does not become a lien on homestead property. See also Union Oil Co. of Ariz. v. Norton Morgan Commercial Co., 23 Ariz. 236, 245 (1922) (holding that “no lien shall be permitted to attach to the real property claimed as a homestead”).
EXCESS EQUITY (consensual secured debts + homestead) IN HOMESTEAD CAN BE JUDICIALLY FORECLOSED UNDER § 33-1105
See In Evans v. Young, 135 Ariz. 447, 453 (App. 1983), and Grand Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 13 (App. 1983); see also In re Rand, 400 B.R. 749 (Bankr. D. Ariz. 2008) (clarifying that a recorded judgment does not create a lien on property subject to homestead even when the value of the property exceeds the amount of the homestead. “It remains the case that both the homestead statute and the judgment lien statute both conceive of the ‘homestead’ as being the real property, not the equity value of such real property.” 400 B.R. at 754); and In re Glaze, 169 B.R. 956, 966 (Bankr. D. Ariz. 1994)
ONCE A JUDGMENT ATTACHES IT RUNS WITH THE LAND
33-964 establishes the general rule that a judgment lien does not attach to homestead property, and that homeowners hold their homestead property free and clear of judgment liens. See A.R.S. § 33-964(B). Although it is true that once a lien has attached, it “runs with the land,”, but in this case the judgment lien never attached to the Home in the first place.
ABANDONMENT OF HOMESTEAD BY CONVEYING TO TRUST A.R.S. § 33-1104(A):
When a homestead exemption is abandoned by a conveyance of the property, the judgment lien does not re-attach to the property upon the sale. See Sec. Tr. & Sav. Bank, 29 Ariz. 325, 332 (1925).
33-1104(A)(3) a homeowner “may remove from the homestead for up to two years” without abandoning the homestead exemption. Sepics’ departure from the Home shortly before its sale did not constitute an abandonment.
Because of the protection afforded by the homestead statutes, the Judgment never attached as a lien to the Home. Therefore, the Sepics conveyed the Home free and clear of the Judgment.
CONCLUSION: For the foregoing reasons, we affirm the entry of an injunction enjoining a Sheriff’s sale of the Home.
LIEN AVOIDANCE
In re Charnock, 318 B.R. 720 (BAP 9th Cir, 2004) has the legislative history of 522(f)(2) and says that the debtor may avoid a judgment lien recorded before a consensual lien regardless of state law, because Congress wanted to favor consensual liens regardless of the priority of recording.
STATUTE OF LIMITATIONS - AGREEMENT NOT TO ENFORCE
Does a contractual agreement barring a party from executing on the judgment tolls the enforcement period
Harle v. Williams: No. 1 CA-CV 17-0665 (Az Ct Appeals, Div One 3-14-19) Holds that the enforcement period on a judgment is tolled until the judgment is executable, and this judgment wasn’t executable until the date of William’s breach.
Harle and Williams were business partners, then the partnership split. Harle sued Williams. In 2011 the two reached a settlement in which Williams agreed to a total judgment amount and to make monthly payments. As long as Williams made his monthly payment, according to the terms of the settlement, Harle was precluded from recording or enforcing the judgment. The superior court held the judgment had not expired. After all, the court implied, it would be very unfair to allow a debtor to promise the world to a judgment holder in order to convince them to hold off on recording a judgment, but then back out after 5 years, and leave the judgment holder “[prejudiced in the extreme].” (NOTE – renewal of judgments in Arizona is now changed from 5 to 10 years).
STATUTE OF LIMITATION RUNS FROM FIRST MISSED PAYMENT
ARIZONA SUPREME COURT DECIDES STATUTE OF LIMITATION RUNS FROM THE DATE OF FIRST UNCURED MISSED PAYMENT
Mertola LLC v Alberto J Santos/Arlene Santos CV-17-0109-PR (AZ Supreme Court, 7-27-18) Statute of limitation for debt collection in Arizona – cause of action to collect the entire debt accrued as of the date of Santos’s first uncured missed payment.
