Wolves at Last Resort's Door

Student loan horror stories

2012-01-27T08:31:00.000-08:00

Two student loan horror stories:

Story No. 1. I've heard back from one of my former clients that student loans are now harder to get than they were before filing. In fact, that particular person seems to have been cut off entirely from student loans. It means for that client, who happens to have been employed as well as in school, that money will have to be set aside in advance before going back to school. So there is an unexpected delay in educational plans. It may be significant that this was a person who was relying on private student loans, not government student loans.

There's what appears to be good article on the subject of bankruptcy and student loan eligibility at finaid.org. They say that bankruptcy should not effect eligibility for government student loans, but that it is common for there to be a problem with private student loans. This might explain why I haven't been hearing from most of my clients or former clients about any such difficulties. I believe that most of my clients, if they do have an ongoing financial aid program at a college or school, are using government lenders not private lenders.

Story No. 2. Again, it's a problem with a private lender. Client is no longer in school, but has a student loan and wants to keep paying. However, for several months now the client has not been able to find anybody who will accept the payment. There seems to be a musical lender shell game in progress. After the bankruptcy filing, the original lender seems to have transferred the loan to another institution. The new lender seems to have transferred it again, but the client can't seem to find out where. I've made some calls about it, but it seems impossible to get a real person. When one does get a real person, they just say you'll hear from someone soon. But so far that's not happening. Frankly I wonder if someone has lost the file. The problem is of course that student loans don't ever really go away, and sooner or later this thing is going to pop up with somebody demanding payment. And I'm sure whoever it is won't be forgiving any of the interest that has been accumulating during this time that the loan seems to have disappeared.

I've been telling my clients that if they will be needing more student loans after we file, then they better check with the lender and their financial aid office at school to try and get a preview in advance as to what the effect of the bankruptcy might be.

Lien Stripping Update in "Minnesota Lawyer"

2012-01-15T10:19:00.000-08:00

Just noticed that Minnesota Lawyer has a good recent article on the subject of lien stripping and the status of the availability of this process for Minnesota residents. This is a process in Chapter 13 bankruptcies involving people who have second mortgages. It has to be a situation where the value of the house is less than the balance on the first mortgage. The theory is that in cases where the homestead is worth less than the balance on the first mortgage, then the second mortgage is not really a secured debt.

One prepares and files a Chapter 13 bankruptcy in which the second mortgage is put in with the unsecured debts. If it succeeds, the debtors should be able to come out the other end - usually after paying in on a Chapter 13 plan for five years - with only one mortgage on their house instead of two. This could really help a lot of people. The trouble right now is that the availability of the process is still under appeal. Besides that, the exact procedure for clearing the lien of the second mortgage from the title as a matter of real estate law is still under discussion.

Once the appeals are over and both the bankruptcy laws and the real estate laws have been fully nailed down, this could be really something. For now I have not found myself willing to subject a client of mine to all the risks involved in this procedure. To me it just doesn't seem quite ready for prime time. I know lawyers who are going full steam ahead with this, however, and I could refer you to one it you'd like to at least look into it.

Beware of Undead Debt - Don't let them reboot the Statute of Limitations

2012-01-04T08:24:00.000-08:00

Over the New Year weekend I saw a Wall Street Journal article. It was about certain banks and credit card companies trying to trick people into paying expired debts. Those would be debts so old that they are now barred by the statute of limitations.

In Minnesota the statute of limitations on most obligations is six years. That means anything you haven't paid on for six years is probably not a debt that can be legally collected. The Wall Street Jounal article describes a plan where people with such expired debt are offered new credit cards, but in exchange for getting the card they are required to pay off some of their old expired debt. The marketing for these new credit cards can be very misleading. A lot of people are signing up for these deals without understanding that the debt they are being asked to pay as a condition of getting the new card is rally old and now bogus.

I see that Yahoo Finance has republished the article or part of it, which you can find here.

Tip if you are sued for expired debt: Last time I checked, in Minnesota a bill collector can still sue you and still get a default judgment for debt which is past the statute of limitations. That's because the statute of limitations is an affirmative defense that must be raised in a response to the lawsuit. So if you are sued for debt that you think is probably expired, you need a lawyer to help you raise that defense. Properly raised, the statute of limitations is a defense that makes the debt go away - but ONLY if it is properly raised as a defense. I would discourage you from trying to raise the defense yourself. You can try, but it's complicated and would be easy to mess up.

Mentioned in Lien Strip article - Not exactly a Claim to Fame

2011-11-14T11:37:00.000-08:00

Seems I was quoted in an article in yesterday's Sunday Pioneer Press. The topic was a process called lien stripping. It involves taking a second mortgage in a Chapter 13 case and throwing it in with the unsecured debts. The second mortgage gets treated as if it were a big credit card instead of a mortgage. At least in theory, at the end of the Chapter 13 payment plan, the mortgage is then just gone. This can only be done in a case where the value of the homestead is less than the balance owing on the first mortgage. The bankruptcy court is asked to treat that second mortgage as if it was unsecured, because as a practical matter there is no security.

I say "in theory" in the above paragraph because the situation is that this process is so new - at least here in Minnesota - that nobody knows quite for sure exactly how it should be done. That is still being worked out. For one thing, the case (Fisette) which says we can do it is being appealed. I don't expect it to be overturned, but that could happen. For another thing, nobody knows for sure how to clear the title of the second mortgage. The mortgage can be gone as a matter of bankruptcy law, but still be a problem as a matter of real estate law. Real estate law is as if it's on a different planet than bankruptcy law - maybe in a different solar system. There's a need for adjustments between the two legal systems before lien stripping can be expected to go smoothly. While those adjustments might be in process, they are certainly not completed at this time.

The whole thing is a bit too up in the air for me, and so far I have been reluctant to try doing any of this. I have been explaining it as a possible option, and I have been referring people who are interested to some of the lawyers who have been doing them - such as Mr. Theisen and Mr. Andresen. People like them should be given credit for having the gumption to push for this, particularly Craig Andresen who is the one who has the case on appeal.

This is a developing area and I'm sure to have more to say about it later.

Life Estates and Fraudulent Transfers

2011-10-25T14:28:00.000-07:00

Seems I've been hearing a lot lately from people who have what they call a remainder interest subject to a life estate. If you search the archives of this blog there should still be an older item there where I called life estates an idea from hell. A life estate is created when someone transfers ownership of real estate - such as a cabin or farm - to some younger relatives, but keeps the right to live there and use the property for the rest of their life. The transfer is done by means of a deed. The person who keeps the right to use the property during their lifetime is said to have a life estate, and the people to whom the rest of the ownership was transferred are said to have a remainder interest. Typically the person with the life estate is a parent, and the people with the remainder are the children. Sometimes the parents will do it without telling their children.

The people who receive the remainder interest usually don't think much of it because they can't use the property now, but the law considers it an asset that they own right now. If you need a bankruptcy it can be a big problem. A remainder interest can be bought and sold, and there actually is a market for such things. There are investors out there who buy them. Most of the time the value of the remainder interest is enough so that it becomes impossible to file a Chapter 7. The will trustee claim the remainder interest as an asset for the creditors. It could make a Chapter 13 difficult too.

When I explain all this to somebody who is unfortunate enough to have one of these things, they often will say "well then I'll deed it back and get rid of it." My response to that idea is that it would be considered fraud to do that. There are both state and federal fraudulent transfer statutes that make it possible to undo the transfer when it is for the purpose of hiding an asset from creditors. When it is done in anticipation of a bankruptcy, it might be considered bankruptcy fraud which is actually a felony. Concealing an asset can be grounds for having a bankruptcy case dismissed without a discharge, even though the trustee might recover the asset from whoever it was transferred to first. So you can lose the asset, keep all your debts, and maybe be charged criminally besides. It's hard to believe it can get that bad but it can.

Before filing a bankruptcy for someone, I often ask them to check with any elderly relatives who might have done one of these arrangements. I need to know for sure that no such property interest exists.

A couple of years ago the Minnesota legislature created a new alternative to the life estate. Now one can do what they call a transfer on death deed. The difference between the deed creating the life estate and the transfer on death deed is that the latter is revocable. It has no effect until the grantor actually dies, so what it really does is create a right to inherit a particular piece of real estate without putting the property through probate. For bankruptcy purposes this new idea scares me. I'm not sure if I trust it. I would want to be sure that it was tested in some court decisions before I rely on it.

At the Bankruptcy Institute Today

2011-09-13T08:19:00.000-07:00

You might find it hard to get a hold of me today. I'll be in classes all day at the Bankruptcy Institute. This is an annual event sponsored by the Minnesota State Bar Association's Minnesota Continuing Legal Education. I was here all day yesterday too.

The highlights yesterday for me were the case law update and the session on "Advanced Chapter 13 Plan Drafting." Another good session was the one on business owner bankruptcies. Today so far the best thing has been a joke one of the presenting judges just told: something about how what a judge needs is grey hair so he looks serious and hemorrhoids so he looks concerned.

More later.

Harleys and Bankruptcies Don't Mix

2011-08-29T08:12:00.001-07:00

At least that would be the general rule. All rules of course have exceptions.

I just spoke by phone with a person who needs a bankruptcy. The trouble is that he or she is the owner of a Harley-Davidson motorcycle. It's not paid for. There's still a loan on the bike with a monthly payment. The usual story in that situation is that if you want to file a bankruptcy - any kind of bankruptcy - the bike has to go. Sell it or surrender it, but it has to go before we can file.

Most of the time when I explain this to the owner of a Harley, it's the last I hear from that person.

I just spent a very quiet and peaceful weekend at a campground in southern Minnesota. I found that there happened to be a group of over 100 bikers there, mostly if not all riding Harley-Davidsons. I barely noticed them. They partied and carried on, but in a quiet and respectful way. In fact they were some of the most well behaved people I've ever seen. I learned later that they were a group of retired police officers, some from Minnesota and some from Chicago. Most of them were dressed in typical biker attire, including jackets and hats bearing one or more variation of the Harley-Davidson logo. Those bikes were obviously an important part of their social life.

Powerful attachment to a Harley-Davidson motorcycle is a phenomenon I've seen repeatedly. Often as with the retired cops it can be a really good thing. But I can't change the way the bankruptcy trustees view these things. In a bankruptcy case, unless it's paid for and so old that it's not worth much, a Harley tends to be an asset that they want to seize or a frivolous expense that they won't allow or both. It's just not a good thing for anybody contemplating bankruptcy.

Minnesota 13th in Country in Surplus Lawyers

2011-08-04T09:42:00.001-07:00

I took a look this morning at a news digest from the Minnesota State Bar Association. A story that caught my eye was full of charts and graphs comparing the number of lawyers admitted to the bar to practice law compared with the number of job openings. You can see the full story at economicmodeling.com.

For the year 2010 Minnesota had a lawyer surplus of 510, according to the article. Only New York, California, New Jersey, Illinois, Massachusetts, Pennsylvania, Texas, Florida, Maryland Connecticut, and North Carolina had bigger surpluses. The nation as a whole had a lawyer surplus of $27,269.

Interesting enough, our neighbor Wisconsin actually had a lawyer deficit of 14. In other words, Wisconsin had 14 more job openings than there were new lawyers to fill them. The only other state with a deficit was Nebraska. Nebraska's deficit was only three, however; pretty close to break even.

Whenever I get a call from my Alma mater, the University of Minnesota Law School, asking for a financial donation, I have had to ask myself whether I feel that Minnesota really needs more lawyers. The answer to that question for me has always been in the negative. This article seems to confirm that.

Two pro se cases not heard last Thursday

2011-07-16T12:44:00.000-07:00

I was at the Federal Courthouse in Minneapolis last Thursday for a meeting of creditors. The room was full and I was planning for a long wait with my client.

To my surprise the trustee - who is the person who runs such proceedings - stood up and asked two apparently married couples to leave. These individuals were there without a lawyer and were obviously pro se - or in other words representing themselves. From the words that were exchanged it sounded as if they had gone to some sort of a non-lawyer document preparation service.

Apparently whoever they had gone to had neglected to tell them that they were supposed to provide a copy of their most recent tax return to the trustee well in advance of the date of the meeting of creditors.

I expect that those parties will be allowed to provide their tax returns to the trustee and reschedule their meeting of creditors - which those who know me know I often call the "hearing," because that word is a good one to describe what happens. I can't help but wonder what else might be wrong with those bankruptcy filings.

I've been concerned for some time that some of these document preparation outfits are dangerous. If you search this blog I believe you'll find something from a while back where I was carrying on about such a service located in India which had contacted me and wanted to essentially use my name.

My Ten Seconds (or less) of Fame

2011-06-29T05:55:00.000-07:00

My wife Karen, our two dogs Ben and Jerry and I went camping this past weekend at Jay Cooke State Park just south of Duluth. We were minding our own business Saturday morning. I was drinking coffee and having some Cheerios. Ben and Jerry had taken up residence on Karen's lap. Then along came a crew from WDIO TV Channel 10 in Duluth.

They were interviewing folks on the subject of the impending state park shutdown - a side effect of the impending state government shutdown. The story was their lead story on the 10 pm news that night. The video is posted at the WDIO web site. The TV guys spent several hours at the park that day, but the story is edited down to two minutes.

Here's a link to the video if you would like to watch

Spike in Traffic to my Web Site

2011-06-16T08:10:00.000-07:00

I've been noticing for a few years now that the volume of phone calls and the traffic to my web site seem to ebb and flow with the news about the economy. The trends I notice in my incoming traffic seem to run in advance of the news by anywhere between a couple of weeks and a couple of months.

I wasn't surprised recently to see that the unemployment rate is back up to 9.1%, real estate prices dropped another 10%, and jobless claims are over 400,000 per week. I wasn't surprised to hear that we have 1.9 million less jobs now than we had when the "stimulus" program was announced. I wasn't surprised because earlier this spring I was noticing a spike in my phone calls. I told a couple of friends that it reminded me of the spike in calls I had in early 2007.

Now I am noticing a spike in the traffic to my web site. This morning I took a look at the Google Analytics for mn-bankruptcy.com. Compared to last week, traffic is up 22.9%. Compared to last year, traffic is up 22.68%. The number of visitors on Tuesday this week, June 14th, was 117. That's the highest for one day since January 24th. My best guess would be that something is shifting with the economy again. Downward.

I don't need or want it to get any worse. I'm already very busy.

Cleaning up mistakes of low-cost services

2011-05-18T08:07:00.000-07:00

I have been reading a discussion this morning on a bankruptcy lawyer listserve. The topic which has captured my attention is how badly some of the document preparation services can fowl up a bankruptcy case. It is not unusual to be told his or her fee is too high; and then a few months later that same person, who filed using a document preparation service, is back asking to have something fixed.

