Does my 'new' wife need to provide anything to the trustee at the creditors meeting this Tuesday to show that she wants to retain her security interest in the car? Or is simply listing her

A: You can list her as a secured creditor, and/or she can file a proof of claim with the bankruptcy court. She doesn't have to provide anything at the "341 hearing." In fact, it's probably better that she doesn't show up at all, because then she's not available to answer questions, in the event that the trustee decided to do so (despite the fact that it would be outside of the trustee's jurisdiction to attempt to call your spouse as a witness at the hearing).

To make all things easier, when we married, she kept her original name so as to avoid confusion with my debtors. Also, my wife and I, in front of a notary, also signed a prenuptial agreement the day we got married that our finances 'prior' to the marriage are separate, but during the marriage, they are together.

A: This isn't particularly relevant to the bankruptcy proceedings.

Because I'm low on cash, please provide the best price possible. I'm requesting medium answer detail in the event there is a form that needs to be filled out; you can provide me the original form and a sample on how to fill it out.

A: You control the "price" when you ask your question. In this case, you offerred $59, and I'm considering the question expressly based upon that offer.

Concerning any form, a proof of claim binds a secured creditor to the jurisdiction of the bankruptcy court. However, if you list the secured creditor on your schedules, then that is sufficient to indicate their interest, and if the creditor files a proof of claim, then the trustee can sue to try avoid the claim on grounds that it is an "insider transaction," without permitting the creditor a jury trial. So, in this instance it may be far better for your spouse to not file a proof of claim form and thereby avoid the bankruptcy court's jurisdiction, in the event that the trustee decides he wants to try to recover the vehicle (unlikely, because there is no money to be had, but just in case).

In other words, by not filing the proof of claim, your spouse makes it much more expensive for the trustee to try to avoid your spouse's secured claim on the vehicle.

Hope this helps.

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Are you saying that if my wife doesn't show at the hearing, the trustee can't just ask me for my keys and take the car?

A: If you scheduled your vehicle and stated that it has no more than $2,575 in net value, then the trustee cannot seize the vehicle. You stated that your equity is less than $1,000, so the answer is "no," the trustee can't demand that you turnover the car.

Are you saying the BK court has no jurisdiction over my wife? if so, why?

Because Hawaii is not a community property state, so your property and hers are separate, except where you have intentionally commingled it, and unless your wife signed as a joint debtor in the bankruptcy, the bankruptcy court has no jurisdiction over her -- unless the bankruptcy trustee sues your wife or she files a proof of claim.

Can he ask me for her financial records, even though we signed a prenuptial agreement?

A: He can ask, and you can say, "I don't have access to any of her financial records." The only financial records that the trustee can get (because you are required to provide it at least 7 days before the 341 meeting of creditors) which would show your wife's financial circumstances, would be your tax return. And that's only possible if you filed "married-jointly." If you did, then that may have been a mistake, but if you filed "married-separate," then since you have no right to see your spouse's tax return, neither does the bankruptcy trustee.

Or is it a problem that we didn't marry until 21 days after I filed for BK?

A: Not particularly relevant, under the circumstances.

Is the short time a problem?

A: No.

Would it matter that my wife is a permanent resident (green card) from Thailand and doesn't have a driver's license, yet?

A: No.

She's studying for the test now. And is there a problem with putting her on title with me now that we are married, as an extra measure, or would that be a problem that the lienholder is my wife and on title, too?

A: Title to what -- the car? You really don't want to start messing around with any financial matters until the bankruptcy is discharged and closed. Otherwise, the trustee may start getting the idea that you are hiding something, and then he/she may start using his powers to start probing into everything about you.

BTW, to put things into perspective, I owe about $1.4M. ($900K on real estate only worth half that, which I haven't lived in for more than a year; vacant), $429K+ on one business transaction, and the remaining $50-$60K for other miscellaneous debts. I don't know if that changes anything or not.

A: The bankruptcy trustee cares about "net worth," because that's what is used to pay your creditors. If you are insolvent (assets minus liabilities less than or equal to $0), then the trustee doesn't care, because you've got nothing to administrate and the case must be discharged against all of the unsecured creditors, all of whom will receive nothing.

Hope this helps.

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Please provide positive feedback (middle face/stars or better) for my previous answers to your original questions -- after which I will be happy to consider your new questions just asked.

Thanks for your cooperation and understanding.