Decision:
Mertola, LLC, sued Alberto Santos and his wife Arlene Santos to collect an outstanding credit-card debt. Although the credit-card agreement gave the creditor the option of declaring the debt immediately due and payable upon default, we hold that even if that option was not exercised, the cause of action to collect the entire debt accrued as of the date of Santos’s first uncured missed payment. Mertola’s claim was barred by the statute of limitations six years after that date pursuant to A.R.S. § 12-548(A)(2). We vacate the court of appeals’ opinion and affirm the trial court’s summary judgment in favor of Santos. We award Santos reasonable attorney fees pursuant to the Account Agreement and costs pursuant to A.R.S. § 12-341.
LAW OF CASE DOCTRINE IN BANKRUPTCY
Law Of the Case Doctrine in Bankruptcy
Reprint from Weil Bankruptcy Blog – by Robert Lemons & Candice Carson
When a court reaches a decision in a case, the law of the case doctrine generally provides that parties should not be able to relitigate the same issue in that case, and for the court to adhere to its prior decision.1 The doctrine does not, however, apply to every decision a court reaches. Two recent decisions by Judge Elizabeth Stong in the Brizinova chapter 7 cases in the Bankruptcy Court for the Eastern District of New York explore when the doctrine may or may not apply in bankruptcy cases.
Judge Stong’s decisions suggest that the law of the case doctrine has limited application in the bankruptcy context because it may only be applicable when (i) there is identity of parties between the prior decision and the matter at issue and (ii) the prior decision was a final judgment.2 In Brizinova I, Judge Stong ruled that the chapter 7 trustee (the “Trustee”) adequately alleged that certain proceeds constituted property of the Debtors’ estate.3 In two subsequent Brizinova decisions, Soshkin and Brizinova II, the Trustee argued that the court must adhere to the court’s prior ruling in Brizinova I and apply the law of the case doctrine to deny defendants’ request to dismiss the Trustee’s complaint.4 In both decisions, Judge Stong refused to apply the law of the case doctrine because the court did not enter a final order in Brizinova I. In Soshkin, the identity-of-parties requirement was also not met because the Trustee litigated against a separate party.
What Happened in Brizinova I?
In Brizinova I, Estella Brizinova and Edward Soshkin (together, the “Debtors”), who were husband and wife, jointly filed a chapter 7 case, and the Trustee was immediately appointed on the petition date. Ms. Brizinova held 100% of the stock of ENSI Consulting, Inc. (“ENSI”), an online auto supply parts company that employed both Ms. Brizinova and Mr. Soshkin, with Mr. Soshkin serving as ENSI’s bookkeeper. The Debtors’ schedules listed a value in the amount of zero dollars for Ms. Brizinova’s shares in ENSI. The Trustee asserted that the Debtors continued to operate ENSI to generate post-petition sale proceeds after filing their chapter 7 case (the “Sale Proceeds”), and that the Sale Proceeds were property of the Debtors’ estate. The Debtors refused to turn over the Sale Proceeds to the Trustee.
In response, the Trustee filed a complaint against the Debtors to recover the Sale Proceeds and seeking damages for conversion and violation of the automatic stay arising from the transfer of the Sale Proceeds. The Debtors filed a motion to dismiss the Trustee’s complaint arguing, inter alia, that the Sale Proceeds were not property of the Debtors’ estate because ENSI was not operating when the bankruptcy petition was filed and that the allegations were too speculative and, therefore, the element of each claim was not adequately pleaded.
The court sustained the Trustee’s turnover and automatic stay violation claims, but denied in part the Trustee’s conversion claim because the complaint did not identify specifically the property that was allegedly converted.5 The court granted the Trustee leave to replead the denied conversion claim.
What Happened in Soshkin?