My policy has been that I don't like to jump in and try to fix something that someone else has screwed up. I fear the risk of malpractice for one thing. Although someone else broke it, once I start trying to fix it the responsibility could rub off on me. I did recently, however, give in to a plea to help with the amendment of some documents. I'm soft hearted, it looked like a simple problem to fix, but I probably still should not have. The case could have had other problems besides the one I was asked to help with. Then what?

Beware of anyone who tells you: There's nothing involved but filling out a bunch of forms, only takes a few minutes, no need to waste valuable money and time.

Harassment by mail and phone; some that stops after filing bankruptcy and some that might not

2011-05-02T13:38:00.000-07:00

During my first meeting with a new potential client, it's not unusual for that person's cell phone to be ringing repeatedly. Usually it's call after call from bill collectors or collection agencies. Once we get a bankruptcy case filed, most such calls will slow down and then finally stop within a few days. This is because of what is technically called the "automatic stay" - a court order issued as soon as a bankruptcy case is filed which tells all the creditors to leave the debtor alone and to stop all collection efforts. I tell my clients to let me know if a creditor doesn't seem to have gotten the word about the bankruptcy. It might be that there's a creditor that wasn't listed and that needs to be added to the creditor list.

Lately, however, I've been hearing from my clients about harassment which they are receiving from sources other than bill collectors. For one thing, there are disreputable credit counseling services which are sending out advertising disguised to look like letters from a bill collector. A client faxed me one not long ago, and it had me fooled. It certainly looked like something from a creditor to me. In fact it looked like a notice that the creditor had scheduled an arbitration hearing. I thought it needed immediate attention, so I called the number on the "Debt Mediation Notice." I told them about the bankruptcy and asked them which creditor they represented. To my surprise they told me that they were a debt settlement service and they didn't represent anybody. They weren't trying to collect a debt. They wanted to help my client settle his debts, which obviously was not possible since a bankruptcy had already been filed.

So now when you go in debt apparently one can expect to be harassed not only by creditors, but by businesses that market their services to those who are in financial distress. I find such marketing to be a despicable practice, particularly when it is misleading. Since I saw that "Debt Mediation Notice," I have been wondering how such organizations would get information on who is in financial trouble. I believe that this afternoon I may have received some insight on that.

I have just received two emails from an outfit that is offering to send out junk mail on my behalf which would be addressed to "homeowners in your area that are 60 or 90 days late on their mortgage payment and/or with late credit card debt balances of $20,000 or more." They don't say where they are getting the mailing list for that, but my best guess would be that there must be a credit reporting agency which is selling that information. If that's legal, somebody ought to pass a law making it illegal.

Filing a bankruptcy only stops the stuff coming in from creditors and bill collectors. Other materials intended for the financially distressed are not affected. Another thing that's not affected is junk mail from agencies that do the post-bankruptcy-filing counseling. Before filing a case I usually have my client signed up for the required counseling program, but this doesn't stop aggressive and misleading mail advertising those counseling agencies. Some of the materials contain statements to the effect that the bankruptcy will be dismissed if the counseling is not completed. There may be some truth in that, but the counseling doesn't have to be done with the outfits that are mailing out that sort of thing. I've had some clients get pretty upset upon receiving some of these materials, particularly elderly clients who aren't used to how misleading some things can be.

So I have deleted those emails which offered to do a mass mailing for me to people who are in financial trouble. I would suggest that if you receive anything like that from one of my fellow lawyers, definitely don't call that person. Run the other way.

Bankruptcy court NOT shutting down -at least not for now

2011-04-08T15:26:00.000-07:00

I've been concerned all week over what to expect with the anticipated federal government shut down. The bankruptcy court is federal, so this shut down could affect me and my clients in a very direct way.

I went on line and tried to research it a bit around noon today. I found announcements that the Nevada bankruptcy courts were going to stay open, along with a statement from one of the bankruptcy judges in another state - Colorado if I recall correctly - stating that they would not be closing. In an interview a lawyer from New York said that they were going to try to keep essential services concerning life and property going, and the bankruptcy court would be in that category.

Then a few minutes ago the Minnesota bankruptcy court sent out the following email:

"In the event that a lapse in appropriations - sometimes referred to as a "government shutdown" - occurs on April 9, 2011, the United States Bankruptcy Court, District of Minnesota will remain open for business as usual, and hearings, trials and 341 meetings will be held without interruption. Applications, hearings and other matters may be scheduled with the Court as usual. Public access to the Court, in person and through the Court's electronic filing system, CM/ECF, will not be affected.

If a lapse in appropriations continues after April 22, 2011, the Court will continue to conduct hearings and trial. As to continuation of services in the Clerk's office, notice will be posted on the Court's website at www.mnb.uscourts.gov."

At least now I can tell my clients who are scheduled for hearing next week that we are still on and nothing has changed. I'm still a bit anxious about a few cases I was planning on filing toward the end of the month, however, for obvious reasons.

Warning: Extreme Danger

2011-02-26T12:37:00.000-08:00

I keep getting these phone calls. Yesterday morning was the second time this week. They come in from several sources which are outside Minnesota, and perhaps outside the US. Friday morning's call sounded like a guy from India. They start by asking if I am still accepting new cases, which of course is a yes. Then they say they have clients in Minnesota who need my help. After carrying on and trying to white wash what they are really up to for a few more minutes, it always turns out that they have some sort of an on line bankruptcy generating factory. They want to put my name on their work and have me file it for them here in the Minnesota district of the federal bankruptcy court.

In other words these are entirely on line bankruptcy filing services which never meet face to face with their clients. I strongly suspect that they never even speak with them on the phone either, but that they rely entirely on fill in the blanks forms submitted by their "clients." I use forms too, but I can't remember a client who understood all the questions; and I consider the forms to be just the starting point in what is going to be an intense and face-to-face process.

Bankruptcy is a process regulated by federal law. This should not be taken to mean, however, that it is exactly the same and entirely uniform all over the US. There are tremendous variations in what law applies and in how the laws are interpreted from state to state, and there are even variations with the states. There are subtle differences, for example, between how things are done in Minneapolis as compared to how it goes in St. Paul. You don't want to be relying on someone who is not from here and hasn't even been here.

In my opinion they are trying to automate a process that cannot be automated, trying to use a one-size-fits-all approach in a profession that requires an extraordinary amount of individual attention, and these people are extremely dangerous.

I told them that I cannot get involved in something like that, I do all my own work, and no I'm not interested.

That guy who called will keep on until he finds somebody who will take him up on his proposal. RUN THE OTHER WAY. FAST AS YOU CAN.

Best Minnesota Bankruptcy Attorney?????

2011-02-18T12:29:00.000-08:00

I just got off the phone with a guy who claimed that he found me by typing "best minnesota bankruptcy attorney" into google.

I just tried it. Sure enough, my web site comes up first - at least in the organic results. I'm not counting the paid advertisements, just the regular search result listing.

I have no idea how this would happen. Some sort of a fluke I would suppose. I do my own web site, but I have made no effort to promote the word "best" as any kind of a key word. I might mention somewhere on the site that I use software called "Best Case."

So that's my curiousity of the day. I'm sure that result won't continue for long. More later.

To the Guy I was supposed to call back around 12:30 PM Today

2011-02-16T13:45:00.001-08:00

Your phone is disconnected. I tried to return your call at 12:30 pm today as I said I would; but between the time you called me around 10 am today and the time I tried to return the call, you apparently were disconnected.

Please try to call me again when you can. I know they say that the recession is behind us, but the fact your phone got disconnected today would seem to indicate that it is not over for you.

While not on the same level of magnitude, this reminds me of the time - not that long ago - that a repo guy towed my client's car away from the parking lot in front of my office.

More later.

Loan Modifications, Meteorites and the StarTribune

2011-01-24T14:49:00.000-08:00

Not long ago I was meeting with a client who was pursuing the mortgage modification process through the federal progam known as HAMP. We were close to filing a bankruptcy; and my client expressed concern that if the modification came through, the lower house payment would mess up the budget numbers we were about the file with the bankruptcy court.

I don't ever mean to be rude. I certainly hate to discourage people. Sometimes I need to apoligize to my clients for the things I say. Sometimes I even try to apologize in advance, because the nature of what I need to say could be offensive - not to mention that my sense of humor is really backwards too.

BUT - without any advance apology - I told this particular client that I believed the chances of getting the mortgage modification were about the same as the chances of being hit by a meteorite.

I don't claim to be an expert on mortgages or finance. I don't provide legal advice on that subject. It's enough trouble for me to keep track of the bankruptcy laws. A large number of my clients, however, have tried on their own to do these mortgage modifications. My estimate of his chances of success were based only on what I have seen others go through, not on any direct knowledge or expertise. Almost nobody I have known has ever been successful. Two clients, maybe three, have actually succeeded.

I was reminded of my talk with that client when I read the headline story about mortgage modifications in yesterday's Sunday StarTribune. They had a front page story that continued in a full page layout on one of the inside pages. The reporter described multiple incidents where the lender encouraged borrowers by temporarily lowering payments, only to announce a year or so later that the modification was denied. Suddenly all the formerly reduced payments became due and payable immediately. Foreclosure often followed.

I have spent more time than I should have just now trying to put a link to that StarTribune story into this blog entry. I guess it can't be done, because that article is designated as "premium content." Its only available to subscribers. I could carry on at length just about that, but I better shut up now.

A Fresh Start for the New Year

2011-01-08T08:05:00.000-08:00

I always keep an eye on the traffic to my web site. As the holidays approached last month, I could see that the traffic was dropping off significantly. On the Monday after Christmas, however, there was a sharp spike upward. Traffic stayed high all that week and then jumped even higher following the New Years weekend. The Tuesday after New Years Day was the highest traffic day I have had for months.

These traffic statistics plus the incoming phone calls and emails confirm that a lot of people are considering using the bankruptcy process to make a new start for the new year. That's exactly what the bankruptcy laws were originally designed to do. Instead of putting you in debtor prison or turning you into a completely homeless person, you get to clear the slate of the old debts and start fresh - if you qualify.

The original version of the United States Constitution, the one they read this week on the floor of the House of Representatives, included the power to create a nationwide bankruptcy system. This is not a new idea. The founding fathers recognized bankruptcy as a thing of value, and wanted it to uniform for the whole country instead of being different in each state. When I was first out of law school back in the 1970s the process was extremely simple. A bankruptcy petition was less than 15 pages of material. There were few restrictions on who could file. The primary concern was whether there would be a lot of assets that could not be claimed as exempt. Since then every few years additional red tape and limitations have been added. Finally in 2005 there was a massive rewrite of the law which was so severe that we were wondering if the whole process may finally have been killed.

Well, if the intent was to completely remove bankruptcy as an option, it didn't work. The American Bankruptcy Institute reports that bankruptcy filings jumped by 9% in 2010. Last week the Wall Street Journal carried a detailed article about the increase in filings. The article includes a graph showing bankruptcy filings between 2000 and 2010. On the graph one can see the spike in 2005 right before the effective date of the 2005 law, followed by a dramatic drop in filings, followed by a steady increase. When I saw news releases last summer stating that the first half of 2010 had broken some sort of a record for bankruptcy fillings, I commented that I didn't think it could possibly have exceeded 2005. This graph shows I was right. Nevertheless, it is quite clear that filings are back up to pre-2005 levels.

So if you are considering such a fresh start, you certainly are not alone. I'd sure be glad to talk it over with you. I can do a screening over the phone which you give you a pretty good idea of what you qualify for. I don't charge for those phone calls. If you just can't seem to get ahead, you might want to look into it.

Get your bankruptcy for $187.00!

2010-12-04T08:10:00.000-08:00

While checking how my website was being ranked on Google, I noticed an ad for an outfit that said it would prepare and file your bankruptcy for $187. Well, that would be a heck of a deal. It certainly piqued my curiosity.

So I went and took a look at their site. For one thing, I was wondering who the lawyer was who was doing this. I quickly found that the site provides no way of figuring out who is running the company or whether there is a lawyer involved at all. There is no address and no phone number provided. No names of any real person.

So I tired a Google search. I typed in who is and the name of the web site at Google. The first item on the list was the web site itself. The second item listed was a page at ripoffreport.com about these guys.

You can see for yourself what they have to say. You do yourself a disservice if you use price as your only criteria.

Stopping Garnishment by filing a Bankruptcy

2010-11-18T09:01:00.000-08:00

A lot of people have had their bank accounts garnished this week. My phone has been buzzing about it. I think the law firm of Messerli and Kramer must have been cleaning up their garnishment backlog over this past weekend or something.

So now I am having to explain that I can't just create a bankruptcy filing to stop the garnishment inside of a few hours or even a few days. To be sure I am getting it right, I need somewhere around six weeks, maybe more, to put one of these bankruptcy cases together. A bankruptcy petition is a document that usually exceeds 50 pages. There are hundreds and hundreds of questions to be answered. The penalty for not answering correctly can include criminal felony charges. It just is not the sort of thing that should be slapped together in a rush.

There is a procedure for an emergency filing. It involves filing part of the bankruptcy petition, and then being allowed 14 days to get the rest done. I have done this in the past prior to the passage of the 2005 "reform" legislation, but since then I have been of the opinion that it's too hazardous. It's best to let them garnish away and get the bankruptcy done properly.

The filing of a bankruptcy does stop garnishment - immediately upon the filing of the case. It's really nice that way. But if you may be vulnerable to a garnishment, don't let it go. Get to a competent bankruptcy lawyer and get started now.

No, I'm not associated with "Legal Helpers"

2010-10-27T15:57:00.000-07:00

I got a fax yesterday from someone who said he had been given my name by an outfit called "Legal Helpers." He said they were not attorneys and that they were helping him prepare his own bankruptcy without an attorney. He seemed to think that somehow I was associated with them. Please let the record reflect that I am not.

I have nothing to do with them. In addition I want to say that anyone trying to file their own bankruptcy without a lawyer is taking a very serious risk. To anyone who is trying to do that: please don't rely on anything I have posted on my web site or anywhere else. Nothing written or provided by me is intended for do-it-yourself use, and trying to use my material that way could lead you to disaster. My web pages are nothing but a few general comments, not intended to be any sort of an exhaustive treatise.

Lincoln said it: "He who represents himself has a fool for a lawyer."

Median Incomes Drop - Judges Require New Checklist

2010-10-20T12:19:00.000-07:00

Effective November 1st there are new median income numbers for prescribed by the US Trustee's office. The only state I have looked at is Minnesota. I don't know if median incomes rose anywhere else, but here they seem to have dropped significantly. I am now in the process of reviewing the cases I am working on to see if these new numbers will create a problem.

There are a few cases I was hoping to file before the end of this month. For most if not all of them there is still something I need my client to provide, such as a counseling certificate, before the case can be filed. I will be trying to contact all of those clients to emphasize how important it is to not delay. Even if you can get by with the new numbers, the cases will certainly look better if we can use the old pre-November median income table. I have already posted the new median numbers on my Chapter 7 page.