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socrateaser41084.8204883912

Hmmm. There are several test paths being used by the website. If there is no "smiley faces" or "stars," then there should be an "Accept" button that you can click.

If none of those options are available, let me know, and I'll have customer service contact you.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

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I understand. I'll opt out so that someone else can help should they feel so disposed. If you change your mind, all you have to do is click that big green button, and I'll be happy to renter the conversation.

Best wishes.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

"I'm glad I asked the clarifying question. When I said I had little equity, I wasn't saying that was the value of the vehicle. It is a 2005 Mercedes 230K worth about $10,600 of which I have about $895 of equity in it, because my wife has the other equity.

Does it matter that I put her on title the day before my BK7 was filed? And if so, should the trustee accept the copies of her post dated checks and the loan agreement as evidence of her ownership?"

This could be a problem if the Trustee finds out that you transferred nearly $10,000 in equity in the vehicle to your then-girlfriend the day before the bankruptcy. Since the transfer occurred within the 6-month period directly prior to your bankruptcy filing, this could be considered a "preferential transfer," and your then-girlfriend's equity in the car that you gave her could be "clawed back" into the bankruptcy estate. The difficult thing about preferential transfer is that the Trustee doesn't have to show that you committed fraud or had any particular intentions to avoid creditors; but only that the transfer was completed within 6 months of your filing.

To be honest, it's probably best to NOT produce copies of the post-dated checks and such that demonstrate you transferred your interest in the vehicle the day prior to the bankruptcy unless the Trustee specifically demands them. Make the Trustee do the work to subpoena the documents and schedule a Rule 2004 Examination (a bankruptcy deposition).

Please let me know if you have any other questions about this. Thanks.

Under §547(b) of the Bankruptcy Code, which governs Preferential Transfers, a Trustee may avoid any transfer of interest of the debtor's property if all of the following conditions are met:

1) The transfer was for the benefit of a creditor;

2) For an antecedent debt owed before the transfer was made;

3) The debtor was insolvent at the time of the transfer (case law presumes insolvency during the 90 days prior to filing the bankruptcy petition);

4) The transfer was made within 90 days before filing the petition (or one year if the transfer was to an "insider", i.e. family member or business partner);

5) The transfer enables a creditor to receive more than they would have received in a Chapter 7 liquidation if the transfer had not been made.

In view of your answer, can or should my wife file anything to protect those loans she gave me? Or can she do that in the event the trustee wants to take the car?

There are two big problems here from the preferential transfer standpoint that the Trustee would likely object to: 1) Your wife is being treated differently from other unsecured creditors (many of whom will presumably receive nothing or pennies on the dollar), while she would retain a lien on the car worth 100% of what she loaned you. 2) The actual security interest (your wife's lien on the car) was not perfected until a day before you filed. This is a huge problem, as it tends to show that the transaction was NOT either "made in the ordinary course of business" or "made according to ordinary business terms" [which are typically the best defenses to a preferential transfer claim]. A bank or other creditor giving you a secured loan "according to ordinary business terms" would almost certainly demand a lien on the car contemporaneously with the first cash advance in September 2011; they would not be willing to wait six months to obtain the lien, nor would they give you additional advances without a perfected security interest.

At the creditors hearing, should my wife show up or not? No.

Can the trustee ask me for keys to the car at the hearing? No.

Is there any appeal process I can go through if he wants the car? If you dispute the alleged preferential transfer, you might be able to launch a pre-emptive strike. Here's how it would work: your wife could actually file a separate adversary proceeding against YOU to obtain a declaratory judgment to determine the validity, priority, or extent of her lien on your car. This would certainly throw the Trustee for a loop, give you time to more fully explore your possible defenses, and have your attorney brief the complex legal issues involved. PLEASE consult with your attorney before doing this, as it's extremely technical and must be done correctly if you're going to do it.

In view of your answer, can or should my wife file anything to protect those loans she gave me? Or can she do that in the event the trustee wants to take the car?

Sorry, it keeps cutting off part of what I write. Here's the first part of my answer:

Your wife could file a secured Proof of Claim for the value of her alleged lien on the car ($10,000 or so). However, once she files a Proof of Claim, she is consenting to Bankruptcy Court jurisdiction, which could limit her options to do certain things (like potentially file an adversary complaint and/or demand a jury trial). You should consult with a local bankruptcy attorney on the relative advantages and disadvantages of your wife filing a Proof of Claim. On balance, it's probably best for her not to file a Proof of Claim, as she has little to gain and a lot to lose.