Rather than repleading the denied conversion claim, the Trustee commenced another adversary proceeding alleging substantially similar claims to the Sale Proceeds as in Brizinova I against Zlata Soshkin, the daughter-in-law of the Debtors. Ms. Soshkin moved to dismiss the Trustee’s complaint but argued an additional defense that was not included in the Debtors’ motion to dismiss in Brizinova I — that the Sale Proceeds were property of ENSI and were not the property of the Debtors’ estate. In response, the Trustee argued that the law of the case doctrine required the court to reach the same conclusions as those ruled in Brizinova I and find that the Trustee adequately pleaded that the Sale Proceeds were property of the Debtors’ estate.
When considering the law of the case doctrine, Judge Stong found that “[t]wo considerations stand out as fundamental: whether there is identity of parties between the prior and subsequent matters; and whether the prior decision is a final one.”6 Here, the identity of parties was not met because the parties in Brizinova I were the Trustee and the Debtors, but the parties in Soshkin were the Trustee and Ms. Soshkin. Since Ms. Soshkin was not party to the prior proceeding, applying the law of the case doctrine would have deprived Ms. Soshkin the opportunity to be heard, which is a fundamental right of due process. Judge Stong noted that this right was an opportunity for Ms. Soshkin and not her counsel, who also represented the Debtors in Brizinova I. Moreover, Judge Stong found that there was no final judgment in Brizinova I because the decision denying the motion to dismiss allowed the case to continue and did not end the case.
After refusing to apply the law of the case doctrine, Judge Stong held that the Trustee did not adequately plead that the Sale Proceeds were property of the Debtors’ estate.7 The complaint only alleged that the Sale Proceeds collected from the sale of auto parts belonging to ENSI were property of the Debtors’ estate, but ENSI was not a Debtor. Therefore, Soshkin’s motion to dismiss was granted with leave to replead.
What Happened in Brizinova II?
In Brizinova II, the Debtors used the same argument made in Soshkin — that the Sale Proceeds were property of ENSI and not the Debtors’ estate — in a second attempt to dismiss the Trustee’s adversary proceeding against the Debtors by filing a motion for summary judgment. The Trustee opposed this motion because the court previously held in Brizinova Ithat the Trustee adequately alleged that the Sale Proceeds were property of the Debtors’ estate and, therefore, the law of the case doctrine required the court to reach the same conclusion for the motion for summary judgment.
Judge Stong, applying a substantially similar analysis as she did in Soshkin, held that the law of the case doctrine did not apply and that the Trustee did not adequately plead that the Sale Proceeds were property of the Debtors’ estate.8 Although, unlike Soshkin, the requirement for the same identity of parties was met, Judge Stong declined to apply the law of the case doctrine because there was no final order in Brizinova I. The court’s denial of the motion to dismiss in Brizinova I was not a final order because it allowed the parties to engage in further dispositive motion practice and allowed the case to continue to trial.9 Judge Stong noted that the finality requirement also cannot be satisfied by a refusal to grant summary judgment.
When May a Bankruptcy Court Apply the Law of the Case Doctrine?
Although Soshkin and Brizinova II did not involve situations where the law of the case doctrine was applicable, they do provide some guidance for when it may apply in a bankruptcy case. Clearly, the parties to the old and new litigation must be the same. The question of whether the first order was a final judgment may be trickier. Presumably, an order granting a motion to dismiss or granting summary judgment in an adversary proceeding would satisfy the final judgment requirement because that order would end the litigation. Similarly, a judgment in favor of a plaintiff in an adversary proceeding presumably would also satisfy the final judgment requirement. Whether orders granting or denying motions in the main bankruptcy case are final judgments may be harder to determine. As Judge Stong noted, however, the requirement of a final judgment in the law of the case doctrine is similar to the same requirement for the related rule of res judicata. Accordingly, case law considering the application of res judicata in bankruptcy cases should provide an additional source of guidance. Regardless, as demonstrated by the decisions in the Brizinovacase, parties should not assume that the law of the case doctrine will apply and should ensure that they also fully argue the underlying merits in the matter at hand.