I mentioned in my last post that the judges of the district were unhappy with many of the younger new lawyers who are filing bankruptcies but making all sorts of mistakes. They are also displeased to learn that many clients feel abandoned by their lawyers after the case is filed. The judges and the clerk of court are getting calls from debtors who can't seem to get their lawyers on the phone. In other cases the clients have never actually met with the person who is supposed to be their lawyer, but have only worked with other staff in that lawyer's office. To try to remedy some of this the judges have provided a new checklist - one for Chapter 7 cases and one for Chapter 13 cases. It lists what the lawyer is supposed to be responsible for and what the debtors are responsible for. Each list runs about five pages. A copy of both lists can be found on my site under a link labeled "responsibility forms." I guess I don't mind the forms, although they do create more work. I just wish they weren't needed.

Two Days at the Bankruptcy Institute

2010-10-05T19:00:00.001-07:00

Just spent all day today and all day yesterday at the Minnesota Continuing Legal Education's Bankruptcy Institute. For me the best part was this afternoon, a presentation about the preparation and amendment of Chapter 13 plans.

It was also just good to reconnect with some of my fellow bankruptcy lawyers. Things are getting really complicated out there. Some of the judges and trustees were expressing frustration with a number of younger and inexperienced recent law school graduates who have not been acclimated to the level of professionalism that's required. Apparently there is some concern that clients are being abandoned by their lawyers.

To try to combat this the judges of the district are about to order a new procedure - from my point of view just another form that must be completed before filing. This one is going to be a long list of duties and responsibilities - one list for the lawyer and the other for the client. It's going to be food for conversation to say the least.

I'll have more to say about the new form once I have actually started working with it.

More later.

Fall Colors on the Road to St. Cloud

2010-10-02T15:22:00.000-07:00

I had a hearing (meeting of creditors) in St. Cloud this past Thursday. I go there fairly regularly, because that's where the initial bankruptcy hearings are for residents of Wright County - and quite a few of my clients are from Wright County. I'm really not that far from the Wright County border. Particularly since the most recent straightening of Highway 12, getting here from places like Delano, Montrose and Waverly isn't that hard.

That hearing was fairly early in the morning, and I got to look at the fall colors along I-94 in the early morning sun. I think the low angle of the sun in back of me as I headed northwest contributed to the drama. If those colors weren't at their peak, it had to be about as close as I'll ever see. Every time I came around a curve to a fresh view of reds and oranges, I was thankful that I had an excuse to be making that drive.

The hearings in St. Cloud are at the Red Cross Building on St. Germain St. It does not at all look like a court house. In fact I would say it's a strange place to be having hearings like that. I had my camera in the car and I was thinking of taking some pictures of the place for my web site. By the time I was done with the hearing, however, I had forgotten about taking pictures. I was concentrating on the case to the point that I didn't remember anything about the picture idea until I was half way back.

The drive southeast from St. Cloud allows one to contemplate the railroad which runs parallel to the freeway. Burlington Northern Santa Fe I think. Until a few years ago there were the remnants of some sort of railroad-related telephone or telegraph lines along that railroad. Every now and then as one drove along an old pole could be seen in the trees or bushes along the railroad with a few wires draped over it and hanging to the ground. Those seem to have all been removed now, because I don't see them anymore. One time I spent a few minutes on Google trying to see if anyone had posted anything about the history of those old poles and wires, but I found nothing.

As a kid I remember that all railroads had lots of telegraph or telephone wires running alongside. It was explained to me, I no longer remember by who, that those were private railroad communication lines so they could keep track of where the trains were and keep them from running into each other. Obviously they've found a better way to communicate and don't need the wires anymore. I'm curious about it, but I can't seem to find a write up on this topic anywhere. If anybody knows of a good place to look for such info, please let me know.

Well, that was a good ramble. More later.

Real Clients and Fake Clients, Real Friends and Fake Friends

2010-09-16T06:22:00.000-07:00

Earlier this week I was meeting with a client who was in the process of hiring me to represent her in the Chapter 7 bankruptcy process. As we were both signing the retainer agreement, I explained as I usually do at that point that now I was her lawyer. This means she has my permission to use my name if she needs to in the event that creditors manage to reach her by telephone.

These days most of my clients are pretty good at avoiding the calls from creditors by just watching their caller ID. It's not unusual to be receiving between twenty to fifty calls a day from bill collectors by the time someone finally decides to come see me. I've carried on before about how people tend to wait too long and most should have come in sooner. Some of the creditor calls are hard to avoid, however, because they are tricky and disguise their caller ID. One who called me recently had a caller ID that said "Swiss Miss."

So I tell my clients when they hire me that when one of those creditors gets though on the phone for whatever reason, my advice is to say something like this: "I've hired a lawyer to represent me in Chapter 7 bankruptcy. He's instructed me to not speak with you, to not say anything, except that his name is David Kelly and his number is 952-544-6356. If you have questions you should call him. Goodbye."

Once they hear this and confirm that it's true - by calling me - many of the creditors will stop calling. As far as I know there is no legal requirement that they do so until we actually file the case, but as a practical matter they know that they might as well focus their energy elsewhere.

When I went over this with the client who I referred to above, she made a remark to the effect that she wasn't necessarily very happy about being able to say I was her lawyer. She wished she had not needed to hire me. I replied that, if this was any comfort, there seemed to be quite a few people out there who were happy to claim I was their lawyer even though they had never met me.

Yes that's right, I have real clients like the woman who just hired me, and I also have fake clients. Besides the calls from creditors to confirm that I've been hired by my real clients, I am also receiving calls from creditors who have been given my name by people I have never heard of. There tend to be about two calls a week like that. I guess they must think I'm good if they want to take my name in vain like that.

So I said to my new client that I had real clients and fake clients, and at least she was a real client. To that she replied, "well I have real friends and fake friends."

I thought my new client's remark was quite profound. At least it seemed profound to me. I asked her permission to quote her here, anonymously of course.

Guess that Facebook Page is shaping up.

2010-09-07T12:16:00.000-07:00

There's a lull in my phone calls and appointments today - day after Labor Day. Something to do with the first day of school I would guess. As usual my schedule is very busy starting tomorrow and going about two weeks out, but not today.

So I was able to spend part of the morning working on a "Welcome" tab for my facebook page. There's a free utility for that, which Kim Komando recently recommended. I trust her recommendations, and this one was as described. It consists of a template, actually a choice of templates, where one can fill in graphics and text with a link to one's web site. I'm pretty satisfied with mine, which you can find by clicking on this bit of text.

I guess I'm a bit shy when it comes to facebook. To me the whole concept is hard to wrap my brain around. That probably has something to do with my core belief about computers, which is that they are nothing but glorified typewriters. It's not right for a typewriter to do what facebook does.

What to Bring to a Bankruptcy Hearing

2010-07-29T15:42:00.000-07:00

At the outset let me say that this post is about the practices that I encounter here in Minnesota, mostly for cases right here in the Twin Cities. If you are from somewhere else, please consult an attorney in your own jurisdiction. Even though bankruptcy is based on federal law and should be about the same everywhere in the country, there are in fact tremendous variations from one locale to another.

Usually the only hearing there is in a Chapter 7 or Chapter 13 bankruptcy is a little proceeding they call the "Meeting of Creditors." Sometimes it's also called the "341" or "341 Meeting," after the section of the bankruptcy code that sets up the hearing process. In this post when I say "hearing," I mean this meeting of creditors.

This week I have had a hearing nearly every day, except for Friday when I had two. It is usually simple and short, possibly just five minutes, if the lawyer and the clients are properly prepared. But there's nothing that can delay it worse or mess it up more than not coming to the hearing with all the required documents.

For most of these the required doucments fall into four categories, sometimes five. Here they are:

1. Driver's license or goverment photo ID for each debtor.

2. Social security card. It's surprising how many people can't find this or have lost it a long time ago. If you absolutely can't find your card, there are some substitutes that are acceptable. In general you can use anything that you have that has your social security number on it, AS LONG AS IT WAS CREATED BY A THIRD PARTY.

So a pay stub would work, since that is created by your employer. So would a W-2. Trouble is that most pay stubs don't have the social security number on them anymore. It's getting harder and harder to find a document that has it. Health insurance cards used to have them, but now most don't. In this day of identity theft, the items that have a social security number on them are disappearing. About the only thing that I can use reliably is a W-2 or 1099. I usully can't use a tax return, because that's considered a self generated document - it's not from a third party.

3. Most recent paystub from employment for each debtor. That is the pay stub that is most recent as of the date of the hearing, not the most recent stub from before the date of filing. The handout from the court which I have posted on my site says to bring "evidence of current income," but I've never seen a trustee ask for anything other than a pay stub. I've never seen a person who gets a pension or unemployment be asked to produce evidence of that at the hearing. My experience also is that self-employed people don't have to produce anything in this category - not at the hearing at least.

4. Bank statements for all open accounts which show what the balance was on the day the case was filed. If the account is open, you have to produce a statement for it. However, unlike the pay stub, this is not necessarily the most recent statement as of the date of the hearing. Usually the statement that comes in the mail at the beginning of the month following the filing of the case will do the trick. You have to be sure, however, that the date of filing is covered in the period included in the statement. In cases where my clients are unable to get a statment that came in the mail, I tell them to go on line or actually go to the bank and get a statement that includes about two weeks before the date of filing and two weeks after that date. Some of the trustees like to snoop through these statements, and I'm concerned that they would be disappointed if we just came in with one page that gave the balance on date of filing.

5. Additional information if the trustee requests it. The above four items or categories of items are all that's required for more than 90% of the cases I handle. However, every now and then there will be a case where the trustee sends us a letter asking for more information. This could be almost anything, but the rule I follow is that if the trustee wants it, I tell my clients that we better provide it. Often these letters ask that the material be emailed to the trustee several days before the hearing.

Still the questions about jail time for being in debt

2010-07-15T15:47:00.000-07:00

I've been trying to reassure people that in most cases winding up in jail because of a debt is unlikely. Here's what I said about it recently on youtube:

Minnesota Bankruptcy filings Highest in a Decade?

2010-07-07T14:33:00.000-07:00

So says today's Pioneer Press. The headline is "State bankruptcy levels highest in decade." I found this interesting to say the least, and just spent a bit of time looking at statistics for Minnesota bankruptcy filings on the American Bankruptcy Institute site. I thought I would check it out, because I always thought we had never gotten back to the levels we were at in October of 2005 just before the new law went into effect.

Turns out I was right, or at least I think I was. The Pioneer Press article is apparently comparing the first five months of the year this year with the first five months of every year going back ten years. If you do that, yes this is the highest year ever. However, if you compare the first quarter of this year with the last quarter of 2005, the last quarter of 2005 was significantly higher. I don't think we have ever really surpassed that big rush we had in late 2005.

I have to admit though, it has been really busy around here. I did just file five cases in the last five days of June. Maybe that's not a lot for some lawyers, but it's a lot for me.

Going to Jail for Being in Debt

2010-06-10T08:57:00.000-07:00

Everyone I have spoken with all this week has brought up the front page story in last Sunday's Star Tribune about going to jail for debt. I'm glad that the newspaper is making people aware that this can happen. What you need to know about it, however, is that the procedure is rare and easy to avoid.

In Minnesota nobody is sent to jail for not paying a debt. You can wind up in jail, however, for not obeying a court order. A person who ignores a court order can be found in contempt of court, and the most common penalty for that is a little time - often just a few hours - behind bars. The kind of court order that's usually involved is one that requires the debtor to respond to a request for information about his or her assets.

When you get sued for a debt in Minnesota, typically a judgment is entered. A judgment is a fancy piece of paper that says you owe the money. After getting a judgment, a creditor has a right to inquire into what assets the debtor has out of which the debt can be paid. Usually this inquiry takes place in the form of written questions or a demand for documents. Typically the debtor will ignore this - for one thing you probably need a lawyer to even figure out what it is. So when there's no response, the creditor will bring a motion requiring a response. The creditor has a right to a response, so the judge will always order the debtor to respond.

Then the creditor serves the debtor with the court order. By now the debtor has received a large number of legal documents, and this one tends to look the same and just as incomprehensible as the others. The order should be served in person, and a good process server will make a point of showing the debtor that there is a judge's signature on the document. Of course, a lot of the process servers aren't so good.

When the debtor ignores the court order, the creditor is in a position to make a motion that the debtor be found in contempt. Another order is served, this one requiring the debtor to show up for the contempt motion hearing. If the debtor fails to show up for that, an arrest order can be issued.

Usually the judge will just have you held for a few hours. Sometimes in an extreme case that can become a few days, perhaps even a few weeks. One way to get a person in such circumstances released is to file a bankruptcy. The automatic stay from the bankruptcy court is usually all it takes to invalidate the legal process that is holding the person in jail. If one brings the receipt for the bankruptcy court filing fee to the judge who has ordered a person to jail, most judges will immediately order that the person be released. Since child support and spousal maintenance are not discharged in bankruptcy, I'm not sure this would work if the contempt of court involved nonpayment of child support or maintenance.

All week I have been trying to reassure people that it's actually pretty difficult to have this happen and not see it coming in advance, so that we have plenty of time to get their bankruptcy filed before it would ever become a real danger. One moral of the story is that one should never let legal documents pile up without at least consulting somebody about what they mean.

Might be hard to find a good bankruptcy lawyer for the next few days

2010-04-30T18:27:00.000-07:00

Because they're all at a convention. In San Francisco. National Association of Consumer Bankruptcy Attorneys.

This includes me. I'm in the middle of about 18 hours of classes. It's not exactly a party.

I'll be back in the office Wednesday morning, May 5th.

Busy with Bankruptcies

2010-04-26T13:23:00.000-07:00

Well, it seems that nearly all I am doing these days is bankruptcy. At least as a practical matter. I have decided that for now it would be best for me to not accept any more probate cases or DWI cases. At least that's how I feel about it today.

There's only so much that one guy can do. It's time for me to start concentrating on one thing, especially since there's so much of it.

So I thought it was time to change the URL of my blog. It was "mn-bankruptcy-dwi-probate.blogspot.com." I think at this time it's best for me to drop the "dwi-probate" part. A while back I was surfing here at blog spot and saw a utility to migrate a blog to a new URL.

It might take me a while, but now that I have this new blog set up at this location; my intent is to migrate my whole old blog to here - if I can figure out how to do it.

So come back later and see how I'm coming.

Good news and bad news for potential bankruptcy filers

2010-04-06T14:52:00.000-07:00

Within the past month there has been good news and bad news for folks thinking of filing a bankruptcy. The good news is that the federal exemptions have gone up as of April 1, 2010. The bad news is that the median income thresholds - which have a lot to do with who qualifies to file a Chapter 7 - have gone down slightly as of March 15th.

I just finished updating my exemptions page and my Chapter 7 page by posting the new numbers if you want to check them out.

