Ok, so I am diverting from strictly bankruptcy topics once again, but I try to mix it up a little. Keep it interesting. This morning our law firm, Perez Law Group, made another trip to St. Vincent de Paul to volunteer and serve breakfast.
I'm not going to lie to any of you. We have to get up early to do this, and that is never easy for a non-morning person like myself to do. The first ten minutes are pretty difficult. I am basically a robot. I wish desperately that I had my Starbucks or that I was back in my cozy bed. But, once that initial drowsy feeling is shaken, the rewards of the experience take over, and I am grateful that I'm there.
Today I got to hand out the trays to each person in the breakfast line. This time there were over 300 people in Phoenix in need of the service provided by St. Vincent's. Those numbers a pretty staggering, and the people in the line are varied. There are the truly homeless and there are those that look like they have just fallen on to some hard times. What they all have in common, however, is appreciation for what is being given to them. I cannot count how many times my tray offering was met with a polite smile and warm "thank you." Those two words, "thank you," really got to me this morning. It made me realize that even the smallest act, such as handing out a breakfast tray, can mean something to someone. It brought a smile to my face.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
Wednesday, February 23, 2011
Wednesday, February 16, 2011
The Rules of Purchasing a New Vehicle Prior to Filing Chapter 7 Bankruptcy
Many times we have clients that own an older car with lots of miles or one that is not cost-effective, and they wish to purchase a replacement vehicle. If they are the kind of clients that we as bankruptcy attorneys love, they will call us before they purchase this vehicle and ask if it is ok for them to do so. Our initial reaction has always been "of course, go for it as long as you don't exceed your bankruptcy exemption amount of $5,000 equity per vehicle." Recently, I read a judicial opinion that has made me change my tune a little.
There is a 2009 Chapter 7 case out of Tucson in which a Debtor purchased a vehicle prior to filing his bankruptcy. He could not finance the entire amount of the vehicle himself, so he asked an acquaintance to finance part and record a lien on the vehicle in her name. The dealership offered to record the lien and sent it to a title agency after her check cleared. That title agency did not submit the title application until 33 days after the purchase of the vehicle. One day after that, the Debtor's Chapter 7 bankruptcy was filed.
Ok, so what's the problem? Well, Arizona law says that to validly create and enforce a lien on a vehicle, the lien must be recorded within 30 days of purchase of the vehicle. Additionally, bankruptcy law states that a Chapter 7 trustee can avoid certain preferential transfers (in this case a transfer of the interest in the vehicle) made 90 days before the filing of the bankruptcy petition. The exception is the transfer of a security interest, if perfected, or secured, on or before 30 days after purchase of the collateral. So, if the lien on your brand new vehicle has not been properly or timely recorded, the trustee can avoid the "lien" and declare your vehicle owned free and clear. Once it is free and clear, the trustee can auction any vehicle that is worth more than the bankruptcy exemption amount. You can bet that if you just purchased a vehicle, it is going to be worth more than $5,000 or $10,000 without a lien. If you are in this situation, you can bet that your Chapter 7 trustee's ears will perk up when he or she finds out your purchased a vehicle within 90 of filing your bankruptcy, and then he or she will happily investigate the recording of the title.
So, what was the outcome of this case and what does it mean for all of our clients who are thinking about buying a vehicle before filing bankruptcy? The docket report in this case shows that the Debtor and trustee ended up settling the issue, so neither clearly won the argument. In my opinion the trustee settled because the lienholder's (the generous friend's) attorney discovered a technicality, in this particular case, that may have barred the trustee from taking the vehicle. It is not something that would exist in every case, and I have seen more and more Chapter 7 trustees asking Debtors if they have purchased a vehicle in 30-90 days before their case was filed. Therefore, I would caution all potential bankruptcy Debtors to wait to file their bankruptcy until 90 days have passed from the financing of a vehicle, or at least wait 30 days from purchase of a new vehicle (for the lender who waits until the 30th day to record a lien), and to follow-up with the DMV and make sure the lien has been recorded. As always, please be the client we love and notify your attorney of your intent to purchase a vehicle close to the filing of a bankruptcy.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
There is a 2009 Chapter 7 case out of Tucson in which a Debtor purchased a vehicle prior to filing his bankruptcy. He could not finance the entire amount of the vehicle himself, so he asked an acquaintance to finance part and record a lien on the vehicle in her name. The dealership offered to record the lien and sent it to a title agency after her check cleared. That title agency did not submit the title application until 33 days after the purchase of the vehicle. One day after that, the Debtor's Chapter 7 bankruptcy was filed.