Even when the law of the case doctrine does apply, it does not dictate that a court must follow its own prior decision, but instead allows the court to consider whether it should under the circumstances. See, e.g., Colvin v. Keen, 900 F.3d 63, 68, 73 (2d Cir. 2018) (“[W]hen a court . . . faces the question whether to depart from its own prior ruling, the court has wide discretion to make whichever decision it thinks preferable.”). This article focuses instead, though, on the gating question of when the doctrine may even be available for consideration by a bankruptcy court. The law of the case doctrine may also refer to a situation where a lower court considers adhering to a ruling made by a higher court in the same case, which is not addressed in this article.
See In re Brizinova, 588 B.R. 311, 323 (Bankr. E.D.N.Y. 2018) (referred to as Soshkin); In re Brizinova, 592 B.R. 442, 455 (Bankr. E.D.N.Y. 2018) (referred to as Brizinova II).
See In re Brizinova, 554 B.R. 64, 76, 88 (Bankr. E.D.N.Y. 2016) (referred to as Brizinova I).
See Soshkin, 588 B.R. at 322; Brizinova II, 592 B.R. at 453.
Brizinova I, 554 B.R. at 88.
Soshkin, 588 B.R. at 323.
Id. at 335.
Brizinova II, 592 B.R. at 456.
Id. (internal quotation marks omitted) (citing Datiz v. Int’l Recovery Assocs., Inc., No. 15-cv-3549 (ADS)(AKT), 2017 WL 59085 at *2 (E.D.N.Y. Jan. 4, 2017).
DOCTRINE OF COLLATERAL ESTOPPEL, CLAIM PRECLUSION & RES JUDICATA
Good discussion on issue preclusion, collateral estoppel and exceptions to discharge
In re Duran, Adv. Case No. 4:17-ap-00523-BMW (2/22/19 – AZ Bankruptcy Court). Doctrine of Collateral Estoppel “The preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as ‘res judicata.’” Taylor v. Sturgell, 553 U.S. 880, 892, 128 S. Ct. 2161, 2171, 171 L. Ed. 155 (2008). “These terms have replaced a more confusing lexicon. Claim preclusion describes the rules formerly known as ‘merger’ and ‘bar,’ while issue preclusion encompasses the doctrines once known as ‘collateral estoppel’ and ‘direct estoppel.’” Id. 553 U.S. at 892 n.5, 128 S. Ct. 2161 n.5.
Generally speaking, “[t]he doctrine of issue preclusion forecloses relitigation of those
issues of fact or law that were actually litigated and necessarily decided by a valid and final
judgment in a prior action between the parties” and applies to both findings of fact and
determinations of law. In re Duncan, 713 F.2d 538, 541 (9th Cir. 1983); In re Hagele, No. AP
14-02200, 2016 WL 3965899, at *4 (B.A.P. 9th Cir. July 18, 2016).
PERFECTION OF LIEN, OR FAILURE TO PERFECT
Outside of bankruptcy, perfection is not a condition to a valid lien.
So, for example, if a title loan company (or any loan company) does not perfect the lien at all, then provided that no other lienholders have recorded anything with DMV, the lender can repossess if you don’t stay current. Perfection is about notice only. Lack of perfection does not make the lien invalid, but it does make it junior in priority to any other liens subsequently recorded.
This is true with any lien (not just DMV liens) but also liens for personal property recorded as UCCs, lender’s liens on real property that are not recorded with the recorder’s office, etc.)
However, once a borrower files BK, the bankruptcy code requires a lien to be perfected within 30 days after taking out the loan.
If not, the bankruptcy code allows a trustee to avoid it at the trustee’s discretion. So, once the debtor files BK, timely perfection was necessary to preserve the lien and to prohibit a trustee from avoiding the lien.
If the trustee elects not to avoid the lien for any reason, then after BK, the lien still exists, and the lender is back to the status quo of enforcing its lien, even though it was not perfected. Lack of perfection risks the lien being avoided under the BK code.