The theory of Chapter 7 is that the court appoints a trustee who is given ownership of all your assets, right down to your socks. To get the assets back, you have to be able to claim them as exempt. This means that the list of things you can claim as exempt is very important. Here in Minnesota we get to choose between two very different lists - a list provided by federal law and another list provided by state law. The two lists are quite different, so it can make a big difference which one you choose. In general, the federal list is better unless you have substantial equity in your home. If there's quite a bit of equity, then you better use the state list.

Trouble is that except for the fact that it is good for protecting one's home, the state list has lots of gaps. Lots of things fall through the cracks and will go to the trustee. For this reason I pretty much hate the state list, but sometimes I have to use it anyway.

Since October of 2005 anybody who wants to file a Chapter 7 - except for a person who's debts are "primarily business" - has to either be under the median income or pass a difficult means test. Thus, what those median income numbers are also becomes very important.

I'm relaxed. Really RELAXED.

2010-03-23T08:31:00.000-07:00

Or not.

Nothing drives me close to being stark raving mad like a computer problem. It seems as if when that happens, everything else has to stop until the problem is resolved; and really let me tell you, I definitely have other things to do.

Last week my trusty laptop, upon which I have relied several years for a great many things, started giving me the following message when I booted it up: "Disk failure imminent. Back up all data."

Maybe it was that new defrag program I had tried. Or maybe the laptop is just old. It has served me well four years, maybe almost five. The techno geeks in my life, and I call them that with due respect, all tell me that this is about the useful life of most laptops.

So late last week I went to my friendly local office supply store. The previous Sunday in the Star Tribune I noticed they were having a laptop sale. Yes, from time to time I have been known to still read a newspaper that's actually printed on paper. Anyhow, at the store I found a wonderful whiz bang HP laptop with a 17 inch screen, Windows 7 and all the trimmings.

I brought it home and went to work configuring it for my personal use. That means I installed Eudora for my email, Word Perfect for my word processing, and an old version of WS-FTP so I can update my web sites when I finally get around to it. There's a lot of different stuff about Windows 7 that takes a while to figure out, but I really was doing OK.

I enjoyed that laptop for about all of 72 hours until yesterday afternoon, when it seems to have electrocuted itself. First it started turning itself off for no reason. I took that as a warning sign, plugged in my portable hard drive and managed to back up most of my stuff before it breathed it's final breath. After shutting itself off abruptly several times, it finally refused to boot up at all.

So this morning I tried to return the dead laptop. Fried hard drive was the diagnosis. All they would let me do is trade it for another one. So now I've spent my whole morning trying to get another one up and running to my own personal specs. I'm trying to be gentle with it, but I want it the way I want it.

My apologies for not responding to my email for the past day or so. I hope to have that up and running again shortly.

The shoe is on the other foot today

2010-03-08T12:01:00.000-08:00

I hate this. Amost more than anything.

I am about to leave the office for my annual trip to seem my accountant to do my taxes.

This means that I have to provide detailed financial info about myself to a third party. I try to be as accurate as possible, but I'm always concerned that I might not get it right.

I ask my clients for info like this all the time. Today I have a better idea of how that feels.

Call to cancel your appointment. Help someone else stop the nasty bill collectors!

2010-02-16T07:25:00.000-08:00

People are literally lining up to see me. In 2008 anybody could get in to see me within a week, but now it's about twice that long.

This is, however, the second morning in a row where I have had a no-show appointment. I noticed not long ago that the Veteran's Administration - when notifying someone of an appointment at one of their medical facilities - includes a few words about how they would appreciate it if those unable to show up would call in and either cancel or reschedule. They make a point that those who don't call to cancel or reschedule are denying a fellow veteran of the opportunity to use that time for their appointment. The saying goes something like this: Help your fellow veteran - cancel or reschedule if you can't get here.

I doubt that the person who failed to show up this morning has thought this through. He is not only messing up my schedule, but also denying an opportunity to the person I could have scheduled in this time slot. I have people begging to get in to see me. If I knew that the person scheduled for this morning wasn't coming, I'd be meeting with someone else right now. At least two callers yesterday wanted to meet with me this morning. Best I could do was set up appointments for week after next.

Spam on my blog - so now it's "moderated"

2010-02-02T15:30:00.000-08:00

Talk about nasty stuff! I've started getting spam comments all over my blog. I've been trying to delete them, but I may have missed a few. My apology for any that I may have missed.

I have enough to do without trying to edit the spam out of my blog. For Pete's sake, I'm still having trouble getting my calls returned. I guess I'm used to it in my email, but this abuse of my blog challenges my faith in humanity. Who are these people? Don't they have any self respect? If you ask me, it's a pretty low thing to do.

So I've been fiddling with the blogger.com settings, and I think I've figured out how to make this a "moderated" blog. That means that no comments go up on the blog until I approve them. I'd rather not have to bother with that. I sure don't have time for it. I just want to be left alone so I can practice law.

I would not have known that setting this up as a moderated blog was an option, except that another kind blogger emailed me and suggested it. He was a good man, and I thank him. Guess there's hope for humanity yet.

Trouble over what to bring to the bankruptcy hearing.

2010-01-25T11:04:00.000-08:00

I call it a "hearing." The official name for the event which takes place about a month after filing a bankruptcy is "First Meeting of Creditors." Since creditors hardly ever come, I have always thought this was a misleading name. It usually takes place at a federal courthouse in a room which looks very much like a courtroom. My clients are sworn in and questioned. If that isn't a "hearing," I don't know what is.

There are certain things that a debtor is required to bring to this event. They include a picture ID, social security card, most recent pay check and bank statements covering the date the case was filed. It any of these items is missing, there is a big problem. Until the items are produced and given to the bankruptcy trustee, the whole process is held up.

Although I explain this as clearly as I can, both in direct conversation and in email, I seem to be having an increase in the percentage of clients who show up at the hearing without everything they need. One common problem is that my clients will assume that if a bank account has a negative balance, a low balance, or no activity for a long time, the trustee won't want a statement for that account. I have recently started adding to what I used to tell my clients a whole extra spiel about these bank statements.

The trustee doesn't care if the account has been there five years with only five dollars in it and no deposits or withdrawals. The trustee doesn't care if the bank has quit sending statements and cut off on line access - which they sometimes do after a bankruptcy is filed when it's a case where that bank is one of the creditors. If it's any kind of bank account at all, and it was open on the day the case was filed, you have to have a statement for that account at the hearing, and that statement has to include the date of filing.

I am starting to tell my clients that if there is no other way to get a statement, please actually go to the bank in question and have them print you one. Even the banks that won't send a statement, and who have cut off on line access, will still give you a statement if you go to the bank in person.

So that's my rant for today.

Nothing Like a Little Excitement

2010-01-11T14:03:00.000-08:00

The Vogager Bank is next door to the building where I office. Looks as if it was just robbed this afternoon.

My client scheduled for 4 pm seems to not have gotten here yet. That could be the traffic; or it could be that the neighborhood is surrounded with police who may be obstructing traffic. I'm not sure, but I wouldn't be surprised if there are some road blocks in place. I just was visited by a very polite police officer and his quite pleasant but very focused and very large police dog. No, there wasn't anyone else in the office with me just now.

Apparently they are looking for two guys, one of whom may be loose in my building.

More on this later.

Best endorsement I could get!

2009-12-25T12:06:00.000-08:00

A few days ago I and close family made our annual pilgrimage to the Macy's Santa land display. I admit that to me it's still the Dayton's Christmas display. A sign of the times I guess was that for the first time ever as far as I can remember, they had the same theme for the second year in a row - Day in the Life of an Elf.

As we entered the display area in the 12th floor auditorium, I did see something - well someone actually - that I had never seen there before. It was Mrs. Santa Claus greeting everyone as they entered. Several in my group seemed embarrassed and ignored her, but I had to stop and chat a minute.

"What's your name?" asked Mrs. Santa.

"Davy" I said. I figured I better use the name I went by when I was a little kid or she wouldn't know who I was.

"Davy," she said. "You're on the NICE list. Such great accomplishments!"

Well, that was good to know.

So now that I know that I'm officially NICE, let me wish you-all a Merry Christmas, Happy New Year, and Happy Hanukkah - and happy Whateverelseyoumaycelebrate!

Driving another person's car - with a DWI on your record

2009-12-13T07:48:00.000-08:00

Please!

If you have had a DWI in the last ten years, don't be driving someone else's car. All you have to do is get stopped again for another DWI and have a reading of .20 or more, and the city is going to seize that vehicle. Having a child in the car who is under 18 would also do the trick. They call that an aggravating factor.

I got another call this Saturday - yesterday - from a guy who wanted to know how to get his friend's car back from the police. He had been arrested the night before and scored .20. Since it was his second offense in ten years, they took the car.

Here's the deal. If you have had a DWI in the past ten years and you get stopped again with an aggravating factor, they take the car. Being over .20 is an aggravating factor, and so is having a child in the car who is under 18. Also, should you have two DWIs on your record within the past ten years, and then you get stopped for a third in ten years, they take the car. They don't care who's car it is - they just take it.

So I get these calls asking how do I get the car back. It was my mother's car, my wife's car, my bosses car, my brother's car or my boyfriend's car. The answer is that the car is probably gone for good. If there's a loan against the car, the lender can get it and sell it at auction as if they had repo'd it for non-payment. In addition, if the police made a big mistake or if the car, owned by someone else, was being driven without their permission, you may be able to get it back by filing a petition with the district court.

That petition is in effect a lawsuit against the state and against the agency which seized the car. It's not cheap, it's not easy, and it's very hard to prevail. I usually refer these to a friend of mine, because I don't like to take money from people and then lose.

I guess this is a rant. I just can't believe how surprised people are when this happens. Can't figure out where they've been. None of this is new.

Better ignore the map on my directions page for now.

2009-12-10T15:14:00.000-08:00

It's been brought to my attention that the embedded Google map on my directions page at my web site shows my office as being on the north side of I-394, when in fact it is on the south side. I swear when I set that up a few months back it was working correctly.

So now I have to find time to fix that. It may yet be a few days. I do my web sites with the 2007 edition of Microsoft Expression Web. So far when I have tired to embed a Mapquest map to replace the Google one, the program goes berserk. I'll fix that soon, even if it means buying a newer version of the program.

Meanwhile I notice that some one's been posting spam comments after some of my entries here. I'm going to delete every one of them that I'm aware of right now. Another despicable practice. Doesn't anybody have any self-respect anymore?

Two days behind in my email; please be patient with me.

2009-11-20T15:12:00.000-08:00

Well, that trip to Tucson was wonderful. Whatever tan I may have acquired is just about gone already, sad to say. And if the economy is getting any better, there's sure no sign of it in my office. I am crazy busy. It took me until the end of the day on Thursday to return my calls up to what I had received by Tuesday; and right now - end of the day on Friday - I am still going through emails from Wednesday.

I am returning my calls and I am responding to my emails, but please be patient with me. I am doing my best to actually respond to everyone - eventually.

Tucson till Tuesday

2009-11-04T20:04:00.000-08:00

I'll be out of town between Thursday November 5th and Monday November 9th, and will be back in the office on Tuesday morning, November 10th. I'll be attending a weekend seminar in Tucson, AZ put on by the National Association of Consumer Bankruptcy Attorneys. They provide information that I can't get anywhere else, and every once and a while I have to take a few days to soak it up as best I can. This time I will be doing a fairly intensive course that will be mostly about Chapter 13.

I have a pretty bad cold and I hope to get over it once I get to the desert climate. The high temperature in Tucson on Thursday is supposed to be 92.

DWI Arrests Apparently Down?

2009-10-28T08:28:00.000-07:00

I just had an opportunity to visit on the phone with one of the prosecuting attorneys for the City of Minnetonka. Somewhat to my surprise this person made a remark to the effect that over the past few weeks the number of DWI arrests is down. There was some speculation about what the reason might be, but the real answer is that nobody really knows why.

I can guess that the economy might have something to do with it. Even if people might be still drinking, doing it at home is certainly cheaper. Another issue of course is that DWI arrests have become more difficult from the point of view of the police officers, since there has been a great deal of concern lately about the accuracy of the breath test. If the officer wants a blood test, a trip to a hospital might be required. That takes a lot of extra time.

Leaving office early today.

2009-10-23T12:42:00.000-07:00

Time to leave this office for the weekend. My daughter's wedding day is tomorrow. Lots to do. Rehearsal in a few hours.

Businesses and Personal Bankruptcy

2009-10-13T10:06:00.000-07:00

I keep saying bankruptcy is like pregnancy. You can't be a little bankrupt. When you file a bankruptcy, you are in it 100%. It is all-encompassing.

I just got off the phone - again - from a conversation with someone who wants to do a personal bankruptcy but who is the owner or part owner of a small business. Over and over again I hear from people who seem to think that because their bankruptcy is personal, it will have absolutely nothing to do with their business. They want their business to stay in a separate compartment and be unaffected and untouched.

First thing I usually mention is that the business is an asset and has to be listed along with all the other assets that the debtor has. A value has to be placed on the business, and then we have to figure out if it can be claimed as exempt. If it can't be claimed as exempt, and if we are talking a Chapter 7 bankruptcy, then the business will become property of the bankruptcy trustee - or it will have to be bought back from the trustee if the debtor wants to keep it. As a practical matter, most of the small businesses I hear about are virtually worthless, so that claiming them as exempt is not much of a problem - but it is a question that has to be dealt with.

Second thing I bring up is that we will probably be required to list the business name among the names used by the debtor; and once that is done, it is very likely that the bankruptcy filing will be picked up by the Star Tribune and published in their Monday business section. Typical question at this point: "What if I just transfer the business to my boyfriend?" My answer is that then we would have to disclose the transfer, which could possibly be reversed as fraudulent; and the "doing business as" would be changed to "formerly doing business as" and it still gets published in the Star Tribune.

And if you have a business partner, the "doing business as" business name can get listed in the Star Tribune even though your partner is not filing any bankruptcy. Partners in that position tend to be irate to say the least.

This is not the only circumstance, but one of many, where the bankruptcy process does involve a some pain. Those considering bankruptcy should not expect that there will be absolutely no inconvenience.

Loons at Westwood Hills

2009-09-15T07:03:00.000-07:00

I spent time at the office this past Saturday, but not after first taking a long walk at the Westwood Hills Nature Center in St. Louis Park. It was quite beautiful, with the maples already turning a bright red.

There's a part of the trail that goes over a board walk which extends right through part of the lake. On that section of the trail I noticed out in the middle of the lake some birds that I must say look like loons to me. I have seen them there in prior years, always in the spring or the fall. They seem to make Westwood Lake one of their stops as they migrate either north in the spring or south in the fall. I guess they are already on their way south.

For me there seems to be something uplifting and reassuring about seeing them.