Ok, so what's the problem? Well, Arizona law says that to validly create and enforce a lien on a vehicle, the lien must be recorded within 30 days of purchase of the vehicle. Additionally, bankruptcy law states that a Chapter 7 trustee can avoid certain preferential transfers (in this case a transfer of the interest in the vehicle) made 90 days before the filing of the bankruptcy petition. The exception is the transfer of a security interest, if perfected, or secured, on or before 30 days after purchase of the collateral. So, if the lien on your brand new vehicle has not been properly or timely recorded, the trustee can avoid the "lien" and declare your vehicle owned free and clear. Once it is free and clear, the trustee can auction any vehicle that is worth more than the bankruptcy exemption amount. You can bet that if you just purchased a vehicle, it is going to be worth more than $5,000 or $10,000 without a lien. If you are in this situation, you can bet that your Chapter 7 trustee's ears will perk up when he or she finds out your purchased a vehicle within 90 of filing your bankruptcy, and then he or she will happily investigate the recording of the title.
So, what was the outcome of this case and what does it mean for all of our clients who are thinking about buying a vehicle before filing bankruptcy? The docket report in this case shows that the Debtor and trustee ended up settling the issue, so neither clearly won the argument. In my opinion the trustee settled because the lienholder's (the generous friend's) attorney discovered a technicality, in this particular case, that may have barred the trustee from taking the vehicle. It is not something that would exist in every case, and I have seen more and more Chapter 7 trustees asking Debtors if they have purchased a vehicle in 30-90 days before their case was filed. Therefore, I would caution all potential bankruptcy Debtors to wait to file their bankruptcy until 90 days have passed from the financing of a vehicle, or at least wait 30 days from purchase of a new vehicle (for the lender who waits until the 30th day to record a lien), and to follow-up with the DMV and make sure the lien has been recorded. As always, please be the client we love and notify your attorney of your intent to purchase a vehicle close to the filing of a bankruptcy.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
Friday, February 4, 2011
The Bittersweet Side of Bankruptcy - Your Tax Refund
Tax time is quickly approaching, and a lot of you are probably on the ball and getting your returns prepared. It is highly possible that because of mortgage interest paid, child deductions, or owning energy efficient appliances, your tax preparer has given you the wonderful news that you are getting a sizable tax refund this year! Think of all the things that you can spend that refund on...
But, slow down just one second. If you have decided to also file for bankruptcy, getting that refund is a bittersweet gift, as it will most likely become part of your bankruptcy estate when you file. In a Chapter 7 bankruptcy, you have a trustee assigned to your case. It is the job of the case trustee to review all of your assets and determine if there is anything available for liquidation and distribution to your creditors. Now, the trustee is limited in what he/she can liquidate. The only available assets are those that are non-exempt assets, as determined by your state's exemption laws. In Arizona, a liquidated debt owed to you, like an outstanding tax refund, is non-exempt property (Arizona exemptions are found in the Arizona revised statutes). If it has not been paid out by the time you file bankruptcy, the mean bankruptcy trustee will snatch that big check right up and pay your debts with it. This applies to all refunds from the years prior to your bankruptcy filing and the year of your filing, not for the years after. So, if you are in a rush to file bankruptcy your refund blessing can quickly become a burden.
However, there is some light at the end of the tunnel. If you are able to wait to file bankruptcy, so that you can receive your refund and spend it, that check is yours. In this case, though, you will have to be careful of how you spend your check. No boat, flat screen, or Rolex purchases please. Necessity items only. Now, a necessity can be clothing, home repairs, even a vehicle (if you are without one and desperately need transportation). It can even be mortgage payments if you are behind or want to pay a month in advance to give yourself a cushion. Whatever you do with the check, you will also need to keep receipts and an accounting of where the money went. Because you can bet that if you spend what could have been his/hers, your case trustee will want you to account for every penny of that refund.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
But, slow down just one second. If you have decided to also file for bankruptcy, getting that refund is a bittersweet gift, as it will most likely become part of your bankruptcy estate when you file. In a Chapter 7 bankruptcy, you have a trustee assigned to your case. It is the job of the case trustee to review all of your assets and determine if there is anything available for liquidation and distribution to your creditors. Now, the trustee is limited in what he/she can liquidate. The only available assets are those that are non-exempt assets, as determined by your state's exemption laws. In Arizona, a liquidated debt owed to you, like an outstanding tax refund, is non-exempt property (Arizona exemptions are found in the Arizona revised statutes). If it has not been paid out by the time you file bankruptcy, the mean bankruptcy trustee will snatch that big check right up and pay your debts with it. This applies to all refunds from the years prior to your bankruptcy filing and the year of your filing, not for the years after. So, if you are in a rush to file bankruptcy your refund blessing can quickly become a burden.