In re Cortez, 191 B.R. 174 (1995) : an unavoided, non-perfected lien still is valid. “An unrecorded, thus unperfected, deed of trust is subject to avoidance by the bankruptcy trustee as a hypothetical lien creditor, pursuant to § 544. The appellee’s unperfected deed of trust was subject to avoidance during the debtors’ bankruptcy. However, because it was not avoided, it survived the bankruptcy, even though it was not perfected. In re Eakin, 153 B.R. 59, 60 (Bankr.D.Idaho 1993) (so long as the lien, although it could have been, was not avoided, a valid security interest passes through a bankruptcy filing unaffected). In the instant case, while the appellee was listed as an unsecured creditor and the debt was discharged, the appellee was actually a secured creditor under California law by virtue of the deed of trust lien which had not been avoided in bankruptcy. Its lien survived the bankruptcy; thus, the bankruptcy court did not err by denying the debtors’ motion to reopen the case to avoid the lien.”
See also: North Canyon Ranch Owners Association v. Allen No. 1 CA-CV 17-0227 (2018 Ariz. App. Case – unpublished) that confirms this rule of law and cites Cortez (although this case dealt with an HOA which does not have to be recorded).
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Adversary vs Contested Matter – What is the Difference?
August 31, 2014 /0 Comments/by Diane Drain
ADVERSARY v CONTESTED MATTER
CONTESTED MATTER v. ADVERSARY PROCEEDING
DIFFERENCE BETWEEN MOTION & ADVERSARY
Weil Gotshal & Manges LLP
Doron Kenter
The difference between a contested matter and an adversary proceeding is relatively simple – a contested matter involves a contested request for relief in the context of the main bankruptcy proceeding (pursuant to Rule 9014 of the Federal Rules of Bankruptcy Procedure), while an adversary proceeding involves the filing of a complaint, commencing a separate proceeding governed by the “7000” series of the Bankruptcy Rules. What necessitates an adversary proceeding, and under what circumstances will a simple “contested matter” suffice? Strictly speaking, certain matters must be resolved in an adversary proceeding, rather than upon a motion in the main bankruptcy case. Such matters are listed in Rule 7001 of the Federal Rules of Bankruptcy Procedure and include (but are not limited to) proceedings to:
recover money or property (with certain exceptions);
determine the validity, priority, or extent of a lien or other interest in property;
object to or revoke a discharge;
determine the dischargeability of a debt;
obtain an injunction or other equitable relief, except when a chapter 9, chapter 11, chapter 12, or chapter 13 plan provides for the relief;
subordinate any allowed claim or interest, except when a chapter 9, chapter 11, chapter 12, or chapter 13 plan provides for subordination;
obtain a declaratory judgment relating to any of the foregoing.
This rule, however, may be subject to debate, and may be easily overlooked. But what if the relief being sought does not appear to implicate any of the proceedings referenced in Rule 7001, but objecting parties then raise questions that would be more properly resolved in an adversary proceeding? The Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals was one court to have faced this question recently.
CHALLENGING A LEASE - MOTION OR ADVERSARY?
In In re Gentile Family Industries, (chapter 11 bankruptcy, Central Dist. California, 8:13-bk-16402) the debtor moved to assume a (purportedly unexpired) lease, which was critical to its ongoing business. Diatom, LLC, the lessor and a major creditor of the debtor, opposed the motion, arguing that the lease was not assumable because it had not been renewed according to its terms and was instead simply a month-to-month lease. Central to the dispute was the question of whether the debtor had properly renewed the lease several years prior to commencing its bankruptcy case. The bankruptcy court concluded that the lease had been properly renewed and that the debtor could therefore assume the lease. On appeal, Diatom argued that the judgment should be set aside because the dispute should not have been resolved through a contested matter, but instead through an adversary proceeding, including a complaint for a declaratory judgment regarding the validity of the lease.