"Avoid Bankruptcy" add on the radio this morning

2009-08-24T15:04:00.000-07:00

The radio add starts out with a dramatization of a phone call where a job applicant is being asked about a bankruptcy by a prospective employer. Then the announcer cuts in and starts talking about avoiding bankruptcy by going to whoever was sponsoring the add. This angered me because I have never had a client complain to me about receiving such a call; and I hear lots of complaints about lots of things.

The bankruptcy statute has provisions prohibiting discrimination by employers because a person has filed a bankruptcy. My understanding of those provisions is that they prevent a current employer from changing employment status because of a bankruptcy filing. It is also my understanding, however, that they do not prevent a future employer from taking the filing into account. So at least in theory, a call like the one in the add is possible. I just don't know anyone who it has ever happened to.

I do know people who have spent great amounts of cash on various debt management or debt consolidation schemes, only to ultimately wind up in my office doing a bankruptcy. When I am asked about where to go for credit or debt management counseling, I always say to avoid any outfit that you hear advertising on the radio, TV or other media. The best places to go are the nonprofit organizations such as Lutheran Social Services or Family Means. There are lots of crooked or questionable debt counseling operations. It is possible that they could do a lot of good, but great care should be taken in selecting such a service. If I were you I would avoid any service which does not have an office in Minnesota.

Just ventilating here. I think the add is way inappropriate.

Out of town until Thursday, July 30th

2009-07-28T08:59:00.000-07:00

I'm sitting by the shore of Lake Superior at the Java Moose coffee shop in Grand Marais, MN. My wife and I have been camping here at the municipal campground. Must say this is about my favorite spot in the whole world. The people who run the Java Moose are very kind. They don't seem to mind how long one sits with one's laptop.

Yesterday and Sunday were unique in that our cell phone service was out. I didn't realize how important that cell phone has become until it didn't work. On a trip like this it serves more as a family intercom, helping me find my wife when we get separated during one activity or another. The phones kicked back in and started working late Monday afternoon - something wrong with the tower I guess. Whatever it was it seemed to only affect T-Mobile service. Verizon and AT&T still worked I learned from comparing notes with other campers.

So yesterday, before my wife and I headed out to hike at Mount Oberg, I fired up a pair of old walkie-talkies. That way if we got separated, which happens a lot because I tend to get ahead of her on the trail, we still could talk with each other. Compared to the cell phones, the walkie-talkies seem crude. They always work at least if you are in range no matter where one is, however. Turns out that even when the tower in Grand Marais is working, the cell phone service doesn't extent to Mount Oberg.

I'll be back in the office on Thursday morning. These trips are always too short.

Back to Wayzata Blvd.

2009-07-15T09:16:00.000-07:00

I'm still unpacking, but at least I'm in my new office and the phones are hooked up.

I want to give special thanks to the following, who I will not refer to by name to protect the innocent:

The crew who helped me move. They consisted of my my wife, two daughters, two sons in law, and a step-son-in-law.
The technicians from Popp Telecom, who spent almost all day Friday trying to unscramble a spaghetti bowl of wires in this building so that my DSL, phone jacks and Ethernet jacks would work.
The delivery crew from Office Liquidators in Plymouth, who disposed of some of my old furniture from my old location and delivered new or mostly new furniture to my new place. As close as I can figure, my old desk and chairs had been in use for 27 years - guess I got my use out of them.
The staff from Senior Community Services, which is my new landlord. They have been very helpful and gracious. Before moving in I had asked them for new paint, new carpeting, a sign in the parking lot and some remodeling. They agreed to everything I asked for.
They guys from Joe's Carpeting - who after putting in the carpet have agreed to make some throw rugs out of the remnants for me.
The neighborhood mail carrier - who is making an effort to see that my mail still gets to me.

This is not the first time I have had an office with a Wayzata Blvd. address. Between 1978 and 1980 I was at 6950 Wayzata Blvd. in Golden Valley. That building is no longer there. Long after I left, it was torn down to make room for I-394. It was next door to the Perkins which is still near the intersection of Highway 12 and Louisiana Ave. I had really forgotten about that old office, until I noticed that there was something familiar about having "Wayzata Blvd." on my business card. Deja vu all over again.

Moving to New Office

2009-06-18T19:05:00.000-07:00

Somewhere around July 10th I will be moving my office down the street west about three blocks. The new address will be 10709 Wayzata Blvd. #205, Minnetonka, MN 55305.

Every commercial building for miles around my present office has had "for rent" signs up for some time. A couple of months ago I decided to look around a bit, and I started to feel like a kid in candy store. It didn't take long to figure out that I could get more than twice as much space for about half as much money. The new office space will have a soaring vaulted ceiling in a pyramid-shaped building, with a patio door that opens into a grassy back yard. It's all one level and is fully accessible to the handicapped. There's already one elderly couple who have made their appointment to come see me after the move to avoid the steps at my old location.

I have been very happy at the old office, having been there for almost 13 years. In general I hate change, and I will admit to having an emotional attachment to the old place. I feel in my bones, however, that now is the time to make a change. The new place will have the space I need and will be quite a bit more efficient, particulary after I get it set up the way I want it. It's close enough that I would hope to stay in touch with old friends at the old location; and I have already learned that another old friend has an office right down the hall at the new place.

My phone numbers and email address will stay the same. The fax number is changing to 952-525-7924.

Payday Max and Credit Protection Depot

2009-05-14T15:45:00.000-07:00

I have just had a very bad experience with the above two outfits, which I believe may actually be two of many names that they hide behind. Several web pages that I found say that they are also known as "My Cash Now."

My client had a loan from them, but it was all on line; and the client never had a physical address. I found an address after a bit of searching and used that as the address in the bankruptcy petition, but the notice from the bankruptcy court was sent back - meaning that either it was a bad address or the mail was refused.

I have spent the past hour on the phone with them. They do answer their phone. But all individuals there refuse to provide the address - except for one who put me through to a recording which said something almost too fast to write down. I think I got that address, but I'm not sure because there was no way to get the recording to play again. It was an address in British Columbia, Canada.

In my humble opinion, based on my experience with them today, I cannot characterize them as anything other than devious.

Mortgage Modification Amendment Defeated in Senate

2009-05-01T15:21:00.000-07:00

I just received an email from NACBA - National Association of Consumer Bankruptcy Lawyers. They say that the mortgage modification in Chapter 13 Bankruptcy amendment which NACBA was trying to get passed was defeated today in the Senate. The amendment in question was to be part of the Helping Families Save Their Homes Act.

I think that means it's totally dead for this session of Congress. Had it passed, I was going to have to find a class or seminar to attend to learn what all the bill contained as finally passed. NACBA has it's convention in Chicago at the end of this month, and I would have had to be sure that I got there. As it is, I can probably wait till next year without missing anything essential.

Recession Sing Along

2009-04-25T12:21:00.000-07:00

While you are waiting to come down with the swine flu, you might want to have a good laugh. The funniest thing I've seen in a long time is a recession sing along at the Newsday web site. Click the following for a direct link to the animated video.

Maybe you have to be old enough to remember the West Side Story movie from the 1960s to fully appreciate this thing. I don't see how the mortgage broker singing "I Feel Greedy" could quite have the full intended impact unless the viewer is familiar with the original "I Feel Pretty" from the movie.

A sales tax for filing bankruptcy? Some change!

2009-04-01T15:31:00.000-07:00

It seems that the leadership of our Minnesota state legislature is considering slapping a sales tax on legal services. If they have to do that, I would suggest that there be an exception for legal services connected with bankruptcy filings. I just sent the following email to Minnesota State Representatives Kelliher, Sertich, Lenczewski and Benson; and to State Senator Bonoff:

I am a lawyer who does bankruptcy work. Many people who contact me cannot afford to file a bankruptcy the way it is. Adding a sales tax to my fee would make that much worse.

A sales tax for filing a bankruptcy. Some change that would be.

So much for bankruptcy law change.

2009-03-27T10:16:00.000-07:00

An email I received today from the National Association of Consumer Bankruptcy Lawyers (NACBA) says that Senate Bill S. 61 is stalled. It might never get to the floor for a vote. This is the bill that passed the House about a month ago, and which would have provided bankruptcy judges with authority to rewrite mortgages.

Bankruptcy judges were going to be allowed to reduce balances, lower interest rates and extend terms of mortgages. Only a very narrow group of people would have qualified for this benefit, but it still would have been - as we native Minnesotans say -a pretty big deal.

If it had passed it was my plan to attend a three day convention - basically three days of classes on bankruptcy law - which is scheduled by NACBA in Chicago for the end of May. I would have expected that there would have been plenty of classes and materials explaining the proposed changes, if they had passed. Now I think I'll skip it for this year. I did go last year, and without those changes it would be a lot of the same material.

In a way it's a relief. Learning a lot of new stuff would have been a bit of work. I must say, however, that I am disappointed to see all the hoopla and fanfare followed by nothing but a big thud.

Warning about Debt Management Scams

2009-03-17T08:13:00.000-07:00

I'm looking this morning at the March 15th tip of the day from Kim Komando. It's a rather long article entitled Beware of debt management offers. She describes three different types of programs which one will find when running a Google search: 1) Debt negotiation, 2) debt consolidation, and 3) debt elimination. Personally I would like to add one more type: 4)debt management.

The third one - debt elimination - is always a scam. These are people who are trying to sell information that they claim is secret that you can use to make your debt just go away entirely. If anybody tells you they have that sort of a program, which sometimes is in the form of a magic form you can fill out and then send to the creditors, run away as fast as you can. There is no such program.

Debt negotiation or debt consolidation programs may or may not be legitimate. The Komando article suggests that you should make sure that any agency you use is licensed by your state and also accredited by one of two organizations, the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. I would also suggest that you make sure they are on the approved Department of Justice list for counseling programs acceptable for the pre-filing and post-filing credit counseling required by the bankruptcy statute. You can find a link to the Department of Justice list of approved bankruptcy counseling agencies on my web page at http://www.mn-bankruptcy.com/chapter7.html. At that page click on "Credit Counseling Requirement."

My two favorite local places to go for real counseling are Lutheran Social Services and Family Means. Both have offices fairly close to my office. Both are non-profit. Both do debt management, my Item 4 on the above list. Debt management might involve negotiation, but not necessarily. They are not trying to make money out of your desperate situation. They are tying to figure out how to get you on a payment plan that will actually work. And if that is a hopeless idea for you, they will tell you and suggest that you talk to someone like me.

My Dentist, My Accountant and Me.

2009-03-13T07:50:00.000-07:00

This week I have gone to see both my dentist and my accountant. I like both of these guys, but going to see them tends to be a painful experience. I need both of these guys, but I wish I didn't.

I suspect that the way I feel about seeing my dentist and my accountant may provide some insight into how people feel when they need to come see me for legal advice or representation. I am fairly certain that very few of my clients are glad about being my client - in fact none are glad about it. While I am certainly glad to see them, seeing me or having anything to do with me must certainly be difficult. If my clients had a choice, I'm sure they'd rather be somewhere else.

I mentioned these thoughts to one of my clients, who stated as follows : "I'm glad to have the company, but I'd rather have a different topic." Credit to him for putting it profoundly and succinctly.

I'll share one more fact. Between the dentist and the accountant, I'd rather go see the dentist.

Again with the short sale thing!

2009-02-10T09:46:00.000-08:00

Question received today from LawGuru:

"I sold my house in an short sale and now the bank wants me to repay the $60,000 shortfall. Should I file bankruptcy? ..."

This person must not have seen my remarks on Youtube concerning this subject: The Trouble with Short Sales.

Come on Vacation, leave on Probation

2009-02-06T09:34:00.000-08:00

I had to post this. I just heard from one of my lawyer buddies that the above is the slogan of the prosecutors for Aitkin County. Apparently is stems from a propensity for certain individuals to get arrested while ice fishing or snowmobiling in that county.

I have seen similar situations where individuals from out of state get arrested in the Twin Cities for DWI while here on business or for a wedding or funeral. I can't explain why, but for some reason in my experience this seems to happen a lot in Eden Prarie. Typically after returning home they find me through my Minnesota DWI web site and retain my services.

Credit Card Industry Profits Increased

2009-02-02T08:31:00.000-08:00

I find myself looking at a 32 page report, complete with colorful graphs and charts, written by a gentleman by the name of Michael Simkovic. Mr. Simkovic was a fellow in law and economics at Harvard Law School between 2006 and 2007. He published this report last July. His subject is the effect of the 2005 "Bankruptcy Abuse Prevention and Consumer Protection Act." Many of us call that BAPCPA (pronounced "bapceepa").

The report begins by reminding us that supporters had claimed that ultimately this law would benefit consumers, because it would lower the cost of credit card debt. The data shows, however, that while credit card company losses decreased, and the card companies had record profits, costs to consumers actually increased. "In other words," says Mr. Simkovic, "the 2005 bankruptcy reform profited credit card companies at consumers' expense."

No big surprise there. But thanks to Mr. Simkovic for laying out the details and proving it beyond a reasonable doubt. This seems to be very consistent with a series of articles published in the Star Tribune last October which stated, among other things, that BAPCPA has been one of the contributors to our current economic meltdown.

Regime change without gunfire.

2009-01-18T18:49:00.000-08:00

Before I was licensed to practice law, I was licensed to teach history. Like everyone else in this country, I have been watching the attention being given to the ritual unfolding in Washington, D.C. A lot of attention is being given to various details of the event. Underlying it all, however, is a tradition that I haven't seen anybody say anything about; and this tradition is something that we should give ourselves much more credit for than we do.

The tradition I'm talking about is that every four years, or at the least every eight, we have a peaceful regime change in Washington. It's been going on for over 230 years. The old president steps down and a new guy takes over, without troops having to be called in, without an assassination, without brown shirts taking over the TV and radio stations, without a civil war. I believe if a study were to be done of the subject, going back say three hundred years, and covering the entire globe, it would be found that in the vast majority of places during the vast majority of the time, regimes don't change without somebody getting killed or something being blown up.

So lets all enjoy the party, and let's all be very proud. Notwithstanding all the imperfections, nobody else and nowhere else has anybody come this close to getting it right.

Sorry, my web pages were down for a while today ...

2009-01-14T14:10:00.000-08:00

Godaddy is the server that hosts my web pages. I don't know what their problem was, but for several hours today all my web pages were down and not accessible. Whatever the problem was, it's fixed now and everything is back up.

If you were tying to view one of my web pages and could not, it wasn't something wrong with your computer. It was the company that hosts my sites. My apologies for the inconvenience.

The thing I noticed that sort of surprises me is how much I missed the pages myself. They contain all sorts of charts, tables and reference materials that I use regularly. One of the reasons I have for posting all the material that I have up on my various pages is so that I can find it myself when I need it.