However, there is some light at the end of the tunnel. If you are able to wait to file bankruptcy, so that you can receive your refund and spend it, that check is yours. In this case, though, you will have to be careful of how you spend your check. No boat, flat screen, or Rolex purchases please. Necessity items only. Now, a necessity can be clothing, home repairs, even a vehicle (if you are without one and desperately need transportation). It can even be mortgage payments if you are behind or want to pay a month in advance to give yourself a cushion. Whatever you do with the check, you will also need to keep receipts and an accounting of where the money went. Because you can bet that if you spend what could have been his/hers, your case trustee will want you to account for every penny of that refund.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
Tuesday, February 1, 2011
Breakfast and Karaoke
What do breakfast and karaoke have to do with another? More importantly, what do they have to do with bankruptcy? Usually, not too much. But on this Tuesday morning they had everything to do with one another as this bankruptcy law firm (+ one immigration lawyer) volunteered to serve breakfast at St. Vincent de Paul.
After waking up bright and early, we arrived at the St. Vincent de Paul site on 7th Ave. and Jackson. We were immediately put to work prepping food and setting up for the breakfast serving. We knew we were in for a challenge when the full time volunteers mentioned (more than once) that they wished that more volunteers had showed up and that we needed to move fast to keep the line moving. At about 7:00am people started to arrive and line up for the meal. We were taken aback by the numbers, but happy that we could be of service to so many people. The staff requested that three of the people who came for food volunteer to assist us, and three of them kindly offered to help us. We moved to preparing all the trays so they could be handed out to each person. We were paired with a man named Bobby who both entertained us and touched our hearts. He came all the way here from Alabama, and by a series of circumstances has ended up living in a group home. He uses the computer at his home to search for jobs, but has had no luck. And, after hearing our mention of karaoke for my upcoming birthday celebration, he began to entertain us with his own singing. By the way, he's a fan of blues and southern rock.
By 8:30, they were closing off the line, and we had served over 400 people, heard some karaoke, and made a new friend. The experience reinforced for us that even the smallest thing, like donating your time, can really make a difference for someone else and will show you what's truly important in life. We plan on making this a monthly event for our office and can't wait to do it again. I strongly encourage everyone to contact St. Vincent de Paul and find out how else to get involved: http://www.stvincentdepaul.net/volunteer.htm
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
After waking up bright and early, we arrived at the St. Vincent de Paul site on 7th Ave. and Jackson. We were immediately put to work prepping food and setting up for the breakfast serving. We knew we were in for a challenge when the full time volunteers mentioned (more than once) that they wished that more volunteers had showed up and that we needed to move fast to keep the line moving. At about 7:00am people started to arrive and line up for the meal. We were taken aback by the numbers, but happy that we could be of service to so many people. The staff requested that three of the people who came for food volunteer to assist us, and three of them kindly offered to help us. We moved to preparing all the trays so they could be handed out to each person. We were paired with a man named Bobby who both entertained us and touched our hearts. He came all the way here from Alabama, and by a series of circumstances has ended up living in a group home. He uses the computer at his home to search for jobs, but has had no luck. And, after hearing our mention of karaoke for my upcoming birthday celebration, he began to entertain us with his own singing. By the way, he's a fan of blues and southern rock.
By 8:30, they were closing off the line, and we had served over 400 people, heard some karaoke, and made a new friend. The experience reinforced for us that even the smallest thing, like donating your time, can really make a difference for someone else and will show you what's truly important in life. We plan on making this a monthly event for our office and can't wait to do it again. I strongly encourage everyone to contact St. Vincent de Paul and find out how else to get involved: http://www.stvincentdepaul.net/volunteer.htm
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, www.perezlawgroup.com.
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