Strictly speaking, Diatom may have been correct (the appellate panel did not conclusively decide whether the debtor should have commenced an adversary proceeding in the first instance). However, notwithstanding the fact that the contested matter involved questions regarding the validity of the lease, the appellate panel concluded that the error (if there was one) was harmless and did not warrant reversal. Quoting its previous decision in Ruvacalba v. Munoz (In re Munoz), the appellate panel held that even though it may be error to treat that which should be subject to adversary proceeding as a contested matter, “[s]uch an error may nevertheless be harmless when the record of the procedurally incorrect ‘contested matter’ is developed to a sufficient degree that the record of an adversary proceeding likely would not have been materially different for certain contested matter which should have been brought as an adversary proceeding.” In Gentile Family Industries, the parties had “ample time to air their positions” after a full opportunity to brief the issues and to introduce evidence in support of their respective positions. Indeed, the court observed that “for all practical purposes an adversary proceeding was held in this case.” Because Diatom could not show that it had been procedurally disadvantaged by the bankruptcy court’s approach to the dispute, the appellate panel saw no need to disturb the bankruptcy court’s conclusion that, as a matter of law, the debtor could assume the unexpired lease.
Gentile Family Industries and other similar cases point to the principle that form will not be elevated over substance in bankruptcy proceedings, so long as no parties are procedurally disadvantaged. But this case does point to a key question – what should be the result where an objecting party in a contested matter raises questions that would warrant the commencement of an adversary proceeding by the debtor? In the course of a contested matter, it is certainly possible that, as in Gentile Family Industries, an objecting party might introduce an issue that could, in turn, require the debtor to commence an action for a declaratory judgment, or to determine the nature, extent, and validity of lien. If the matter is simply treated as a contested matter in the case, a host of risks may arise, including, for example:
The defendant(s) would not have an opportunity to move to dismiss the complaint without further evidentiary proceedings (potentially including discovery and other litigation expenses);
The defendant(s) would not be able to file counterclaims against the debtor in the context of the contested matter, and would not be able to assert all of the defenses and objections that may be raised in an adversary proceeding;
The default deadlines and other procedural requirements for adversary proceedings would not apply;
Many of the Federal Rules of Civil Procedure that are otherwise applicable to adversary proceedings would not apply, nor would the specific Bankruptcy Rules set forth for adversary proceedings; and
The court’s docket in the main bankruptcy case could become cluttered with discovery disputes and other procedural motions that implicate a dispute between a small subset of parties.
Of course, parties in interest and bankruptcy courts would be well-advised to consider the practical differences between an adversary proceeding and a contested matter in determining their course of action. But many of these distinctions may be immaterial – particularly in straightforward disputes between parties in interest in a bankruptcy case. Moreover, bankruptcy courts may conduct contested matters much the same way as an adversary proceeding would play out (indeed, Bankruptcy Rule 9014(c) provides that many of the “7000 series” of rules also apply to contested matters). If there is no material difference or disadvantage to any parties, it might simply be a waste of resources to put form over substance in differentiating between these two (frequently similar) types of proceedings.
IS IT NECESSARY TO REOPEN CASE IN ORDER TO FILE ADVERSARY?
No – see In Re Menk, 241 B.R. 896 (9th cir bap 1999)
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What is a “Simple” Bankruptcy?
August 30, 2014 /0 Comments/by Diane Drain
WHAT IS A “SIMPLE’ BANKRUPTCY?
Here is a great blog from Matt Berkus, another bankruptcy attorney, in response to the statement we all heard “I have a simple bankruptcy”.
Invariably, two-thirds of prospects will preface a consultation with “I have a simple bankruptcy.” The transparent motive behind the comment is the belief that a simple bankruptcy case should be inexpensive. Let’s state two facts. First, 99.5% of prospective clients are not bankruptcy attorneys and have never filed bankruptcy; so they have no clue what goes into a bankruptcy and the time it takes. Second, simple bankruptcies are actually rare. Simple bankruptcies are the exception, not the rule.
A bankruptcy’s cost is based on the anticipated time to be spent on the case. As bankruptcy attorneys we understand that we are working with people in financial distress. So, our margins are razor thin and subject to fierce competition. Anything, at all, that adds time to a case, even if it is 12 minutes, increases the cost of a case. Let’s put the issue to rest. Here is what a simple bankruptcy looks like. If you have anything more than what is stated here, you don’t have a simple bankruptcy.