Restless nights

2009-01-12T19:22:00.000-08:00

Friday night this past weekend and again on Saturday night, between 12:30 am and about 3:30 am, I was awakened by calls from individuals who had been arrested for DWI and who were in the custody of police. Before being required to take a breath, blood or urine test, a suspect has a right to speak with a lawyer by telephone. In both cases, the arrested person had called someone else who looked up my DWI web site and then passed my cell number back to the person under arrest.

Often when I receive these calls I find that the person on the other end of the phone is seriously considering refusing to take the test that is being offered. This is a serious mistake, since a test refusal is a separate crime in itself. Besides being a crime, the test refusal carries with it a one year revocation of one's driving license. So far I have always recommended that the person take the test. It is hard for me to imagine a situation when I would not recommend that.

When I receive one of these calls, I try to find out as much information about the arrest as I can. Sometimes this can involve staying on the phone with the "suspect" for as long as half an hour or so. The result is that often I know things about what went on that the police report may not include and that the potential client may not remember.

Usually after receiving one of these calls I can't sleep for about an hour, maybe longer. I'll admit that having this two nights in a row was a tad hard on me. If this seems a little disjointed, that's probably why.

Excused!

2009-01-03T08:22:00.000-08:00

Friday morning - yesterday - I was instructed to report to the jury room at the Hennepin County Government Center for jury duty. After listening to a little talk about how things worked, twenty of us were run through security and led up to judge McGunnigle's courtroom. As soon as I walked in I knew I would not be there very long. At the tables in the front of the courtroom sat two lawyers I knew, Rolph Sponheim for the prosecution and Marsh Halberg for the defense. These were both people I know, particularly Mr. Sponheim. Judge McGunnigle explained that the Defendant had been charged with a DWI. He didn't say whether it was a misdemeanor, gross misdemeanor or felony. I could tell that it was no misdemeanor, however, since they were obviously looking to set up a jury of twelve, and with a misdemeanor you only get a jury of six.

I was seated as Juror No. 3. The judge started asking questions to the prospective jurors as a group. One question was whether any of us had an experience which would influence our ability to be objective in this type of case - driving while intoxicated. Several hands went up, including mine. One person was employed in the "beverage industry." One person has a brother who had been arrested for DWI. Another had relatives who were injured in an accident by a drunk driver. I disclosed that I had defended hundreds of this type of case, and it would be hard to say that this would not influence my decision.

The judge went into a little lecture about how experiences of this sort should be set aside and compartmentalized, and he asked if we could do that. All of those who had raised our hands, including me, said that we thought we could. One of the next questions was whether we knew any of the witnesses, whose names were read off for us, and did we know the Defendant or any of the lawyers. Again, I raised my hand. The judge asked me to explain. I said that I knew Mr. Halberg, not well but I did know him. Besides that, the younger lawyer he had brought along to assist him looked familiar, I had surely seen him around, although I did not know him by name. When it came to Mr. Sponheim, I said I thought I knew him well. I had innumerable cases in which he had been the prosecutor. Then Judge McGunnigle asked if knowing these people would keep me from being able to make a decision based only on the evidence which was to be presented. I said that I believed I have a working relationship with Mr. Sponheim, and that I thought that should disqualify me.

At this point the judge called the lawyers up to the bench for a little conference. A moment later I was excused from that case, but I was to report back to the jury room. Back at the jury room the clerk there said that since I had been on call all week, that I would be excused entirely from any further jury duty. My duty was completed. Must say I was a bit surprised but also relieved. I had another feeling, however, which surprised me. During the short time that I had been up in the courtroom, I had started getting interested in the case. I think I would have enjoyed being on that jury. I would have enjoyed watching those lawyers do their stuff, and I would have liked to see how it all came out.

The thought of going downtown to watch the trial just to see what happens next has occurred to me. They are open to the public, and a trial like that ought to take a couple of days at the least. I already feel behind in my work as a result of the distraction from this episode, however, and I know I don't really have the time to go watch that trial. I should just count myself lucky to have this experience behind me.

I'll be in the office Monday morning - no jury duty so far.

2008-12-28T17:34:00.000-08:00

Tomorrow, Monday December 29, 2008, is supposed to be the first day of my jury duty with Hennepin County. I just checked with the phone line, and they will not be needing me - at least not tomorrow morning. So for those of you who have had an appointment with me in the morning, I'll be planning on being there.

The next time I have to check to see if they want me will be 12:15 pm tomorrow afternoon. I am supposed to call in and see if they need me for Monday afternoon. This annoying process will continue for the next two weeks or so. This has meant that I have had to be careful to not be scheduling any court appearances for any of my own cases with my own clients over the next two weeks. Over the past three months or so, I have been making an effort to schedule hearings on all of my cases before Christmas, so that I would have an open schedule now. This made for a dramatically busy December. With that rush over, it seems a bit quiet now; except that I am on call to run downtown and report as a juror to hear a trial.

I'll be reporting more as this unfolds.

"Enhanced"

2008-12-27T12:28:00.000-08:00

The electronic sign over I-394 just a half mile here from my office says "Enhanced DWI Enforcement Thru Jan 1." I don't think they're kidding.

"Enhanced" according to the old hard-bound dictionary on my desk means "to make greater" or to raise, intensify or heighten. It seems to be a term that is used a lot in connection with DWI. For example, if you have a second offense within ten years, that second offense is "enhanced" because of the first. Please remember that taxi cabs are really cheap compared to the cost of being arrested.

As I think I have mentioned earlier, I am noticing that the fact that one is considering or working on filing a bankruptcy seems to enhance to possibility of either being arrested for DWI or being injured in a serious accident. If you should happen to have bankruptcy on your mind, please keep a proper perspective. Focus on what you are doing, when you are doing it. It's only money. You have more reason now than ever to properly care for yourself - including making sure that whatever you consume is in moderation.

The Case for Santa Claus

2008-12-24T07:54:00.000-08:00

Twas the day before Christmas, and my phone has finally quit the constant ringing. Yesterday was another story. Even that close to the holiday, there were lots of interruptions. To all who may be reading this, I wish you a Merry Christmas and a Happy Hanukkah. I am going to make an effort for at least the next 48 hours to enjoy these holidays. It's not that easy after all the sad stories I have been hearing. It is nonetheless my intent to do so.

I think that I still have somewhere within me a little bit of the wonder that was there when I was a small child surrounded by all the holiday hoopla and regalia, expecting a visit from Santa Claus. It's not that I still believe in Santa Claus; but except for the scene in Miracle on 34th Street, he's never been accorded his right to a trial by jury. Even in that movie if I recall correctly, the judge dismissed the charges without letting the jury make a decision. It seems to me that Santa Claus should be accorded the presumption of existence until proven to not exist beyond a reasonable doubt. I don't really believe, but I have to admit that he has not ever been proven to not exist beyond a reasonable doubt. That's a tough standard, and it has not been met. In fact, any student of logic will tell you that it is impossible to prove a negative. Thus it is a safe bet that Santa's nonexistence can never and will never be proven - at least not with evidence that's admissible in court.

I just checked the NORAD web site, where there is a special page for tracking Santa. In fact at the moment I am writing this NORAD says they have Santa on radar over Dhaka, Bangladesh. Looks real to me, or at least I can't prove it's not.

Summoned for jury duty

2008-12-09T14:52:00.000-08:00

I have received a summons to show up for jury duty on December 29th -- downtown at the Hennepin County Government Center. The people who run the program tell me that I can arrange to check in by telephone to see if they need me. This apparently, however, can only be done after I at least show up in person on the first day.

Not long ago I commented to one of the court clerks that I supposed that the week of New Years Eve and New Years Day would be a slow week for jury trials. She laughed at me and said the opposite was the case. Apparently that week is loaded up with jury trials by people who didn't want to have the trial Christmas week.

When I first received the summons I called in and got a hold of one of the supervisors. I had lots of excuses, not the least of which was that I have served as a referee in the Hennepin County settlement and arbitration programs. I have worn a black robe, sat at the big desk in front of the courtroom and have been called "your honor." "So what"' was the response. They have required retired district court judges to serve. There is an exception for judges who are actually on duty as judges, but that of course would not apply to me.

I anticipate having more to say on this topic as the situation unfolds.

Why you don't want to get a second Minnesota DWI

2008-12-04T15:13:00.000-08:00

It's dark and it's cold in Minnesota and the holidays are upon us. This means my phone is about to ring, and on the other end of the line will be someone who just got arrested for the second time in ten years for driving while impaired (DWI).

The consequences of a second alcohol related driving offense are quite harsh, and it seems to me that they come as quite a surprise to many. The punishments for a first offense are quite light by comparison, particularly if your lawyer did a good job. Sometimes that's one of the things I worry about when I have gotten a particularly good outcome for a client: that my client won't realize how serious this could have been, and will therefore be more likely to offend again.

The first offense is usually a misdemeanor punishable by a $1,000 fine or 90 days in jail or both, unless there was some aggravating factor. The most common aggravating factors are having a breath test reading of over .20 or having a minor child in the car, and having such a factor could result in even a first offense being a gross misdemeanor. The second offense in ten years, however, is always at least a gross misdemeanor - punishable by $3,000 or a year in jail or both. If you continue to accumulate alcohol-related driving offenses, the fourth one in a ten year period can be a felony - and could involve a trip to Stillwater State Prison. The legalese for this process is "enhancement." Each offense enhances the next.

Along with increased criminal penalties, the time one goes without being able to drive keeps getting extended for longer periods with each offense. After a third offense drivers are often classified as "inimical to public safety," which is like becoming a second class citizen who will not be allowed to drive for several years if ever again.

You'd think the foregoing would be enough, but it's not necessarily the worst of it. For many the most embarrassing thing for a second time offender is that he or she is issued special license plates -- called "whisky plates" because they often start with the letters "WX." It usually seems that lots of fellow employees in the employee parking lot know what that means, particularly if the person who has the special plates happens to be the boss.

Perhaps the worst thing is what happens to the car the offender is driving when it's a second offense with one of those aggravating factors - such as testing above .20. In that event the police seize that vehicle. Forever in most cases. There are some limited circumstances under which the car can be recovered by the owner; but most of the time that car is gone and stays gone. If the car belongs to the driver's wife, mother, husband, girlfriend, aunt, uncle or employer, the state does not care. Unless the owner can show that the driver did not have permission to drive that vehicle, it usually makes no difference that it belongs to someone else.

For those who wish to try to get the vehicle back, the seizure has to be challenged with a petition filed in district court; and the time allowed for doing so is very short. Winning such challenges is not easy.

In other words, if you happen to already have a first DWI offense on your record, you absolutely must not let that happen again.

National Guard and Reservist Debt Relief Act

2008-10-29T08:37:00.000-07:00

One of the things Congress did before going home was pass the "National Guard and Reservists Debt Relief Act." I haven't heard if the President has signed it, but it seems to me he must. This law would exempt certain members of the armed forces from the means test if a bankruptcy petition is filed within 540 days after they complete active duty. I would hope that the same rule would apply WHILE they are on active duty.

I'm glad to see this law being passed. However, I doubt it has much real effect because almost all of these folks would qualify for bankruptcy anyway.

Don't Panic!

2008-09-28T19:35:00.000-07:00

Just a word or two of warning. I am seeing lots of people who are in a panic. They are in the process of losing their homes or jobs or both. The daily news offers little or no comfort. All the "bailout" talk doesn't include any concrete help for individuals that I can see. This state of mind increases the probability of being in a serious accident or incident. Or such is my personal observation.

I mentioned this in passing while meeting with clients recently. The next time they came in they greeted me as "Nostradamus" - comparing me to the Sixteenth Century prophet or wizard. The type of thing I was talking about had happened to one of them. Sorry about being vague as to exactly what happened, but I need to not break confidentiality. I expressed the hope that it had not been the power of suggestion - the result of an idea that had been planted by me. They were sure it was not.

I bring this up here because I really want to say that I believe we all need to keep the events of the past year or two in perspective. The Romans had a saying - THIS TOO SHALL PASS. It's a universal truth, and I'm convinced that it certainly applies to our present economic climate. Panic and anxiety always just makes any problem worse. The harder and more difficult times are, the more important it is to take care or yourself. One of my favorite slogans - prominent in a lot of the self-help literature - is abbreviated as "HALT" - don't let yourself get too Hungry, Angry, Lonely or Tired. A good concept to keep in mind when going through a bankruptcy or any other crisis.

On several of my web pages I talk about how easy it is go get ahold of me. I wrote most of that a couple of years ago. It has become untrue over the past few months, for which I apologize. Between the clients and the creditors of clients, my voice mail box often fills up. My goal has always been to return my calls within 24 hours. I have of late been unable to be that prompt. If you need me and don't get me right away, keep trying please. I am around and I do want to talk with you; it's just that things are really busy right now. I would say that it's more busy than it was in 2005 right before the new bankruptcy law went into effect.

Correction: I'll be back in the office on Thursday September 18th!

2008-09-14T19:40:00.000-07:00

How embarrassing!

It has come to my attention that the message on my answering machine at my office says that I will be out of town until "Thursday September 19th." Obviously that is wrong, because Thursday is the 18th and the 19th is Friday.

It should say that I will be back on "Thursday September 18th." I'm at Grand Marais for a few days, and I would change that message from here if I could - but it's not that kind of machine. I can't change the message without being there.

So just please be advised that I intend to be in the office again starting on Thursday the 18th of September. I suppose I'll try to call everyone who is on my schedule that day to make sure they are not confused by the message. The names and phone numbers should be here with me on my Palm Pilot.

The fact that I made that error tends to support the proposition that I really needed a couple of days off.

It was a chilly and misty day today at Grand Marais. Not good for outdoor activities. I spent several hours with my wife sipping premium coffee at the Java Moose, and reading an edition of Carl Sandburg's biography of Abraham Lincoln. I've been working on that book off and on for years. It's slow going, very intense and detail filled. I'm still only about half way through.

This evening the sky began to clear and we were able to watch the full moon rise over the harbor, while having dinner at the Angry Trout. It was very beautiful. Tomorrow is supposed to be warmer and sunny. For tonight we are snug and comfortable in our little pop-up camper.

September 10th and 11th

2008-09-11T18:28:00.000-07:00

I'm working late here in the office this September 11th evening. It was a funky day, seven years after the big attack on our country. I was wall to wall all day with appointments, and the phone rang constantly. I finally gave up on the phone. I just could not keep up. I don't think that's ever happened before. Strangely, only about one caller in ten actually leaves a message. I have managed to call most of them back, but I really wonder about the others. If it was important enough to call in the first place, then why no message?

I have to share this with you all. While September 11th is a sad anniversary, so is September 10th. On that day in 1897 a taxi driver in London, England, became the first person in the world ever to be arrested for drunk driving -- after slamming his vehicle into a building.

If I at all can I would like to get to the north shore for a peek at some fall colors. I might run away and try it this weekend. I'm up to date with most of my work. I can't keep up with the calls in any event, and staying home would not fix that. These are the most desperate times I have seen in my lifetime; but I'll be able to help more people if I take care of myself. I keep telling my kids: when the plane loses pressure and the oxygen masks come down, put the mask on yourself first. Then put the mask on your children or others who are in your care. The person who is first to pass out is no longer able to help others.

