Monthly Archives: February 2015

What do I wear to court (is there a dress code)?

There is an official dress code for attorneys, and an unofficial one for everyone else.  If you want to play it safe, dress like you’re going to church.

Court:

Attorneys:          male attorneys are required to wear a shirt, tie, dress pants, and a suit coat

female attorneys wear business wear (generally a business pants suit)

Non-attorneys:  best wear would be church clothing (shirt and tie and slacks or a dress).

However, most of my clients show up in their normal jeans and t-shirts without a problem.

341 Meeting:

Attorneys:           there is no official dress code

(but most attorneys wear a shirt and tie or business pants suit).

Too casual = unprofessional.

Non-attorneys:  church clothing would be nice, but again, clients seem to be fine with a t-shirt and jeans.

Today, I forgot my suit coat.  I didn’t actually forget, but my trunk suit (the emergency blazer I keep in my trunk for court for the past 8 years) was not there.  I had to borrow the jacket from another attorney who is much taller and broader than I am.  Thus, the picture below:  20150210_094701

I once wore a leather jacket to court, like Joe Pesci in My Cousin Vinny (one of the finest lawyer movies ever).  Judge Mosier took one look at me and said, “Mr. Payne, you may want to speak with your tailor before appearing in my court room again.”

Wear something a little nicer than usual.  Church wear is perfect, but try to avoid the cut off short-shorts and tank top look.  You may look fantastic, but court is a bit more formal.

Can we remove our refrigerator and sell it before our home is foreclosed?

Yes.  The refrigerator is your appliance.  It is not a part of the home, and you are not committing theft by taking it.

When you surrender a home in bankruptcy (or even lose it in foreclosure), you are giving it back to the bank.  The bank has a secured interest in the home, and they own the home and all of its fixtures.  However, fixtures does not cover everything in the home.  foreclosure sale

A fixture is something affixed to the home, like the air conditioner, or the hot water heater.  Your refrigerator, freezer, and stove are not fixtures.  They are appliances, same as your television and your stereo.  When you move out of the home, you have every right to the appliances.  No one would leave their tv for the mortgage company to sell off, and you shouldn’t leave your fridge either.

The dishwasher is a strange creature.  It’s “affixed” the the home by those two little screws up at the front that hold in in place under the counter, but it may or may not be a fixture.  In any event, it’s usually too much of a hassle to move.

So if you are giving up your home, don’t give up the appliances.  You have every right to take the refrigerator and sell it off before the foreclosure sale.

Should we pay off some of our small credit cards before filing bankruptcy so that we can keep them open?

No.

It doesn’t work like that.  Even if you pay the balance on your Gap card down to -$200 (you have a $200 credit on the card), they will still close it on the day we file bankruptcy.  And yes, they will still close it even if your account is in good standing.

Now, there is an exception for credit union lines of credit.  They will sometimes allow you to reaffirm, or keep, the line of credit if you agree to keep paying it after your bankruptcy.

I just had a couple in my office who were told by another attorney that if they paid off two of their smaller $300 cards, that there was a good chance they could keep those accounts open.  He was wrong, and they just threw away $600 of their tax refund money.  The husband was furious, and he had every right to be.  They could have used that $600 for food storage or even clothing for their 5 children.

Also, if you pay off unsecured creditors prior to filing bankruptcy, this is called a preferential transfer.  It is a bad thing and means that the bankruptcy trustee can sue those creditors you just paid off to recover those monies for the bankruptcy estate.  In other words, not only did you throw that money away, but you just caused your creditor to be sued in bankruptcy.

 

What happens to the retainer I just paid my family law attorney when I file bankruptcy?

The bankruptcy trustee may sue your divorce/adoption/custody lawyer for the fees on retainer, and you will have a very angry family law attorney who now refuses to work for you.familylawretainer

When you pay a lawyer a retainer, he is holding most of your money in trust, and he will bill against it.  In other words, you pay your divorce attorney $5,000 up front for an upcoming custody battle.  He puts the money in his trust account and bills against it as he performs work on your case.  The money isn’t spent yet;  he is spending it as he works.

So, what if you pay the $5,000 retainer and then file bankruptcy?  The bankruptcy trustee will look at whatever amount of the $5,000 is still left in your divorce attorney’s trust account as your money (which it is).  He will then demand that the family law attorney turn over those funds to the bankruptcy estate.  If the attorney hasn’t billed against it all, he loses it and the bankruptcy trustee walks away the winner.

This means that your retainer is now gone, and your family law attorney has gone through the indignity of being sued by a trustee.  He probably won’t do any more work for you until you replenish that retainer.

What this means is that you’d better talk to your bankruptcy attorney before you make any large transactions (like retaining a family law attorney before going bankrupt).

 

Should we file bankruptcy before or after we get divorced?

Divorce is financially devastating.  I usually hear from potential clients about 2 years after their divorce.  I always say the same thing, “You should’ve done this bk as part of your original divorce.”  The reason why is simple:  you only pay for bk once instead of twice.

That being said, if you are planning on getting divorced and also need to file bankruptcy, you probably want to file a chapter 7 together BEFORE your divorce is finalized.  fees

Chapter 7

Low Income — If your joint income is low enough to qualify for a chapter 7 together, then file it before your divorce is finalized.  Your joint bankruptcy will only result in paying attorney’s fees once and paying the court filing fee once.

High income — If your joint income disqualifies you for a joint chapter 7, then wait until you are divorced, or at least physically separated and on the road to divorce.  If your separate incomes are each low enough to qualify for separate chapter 7 bankrutpcies, then file individual cases.  You’re paying twice the attorney’s fees and twice the filing fees, but it’s still cheaper than a chapter 13.

Chapter 13

If you file a joint chapter 13 and then file for divorce, the odds are pretty good that your attorney will have to withdraw as counsel, and then you will have to either file 2 new chapter 13 cases or bifurcate your case and each pay separate chapter 13 plans.  Your attorney will probably have to withdraw because you have created a nearly impermissible conflict of interest for him, and he cannot represent both of you fairly.

Sometimes, your attorney may still be able to represent both of you, but it’s fairly fact specific.

 

 

Can I buy a laptop computer with my tax refund before bankruptcy?

I get asked this over and over, and I have to say, “No.”

This time of year, clients are waiting to file bk until after they have received and spent their tax refund on exempt (protected) items, like food storage and clothing.  Some other items are protected under Utah law, but the laptop is not one of them.

Let’s say you buy a computer for less than $500, then the odds are pretty good that it will have too small of a resale value to attract a bankruptcy trustee, but it isn’t protected.  20150202_092330

On the other hand, if you use it for your business, then up to $5,000 of its value is protected under a “tools of the trade” exemption

78B-5-506. Value of exempt property — Exemption of implements, professional books, tools, and motor vehicles.

(2) An individual is entitled to an exemption, not exceeding $5,000 in aggregate value, of implements, professional books, or tools of the individual’s trade, including motor vehicles to which no other exemption has been applied, and that are actually used by the individual in the individual’s principal business, trade, or profession.

Play it safe and spend the tax refund on food and clothing and vehicle repairs and you should be okay.