1. A simple bankruptcy only has one source of income
A simple bankruptcy has no more than one source of income. If a husband and wife file a joint bankruptcy, and both work; you don’t have a simple bankruptcy. If you receive social security, and your spouse works, you don’t have a simple case. For every source of income, we need six months of payment documentation that must be reviewed, input and analyzed. In short, the more sources of income, the more time your case takes.
2. In a simple bankruptcy, the source of income is employment, social security, or unemployment insurance
If you are anything other than an employee, unemployed, or retiree whose only income is social security, you don’t have a simple case. The self-employed, business owner, or independent contractors never have a simple bankruptcy case.
3. In a simple bankruptcy, all debts appear on a credit report
To have a simple bankruptcy, all debts must appear on your credit report. There are two reasons why. (a) A credit report gives us an independent source for identifying your creditors. (b) Most bankruptcy preparation software will allows us to direct import the creditors from your credit report. Common creditors that do not appear on a credit report are medical bills and pay day loans. Those debts require us to verify those debts and manually input them (e.g. spend more time).
4. In a simple bankruptcy, debts are mostly credit cards and collection accounts for credit cards
In a simple bankruptcy, the debtor cannot have special debts. Special debts include back income tax, child support, spousal support, any sort of business related debt, restitution, etc.
5. In a simple bankruptcy, no one owns real estate
Owning real estate compounds the time we spend on the case. It is an additional asset, your home is important to you, and there is usually a mortgage associated with it. So, we must do the due diligence to make sure the home is not at risk, and add that information to the petition.
6. A simple bankruptcy only has non-exempt assets
This factor takes a bit to explain. Exemptions are the laws that allow you to keep your stuff notwithstanding the fact you are filing bankruptcy. Rest assured, in most chapter 7 bankruptcies, the person loses nothing or very little. In real terms, having only non-exempt assets means that you have the typical assets we would expect for a middle class family in debt. These assets are furniture, clothing, television, computer, car, and a 401(k) or IRA.
If you own anything, even something minor, that is non-exempt (e.g. tax refund, a 3rd car or a business), you don’t have a simple bankruptcy case. First, we have to take the extra time to explain the consequences and options for dealing with non-exempt assets. Second, if you have non-exempt assets, your chapter 7 bankruptcy will become an asset chapter 7 case. That means we will be doing significantly more work after the bankruptcy is filed to deal with the trustee, keep you informed, and instruct you on what to do. For Colorado, the big category of non-exempt assets are tax refunds and firearms.
7. A simple bankruptcy has no more than 2 vehicles, and no non-exempt equity in those vehicle
If you are unmarried, you only have one vehicle. If you are married, you have no more than 2 vehicles. If you have car loans, you are current on payments and the equity in the vehicles is break-even. If none of the above is true, you don’t have a simple bankruptcy case.
8. Grab bag of other issues that make a bankruptcy not simple
You haven’t used your credit cards for at least 90 days.
You haven’t been sued.
You have no judgments or garnishments against you.
You haven’t paid any money to family members in the last 12 months
All your tax returns have been filed.
Even a simple bankruptcy (chapter 7 bankruptcy) takes about 15-20 man-hours. That time estimate assumes the client does what they are supposed to do. Here’s the thing, a typical bankruptcy attorney charges $250.00 per hour. That would mean that a simple chapter 7 bankruptcy, charged by the hour, would cost $3,750.00 to $5,000.00. However, most markets cannot support that fee. So, bankruptcy attorneys charge significantly less than their counterparts in almost any other area of law. When you see advertised bankruptcy fees of $699.00, take it with a grain of salt. Understand you will probably end up paying more (because of “add ons”) and an attorney is “barely” involved in your case.
A simple bankruptcy involves only one source income, debts that appear only on a credit report, no one has real estate, assets are all exempt, and only 1 car per debtor. In addition, the debtor cannot have done anything in the run-up to bankruptcy to create issues. I think you can see, that a simple bankruptcy is actually rare.
What is Bankruptcy and what is it intended to accomplish?
10 Things You Need to Know Before Filing Bankruptcy
Will I Lose My Home If I File Bankruptcy?
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