Consumer Bankruptcy Up 48% in July

2008-08-30T12:19:00.000-07:00

A few weeks ago I bookmarked an article posted on Twin Cities Daily Planet which indicated that bankrupty filings in Minnesota are up almost 30% for May and June of 2008 as compared to May and June of 2007. I thought it has seemed to be pretty busy around here, but I still thought the percentage was surprisingly high. Had someone told me in January of 2006, right after the "reform" legislation had gone into effect that this was going to happen, I don't think I would have believed it. The standard wisdom at that time was that bankruptcy lawyers might be about out of business. In fact, many lawyers quit practicing bankruptcy law at that time. The new law was called BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act). In my opinion, the only abuse that was going on was that perpetrated by the credit industry, and the only protection provided was for them and not consumers.

Earlier this week I received a copy of Consumer Bankruptcy News, one of those old fashioned publications that is still printed on paper. In the lower right corner of page 7 was an item stating that nation-wide bankruptcy filings were up 48% in July 2008 as compared to July 2007. There were 94,124 consumer filings in July and 82,770 in June this year. That would be as if everybody in Bloomington, Minnesota and in Duluth Minnesota combined had filed for bankruptcy in June or July. If that keeps up, I would assume that for August it would be as if everybody in Rochester, Minnesota had filed for bankruptcy.

If you should feel a need to come see me to talk bankruptcy, there's sure no reason to feel alone.

Short Sales Revisited

2008-08-23T12:32:00.000-07:00

For several months I have had a video posted at YouTube entitled "The Trouble with Short Sales." Of all the videos I have posted, this is the one I get the most flack about - mostly from Realtors who are in the short sale business. My experience of this past week emphasizes how right I am about short sales in Minnesota usually being a really bad deal. If anything, my video understates the case.

A client of mine came to me for help with making a short sale work. I advised that it was likely to be a serious problem, but she wanted to try it anyway. For better mental health and possibly better credit among other reasons, she wanted this house out of her life. A buyer was found, and after a few months the mortgage company indicated - in a rather vague letter of intent - that they were ready to complete the short sale. Getting a real person on the phone from the mortgage company was nearly impossible; and when it was possible to get a real person, it was never anybody who could answer a question or make a decision.

I finally was able to speak with the closer who was going to handle the paperwork for the transaction. She indicated that most of the lenders she dealt with were very clear that they intended to reserve the right to come after the seller for the remaining balance owing on the mortgage, even though the house was being sold. The paperwork for the transaction involving my client did not explicitly say that the lender would be suing my client later, but it didn't say the lender would not be either. The only release that my client could expect to get would be one that released the house only. There would be no release of personal liability.

This was a situation involving only one mortgage. In those situations in the State of Minnesota, the most common method of foreclosure is "foreclosure by advertisement." When advertisement is the method, the lender gets the house, but that's all the lender gets. The home owner is off the hook. That means that my client was presented with the following choice:

Either do a short sale and expect to get sued for the remaining unpaid balance of the mortgage; or
Wait for the lender to foreclose and lose the house without getting sued for anything.

The second choice is obviously better than the first. In both choices the house is lost, but with the second choice at least they don't come after you for more money afterwards. It would have made a lot of sense for the mortgage lender to provide a personal release of liability so that my client could have completed the short sale. Now it will take the mortgage company another year of so and considerable expense to conduct the foreclosure. The house will probably go down in value during that time too. But in letters and calls to the mortgage company, I never seemed to be able to get any body's attention with this information.

This aspect of Minnesota foreclosure law is unusual. There are only seven other states as far as I know that have similar laws. The mortgage company does business in all 50 states, and follows a one size fits all policy line for everything. Their policy might make sense in most states, but not in Minnesota. They hurt themselves by being that way, but nobody seems to care.

For a short time this week I was excited because I thought I was seeing some signs that I might be able to make the short sale idea work. What it was going to take, of course, was a release of personal liability. By Thursday afternoon, however, it was quite clear that was not going to happen. It was time to back out of the deal, cancel the purchase agreement, and wait for a "foreclosure by advertisement."

Underdahl II - End of the Source Code Issue?

2008-08-09T13:51:00.000-07:00

I've mentioned here once or twice in the past, that there has been a small tempest brewing over the source code of the Intoxilyzer 5000 breath test machine. That's the one that's been in use all over Minnesota since the early 1990s. I've heard it said that the computer processor that is the guts of the gizmo has about as much computing power as one of those old pong games from the 1980s, although I doubt that's true. It is true, however, that until recently a small minority of judges have been questioning the validity of the test results because the manufacturer of the machine has keep the source code of the software that dives the device a trade secret. No defense lawyer can get an expert opinion on the validity of the source code, because nobody can get the source code, not even the State of Minnesota.

My understanding is that earlier this year the Attorney General's office in St. Paul filed a suit against the manufacturer demanding that they cough up the code. So far as I know, that is still pending.

Meanwhile our Court of Appeals seems to have either back tracked or flip-flopped on the issue of the Intoxilyzer's source code, depending on how narrowly one reads the opinion. In 2007 in a civil implied consent case known as "Underdahl I," they said that the question of the machine's reliability is subject to challenge and that the Commissioner of Public Safety would not be granted an order which would prevent the district court from enforcing an order requiring that the Commissioner produce the source code. In May of 2008, however, after the State has continued to be unable to produce the code even after suing the manufacturer, the Court of Appeals in a criminal DWI case decision known as "Underdahl II" has said that the defendants failed to make an adequate showing that the source code is relevant to a plausible challenge to the reliability of the Intoxilyzer.

In short in Underdahl I they seemed to open the door to a source code challenge and in Underdahl II they seemed to close it. I must say that after sitting here for a while looking over these two decisions, my head is spinning a bit. I'm not sure if the dust has really settled on this issue or not, and whether there may be further appeals. I still am noticing that some police departments seem to be using a lot more blood and urine testing in an apparent move to side step any possible problem with this.

Shredding Day

2008-07-16T11:41:00.000-07:00

I just got back to the office from my "storage facility," where it took a truck from Shred-N-Go about 15 minutes to chew up 1,204 pounds of old files. Most of that was from the 1990s, although I did throw in a few things from as recent as 2002. OK, maybe even a few things from 2003 that I was sure were not worth saving. About a fourth of it was my own old financial and billing records.

I am feeling some emotions about seeing that stuff go. At the time that I generated those files, they were top priority in my life. I practically sweat blood over some of them. They represented skill, art, valuable lessons; important help provided to many people, whose lives were improved as a result. I believe I practically walked on water in a few of those cases, and perhaps performed a few near miracles. Or so it seemed at the time. And of course in a few of the cases, notwithstanding my best efforts, everything seemed to turn to crap.

I feel a certain sadness about it I suppose. Also relief.

The paper files are not nearly as important as they used to be. The fact is that I still have electronic copies of most of the paper I shredded on a disk or portable hard drive. All bankruptcy documents are available on line going back at least ten years. A summary of what's in the state court files is available on line too.

Last time I did this was five years ago. That would mean that on average I generate about 240.8 pounds of paperwork per year. I wonder what the cost of the printer ink for all this is. No wonder my office supply cost is so high. In the next life will I meet the angry ghosts of all the trees I am responsible for killing?

Bankruptcy Petition Filed in Bad Faith

2008-07-09T08:56:00.000-07:00

Can't help myself. I have to share this.

I'm on an email list where I get all sorts of updates concerning bankruptcy law. My email this morning brought me news of a North Carolina bankruptcy court decision where the case was dismissed as having been brought in bad faith. What was the bad faith?

It seems that the petitioner, a woman who had just finished a divorce process, was filing the petition in bankruptcy primarily to make her attorney fees for the divorce go away. Through the divorce process she had obtained exempt assets in excess of $250,000 in value; and the lawyer's bill was about $42,000; but the lawyer had already expressed a willingness to settle for $20,000.

The court appears to have reasoned that as this person went ahead with her contentious divorce, the lawyer had a reasonable expectation to be paid from the "equitable distribution recovery" of assets in the divorce case, and the filing of bankruptcy right after the divorce was in bad faith.

This is an example of what I hear referred to as the "smell test." There is probably no specific provision in the bankruptcy code that says you can't list your attorney fee bill in a bankruptcy right after the divorce. But under these particular circumstances, the bankruptcy court judge clearly did not like the way it smelled.

I have had several clients who have listed attorney fees in their bankruptcy petitions. However, that was not the only debt they had and that was not the reason why they filed. In addition, there had been a respectable period of time that had passed since the divorce was final; and it would have been something my client felt bad about and only listed because my advice was that all debts had to be listed.

Typically I find that my clients are very reluctant to list a debt that was for a personal service, where they have a relationship with the provider of the service. They really hate to list their doctor, dentist or plumber. If they need a bankruptcy, however, there's no choice. All debts must be listed.

Another Drunk Driving Crack Down

2008-07-01T13:18:00.000-07:00

Today's Star Tribune reports - as is often the case right before a major holiday - that starting today and continuing through the month of July there will be extra law enforcement on the roads and streets of this State specifically looking for drunk drivers. I recommend that you take a look at the full story. There's information there about a new "safe and sober" web site that the state has put up as well.

Creeping Debt and Chapter 13 Bankruptcy Debt Limits

2008-06-28T11:04:00.000-07:00

Not long ago it seemed that $20,000 of credit card debt was a lot. I would file a bankruptcy for a person who had that without giving it a second thought. Now, however, as things go in my world, that's not a lot of debt for most people. Unless the debtor is sick, disabled or hopelessly low income, I would be reluctant to file for someone with such a small debt.

What's happening is that I rarely see anyone who's not more than $50,000 in debt, and over $100,000 of consumer credit card debt is common. Once the total of the debt tops $100,000 I tend to ignore how much higher it goes, as my software keeps a running tally of the total. The fact is that for me, and I'm afraid for the whole country, the amount of credit card debt that seems normal is creeping steadily upward.

So the other day when I was reading my mail on a bankruptcy lawyer listserve, I had a bit of a start. One of the emails reminded me that for a Chapter 13 bankruptcy, there is a limit as to how much debt one is allowed to have. I quickly pulled out the most recent Chapter 13 I had filed and checked the balances of the debts, to make sure we had not exceeded the legal limit. Up until that moment it never occurred to me that one day someone will probably walk into my office with consumer debts in excess of the Chapter 13 limits. All of a sudden, those limits don't seem as high to me as they used to. A lawyer who files a case where the limits are exceeded is subject to sanctions. If I did that it could cost me thousands of dollars. I must start paying more attention to those limits.

In order to qualify for a Chapter 13 bankruptcy, the person's secured debt must not exceed $1,010,650 and the unsecured debt must not exceed $336,900. The way things are going right now, I would not be surprised to meet someone within the next week whose debts are over those limits. From my perspective the current economic downturn has been frightening and unbelievable.

I don't mean to imply that I have never met a person with debts that high. Back in the early 1980s, during a serious recession we had in those years, I did a Chapter 7 bankruptcy for a real estate developer who had gone out of business and who had millions of dollars in debt. There's no limit to the amount of debt you can run through a Chapter 7. I have also done Chapter 7 work for small business owners who's debts would have exeeded the Chapter 13 limits.

But now people I see with consumer debt are actually starting to push those Chapter 13 limits, and that is something I have never seen before.

Burnt Out License Plate Light and DWI

2008-06-11T18:23:00.000-07:00

Recently I had a case where the reason the officer stopped my client was a non functioning license plate light. The only problem was that the light in fact was working, and there was a witness to that fact besides my client.

I got excited. I had gotten arrests thrown out for similar reasons in the past. I thought this one would be easy. Naturally, I dug into the case law looking for the case that would say I win. To my surprise, what I found was the opposite. This past January the Minnesota Court of Appeals said, if I was reading it right, that if the officer THOUGHT that the light was out, the stop was valid even if the light was actually working. What kind of deal was that?

It seems the police can stop you for a perceived equipment violation, even if they are mistaken about whatever it is. Once they have you stopped, if they find you have been drinking, you get a DWI ticket; and it makes no difference if you can show later that your equipment was fine. The bottom line is that there is no sure way to not get caught if you are drinking and driving. Being careful isn't good enough. There's no way you can possibly control all the factors that might lead to a stop and an arrest. The only answer is to just not do it.

I have suspected for some time that there are officers who stop drivers because they just have a feeling that something is not right. Then later they make up something to legally justify the stop. On one hand I suppose you could say that these are good officers and a value to the community. But I really think that they should be required to stay truthful and not just be making up stories.

Bankruptcy and DWI, Judge Arrested

2008-06-03T09:37:00.000-07:00

I have been practicing bankruptcy law and DWI defense for some time now, and it always seems a bit difficult to explain why those two areas of the law seem to mesh for me. So when I saw a story about a bankruptcy judge being arrested for DWI, I woke up and took notice.

Massachusetts bankruptcy judge Robert Somma won't be returning to his job. Why? He has "agreed" to leave his job to pursue other endeavors. Seems he has been off work since his arrest for DWI in February. When I first read the headline I was surprised, because lots of public officials get DWIs. At least one of the Hennepin County judges currently on the bench has received a DWI while in office. They have to take their punishment, but they are not removed from their jobs.

There were other complications in Judge Somma's case, however. Seems that when he was arrested, he was wearing a dress. That in itself, while a bit unusual, doesn't seem to be justification for losing his job either. Apparently he was a good judge and well liked by those who practiced in his courtroom. There's nothing illegal or unethical about wearing a dress that I know of, although I suppose I have to concede that it could have been inappropriate.

Here's a link to the Boston Globe story.

"Click It or Ticket" May Mobilization: May 19 to June 1st

2008-05-24T12:19:00.000-07:00

This holiday weekend and for the rest of this week, there is once again enhanced law enforcement on our streets and highways in Minnesota. This time the emphasis is "designated nighttime seat belt enforcement periods to prevent unbelted deaths ..."

This "Click It or Ticket" mobilization program is one of a series of "Safe and Sober" mobilizations which has been in progress for the last few years. It is specifically aimed at looking for belt non-use and for improper child seat use.

The bottom line, however, is that for the next few days there will be extra law enforcement on the roads. Whenever this happens I know it's time for me to stay close to my phone. My office phone is forwarded to my cell, and I'll be answering that all this weekend. I just got back from a nice trip to Hollywood, so I don't' feel bad about staying in town this weekend.

If you hear from someone who has just been stopped or arrested, you might want to do a quick review of the tips I have posted on my First Arrest First Aid page. I wrote up the materials on that page after receiving a call one night from another lawyer who had a client who had just been arrested. This other lawyer did no criminal defense work at all, and wanted to pick my brain about what to tell his client, who he had on the other line. Before that call I had assumed that there was no use writing that topic up on my site, because someone who has just been arrested would not have web access. Since then I have heard from several spouses and parents who have referred to the contents of that page over the phone when they were called by a family member who was in police custody.

With the onset of cell phone web access, I guess a person could access that page directly after being arrested. Nobody has reported to me that they have done that, however, at least not yet.

Out of the office until May 21st.

2008-05-14T13:31:00.000-07:00

I'm am on my way to Hollywood. That's where the National Association of Consumer Bankruptcy Attorneys is having a big three day seminar. I'll be gone between May 15th and May 20th. I'll be back in the office on the morning of Wednesday May 21st.

I wish I could say I was going to be on American Idol, but that's not it. There are things I can learn at this seminar that would be hard to find anywhere else. What it comes down to is that I can't afford to not go. The law of bankruptcy has been in a hard to track state of flux since the new legislation became effective in late 2005. It seems that every few days a judicial decision turns up that changes the landscape. I need all the help I can get in keeping up with this stuff.

Of course, I am planning on seeing a few sights as well. I'm allowing one day in the trip just for that. Right now I would say that the beach could be a priority.

So email me or leave me a message. I will probably be checking my email. I no longer travel without my laptop. The wireless Internet for the hotel where I'll be did get a poor review, but I expect I'll figure it out. I'll be returning my calls on Wednesday, May 21st.

Debtor Audits in Bankruptcy Cases Resume Today

2008-05-12T14:59:00.000-07:00

My email today brought me a notice that the U.S. Trustee's office is resuming debtor audits as of today. They stopped in January because Congress didn't fund it.

An audit in this context involves the U.S. Trustee's office hiring an outside accounting firm to go over the debtor's records. Previously the policy was that one in 250 cases would randomly be audited. Now the policy is one in a thousand will be audited. That's a 400% improvement, but I'm still sad to see this stuff starting again.

Minnesota Bankruptcy: The Income Limits

2008-05-10T21:38:00.000-07:00

Since the passage of the "new law" in October of 2005, there have been rules based on level of income about who can file a Chapter 7 Bankruptcy. Unless you are at or below the median income for the State of Minnesota based upon your family size, you can only file a Chapter 7 if you pass the so-called means test. The means test is a whole other topic, which I will have to deal with some other time. For now, however, here's a video I posted recently on Youtube where I discuss the median income levels for Minnesota by household size.

The numbers are subject to change every few months, but I have them posted on my site on my Chapter 7 page under the subheading of "Qualifying for Chapter 7 in Minnesota."

David J. Kelly, Attorney
Kelly Law Office
1013 Ford Rd.
Minnetonka, MN 55305
952-544-6356
http://www.mn-bankruptcy.com/
http://www.mn-dwi.com/
http://www.kelly-law.com/

Bloviating about Short Sales on Youtube

2008-05-04T12:39:00.000-07:00

The topic of short sales is hard to understand, and also hard to explain. In this video I spoke without a script, which I think was a mistake. I was trying to be clear, but I don't think I got close to that goal. If I would have written a script first, it would have read about like what follows.

The term "short sale" can mean that:

1) The mortgage company will accept less than full payment and will release both the property and the debtors from the remaining balance of the debt; or

2)The mortgage company will accept less than full payment of the debt, will release the property from the mortgage, but will NOT release the individual debtors from the remaining unpaid balance of the debt.

I hear from lots of people who are trying to do a short sale, but don't know which one they are trying to do or which one they want to do. The first kind leaves you in the clear, but the second variety brings you into my office in need of a bankruptcy.Most short sales are of the second variety, and they are worse than just doing nothing and letting the bank foreclose. Worse yet, often the realtors and mortgage companies involved in these transactions seem to purposely keep the sellers/debtors in the dark as to exactly what kind of deal it is.

If you are doing a short sale, you better consult an accountant about the tax consequences. Under certain circumstances, the amount of the debt forgiveness can be taxable income.This video and these comments are for general information purposes only and are not intended to be legal advice. Viewing these materials does not create an attorney-client relationship. I recommend that you consult the attorney of your choice concerning the details of your case.

David J. Kelly
Kelly Law Office
952-544-6356
http://www.mn-bankruptcy.com/

Out for Blood in Dakota County

2008-05-03T13:59:00.000-07:00

I just got off the phone with a gentleman who was arrested for DWI in Hastings, which of course is in Dakota County, Minnesota. The police had asked him to take either a blood test or urine test, but he refused. He asked for a breath test, but the police would not give him that.

I explained that I have heard that the judges in Dakota County for the most part have stopped accepting breath test results, at least when asked to throw out the evidence in a proper motion. So now the police in that county have stopped offering breath testing, at least that is what I am hearing from my contacts.

The Dakota County judges - or many of them at least - have lost faith in the reliability of the breath test, because the manufacturer of the machine has refused to produce the computer programming source code. In my opinion they are right to do this. Without that code, nobody really knows how the machine works. The law seems to be way up in the air over this, which is why there is so much variation from judge to judge and county to county.

Here in Hennepin County, where I do most of my work, however, about 90% of the judges still put their faith in that breath machine. As a result, I find myself very reluctant to jump into the fray - since there is a high probability that after laughing at me, the next emotion the judge will express will be anger. I have been telling my clients that we can try doing that if they want to, but here in this county it is probably not that good of a gamble. My fee would be high, and the odds are better at Mystic Lake.

The gentleman I just spoke with is now charged with refusing the test. This is a gross misdemeanor - more serious than the usual first offense DWI - and with this comes a one year revocation of his driver's license.

I'm just putting this out here as a warning. If arrested for DWI in Dakota County, and perhaps elsewhere now in Minnesota too, you are more likely than ever to be offered a blood test but not a breath test. My understanding is that refusing the test under those circumstances is the same as refusing a breath test when that is offered. If it happens to you, take the test. You would also be well advised to have an additional test taken at your own expense.

I am watching the development of this issue as closely as I can . Right now the State of Minnesota is suing the manufacturer, and the manufacturer has counter-sued the State. The State in this case is also the customer. My Dad used to say that the customer is always right, but I guess that manufacturer doesn't fee that way.

David J. Kelly
Kelly Law Office
952-544-6356
http://www.mn-dwi.com

Youtube Video Bankruptcy Update Part IV

2008-04-25T19:00:00.000-07:00

Rambling in front of the video camera the other day, it was not long before I got on the subject of how unethical, illegal, fraudulent and criminal it is to attempt charging attorney fees for a bankruptcy on a credit card - with the intent of getting rid of the credit card debt in that bankruptcy. If you run up a debt intending to list it in a bankruptcy, that is fraud. It can be grounds to have a particular debt not discharged in your case; or it could be grounds to have the entire bankruptcy thrown out. Worse yet, it's fraud and could be prosecuted as a felony. Here's what I said about it on Youtube:

Walking with a friend and mentor

2008-04-18T19:22:00.000-07:00

Yesterday I got a call from my office-mate and friend Emanuel Serstock. He's a former Minneapolis Assistant City Attorney, a former Ramsey County Assistant County Attorney, and a former Assistant Hennepin County Public Defender. We call him "Em."

Em knows that I try to go for a good long walk most days, and that I have my favorite places to do this. In particular, he knows that I like to go to the Westwood Hills Nature Center, which is only about a half mile from our office. After an apparent heart attack last fall, he is under doctor's orders to walk at least three times a week. When he called, he wanted to know if I would be walking that day and where would I be going. I said that I had been thinking in terms of a swim at my health club, but that I would be honored to walk with him if he was up for it.

An hour later he was at the office in his walking shoes, and we jumped in my Toyota Highlander. I drove the half mile or so to a back door entrance to the Westwood Hills Nature Center. After deciding whether we would take the track in a clockwise or counter-clockwise direction, we were heading down the trail. I had anticipated that he would have trouble keeping up with me, but the reverse was true. He's a bit taller than me, so his legs are longer. I had been a bit worried about his health, but I'm not anymore. He was robust, vigorous and hard to keep up with.

We found that the ice is finally out and the water is open on the lake. We saw a loon, who was obviously migrating to somewhere further north. We also saw a colorful adult male turkey, which Em said reminded him of certain people he knows.

Em has been a good resource and mentor, helping me with many of my criminal defense cases. Compared to how much help he has given me, I have felt for some time that I owe him something. Going on this walk was an opportunity for me to show him something he had not known about, which I hope to some extent was a down payment on my repayment of my indebtedness to him.

Fraudulent Federal Subpoena Email

2008-04-14T10:28:00.000-07:00

This morning I received an email which purported to come from the federal court in San Diego. It appeared to be a subpoena requiring that I appear in federal court May 9th in San Diego before a grand jury.

It also contained a link which I assume would have downloaded a virus onto my computer.

I called the court in San Diego and they confirmed that it's a hoax. I have also spoken with a lawyer a the law office that is mentioned on the false document. He tells me all they have done there all morning is sit on the phone answering questions about the email. I lost a little time on it, but it's really messing them up. So in case you get it, now you know.

Bankruptcy Update Part III - Spring 2008

2008-04-12T17:56:00.000-07:00

Here's another clip in the series that I have been working on. In this one I talk about how the Senate has eliminated a section of the pending mortgage relief legislation which would have allowed a bankruptcy judge to reduce the balance owing on a mortgage. The idea was that in those situations where the mortgage is more than the value of the property, the bankruptcy judge could reduce the balance of the mortgage to be equal to the value of the house. The rest of the balance of the mortgage would be discharged in the bankruptcy. Sounds like a wonderful idea to me. But the Senate committee didn't think so. Too much lobbying by the banking industry.

So for the time being there is no provision in the bankruptcy law for an option to discharge the part of the mortgage that exceeds the value of the house, while allowing the balance of the mortgage to be a lien on the house. I feel as if I may be doing a bad job at explaining this. It's the kind of thing that many non-lawyers might not understand. As a result, the Senate gets away with not passing a really beneficial piece of legislation, because nobody quite understands what it is they didn't pass.

Lots of court time this week - sorry if I missed your call

2008-04-11T15:32:00.000-07:00

I had some unexpected court time this week, especially yesterday. When that happens, my usual discipline of keeping up with returning calls and responding to emails goes to heck. I've made an effort to get back to everybody before saying I'm done for the week - which I am - but if I did not get back to you, please call me or email me again.

I usually am pretty good about actually looking at what my spam filter catches before I delete that mailbox, but on a week like this one I may have been more likely to miss a real message that got caught there. If I did not respond to your email, please send me another one.

Youtube video Bankruptcy Update Part II

2008-04-08T19:24:00.000-07:00

Here's the second in the series of videos where I update my earlier comments about the current state of bankruptcy law and practice. In this video I talk about how Congress has withdrawn funding from the U. S Trustee's office for the hiring of outside accounting firms to conduct audits of debtor's records.

Youtube video Bankruptcy Update Part I

2008-04-06T12:23:00.000-07:00

Yesterday, before that walk at the nature center, I spent a few hours in the office. I had brought a shirt, tie and jacket, as well as my Flip Video camera. I have been posting to a Youtube channel for almost a year, and I felt yesterday that I might be motivated to record a few new comments on video. Once I got started, I surprised myself about how much I had to say. I grabbed a few I items that were loose on my desk, and found that these made a more than full agenda of things to talk about.

I set up the Flip Video, punched record and walked around to sit in front of it. When I reviewed what I had when I was done, it was almost half an hour of stuff. This time it was all on the subject of bankruptcy. My idea was to supplement and update what I've already said on earlier videos. Now what I recorded is so long that I will have to edit it down into manageable pieces. By the time I'm done editing it will be a whole series of clips. The first of them is embedded here:

Goose Poop on the Trail at Westwood Hills

2008-04-05T16:15:00.000-07:00

I'm inspired. I just finished my first walk of the year around the Westwood Hills Nature Center. It has been a gorgeously beautiful day. This nature center is maybe a half mile east of my office; at least that's how far it is if I go to a back door I've found. It might be more like a mile and a half if I drive all the way to the main gate. Weather and time permitting, I try to make a point of walking there every day. Obviously, weather and time don't always permit - such as during the unusually long winter we just finished. I suppose I could have gone in there during the past winter with my cross country skis, but I never did.

A couple of eagles were circling over the lake this afternoon. At first I thought maybe they were hawks; but then I saw some hawks - they were there too - and concluded that the eagles were really eagles. Hawks look quite a bit different. The ice is still on the lake, except for a little bit of open water around the edges. I watched a poor mallard try to come in for a landing on a small patch of open water, only to find that it was only about two inches deep. He made a bit of a splash, and then seemed surprised to be standing on his feet after coming to an to an abrupt stop. I could swear that he looked at me with an embarrassed expression, but that had to be my imagination.

The City of St. Louis Park does an excellent job of maintaining the hiking trails. Today there were some patches of snow and some muddy spots. There were spots where streams of water from the melting snow were flowing across the trail. And yes even this early in the year, there were parts of the trail where one had to be very careful to not step in what the geese had left behind.

CREDIT CARD CASH ADVANCES TO PAY FOR BANKRUPTCY

2008-04-03T19:18:00.000-07:00

I just got off the phone with a gentleman who is in extreme debt, lives with his parents, and is essentially unemployed. He works part time odd jobs from time to time. His credit is apparently still good, since he is borrowing from one card to pay for another, even though his debt exceeds $50,000. I told him that he certainly qualifies for a Chapter 7 Bankruptcy, and probably needs one; but with no income and no assets, what was his plan to pay for the bankruptcy?

"I have been told that I can do that with cash advances," said he without hesitation. I questioned him more trying to determine exactly who had said that or where he got that idea. He side-stepped and never really answered my questions. I explained that if a lawyer had told him that, it was a violation of every code of ethics I ever heard of. It would also be fraud if not theft, and if it preceded the actual filing of a bankruptcy, it would also be bankruptcy fraud. Bankruptcy fraud, I explained, is a federal felony. It is investigated by the FBI. I would like to stay as far away from that sort of thing as possible.

I would not have thought much of this call, and would not find it worthy of mentioning, except that this was the second such discussion I have had in the last ten days or so. Since it has now come up twice, I am wondering if someone on a web site, blog or other media source has been either promoting or at least discussing the idea.

Let me see if I can spell something out. If a creditor can show that a debt was incurred at a time that the debtor intends to not pay it, but intends instead to run it through a bankruptcy, that is bankruptcy fraud. The person who does that will at least be subject to an objection to the discharge brought by the creditor, and at worst possibly be subject to criminal charges. If the debt is more than $600 or so, and it is incurred within 90 days before filing, it will be presumed to be for luxury goods - which also makes the debt nondischargeable if the creditor objects. Even if all the specific rules for the bankruptcy filing are satisfied, there is still a possibility that the case won't pass the "totality of the circumstances" test. Essentially it's a smell test. If it doesn't smell right, the court can dismiss it.