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Fritz
Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience:  Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
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On November 4th, 2011 a default judgment was filed against

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On November 4th, 2011 a default judgment was filed against me for ~ $50,000 (Maricopa County case number XXXXX@ http://www.superiorcourt.maricopa.gov/docket/CivilCourtCases/caseInfo.asp?caseNumber=CV2011-013492). Recently I was served with a summons to appear for a Debtors Exam in Maricopa county. I failed to appear due to a previous work commitment. A civil arrest warrant was issued for my arrest. I know I can pay the $250 filing and $26 bond handling fees at the Clerk of Court office and get a new court date. I AM concerned however of being arrested and processed and ‘held’ up overnight in Phoenix detention. Is this a possibility? How likely is it?

I have delayed filing Ch. 7 – of which I pass the means test – for some time now. I feel because of the Debtors Exam (DE) and the arrest warrant I must file chapter 7 immediately. Is this concern valid? What is the outcome of a DE? How long will it take? Can I put off filing BK for several months even with this DE and its outcome?

The motivation for these questions is because I have assets. I own a home worth $90,000 which is paid off (owned since 8/2008 & resident for over 2 years in AZ), a trailer worth ~ $600, an ATV worth ~ $2,000 and an automobile worth ~ $12,000. I know the home is exempt up to $150,000 and the auto up to $5,000. I would like to convert the non-exempt portions of the above assets to exempt assets before filing chapter 7. If I convert these assets how long do I need to wait before filing the chapter 7 so the trustee will not attempt to recover the assets?

I have a buyer for the ATV and Trailer right now. I can sell these two items and use the money for dental work and medical tests I have been putting off for several years. As I understand it this is an acceptable and non-challengeable method of conversion. Do you agree?

For the automobile I have examined several options. The one that yields the most money back in my pocket (~ 12,000) is to sell the vehicle as a private owner. This will take time. Another option is to trade the vehicle in at a dealership for ~ (8,000) and get a vehicle worth $5,000 and take the remaining cash. This method takes one week but reduces my cash in hand by over 50%. Another option I have is to finance the car through a third party for ~$7,000 cash back with a promissory note and reaffirmation of the debt at the time of bankruptcy. This method is immediate and my most preferred. Of these options which do you think will reduce the likelihood of an unfavorable view by the trustee or judge? How long will I need to wait after doing each of these to file Ch 7? As I understand it – I do not need to wait at all – but realistically what is the time frame?

In any of these scenarios I would take the resulting cash and purchase a washer and dryer, refrigerator, hardwood floors for my home and make other improvements to the exterior and interior including painting. An alternative idea I had was to return to college and earn a Master’s degree in order to become employed. I don’t think tuition is exempt however. Is it? What are your thoughts on the exemption strategy for the excess cash?

I do not have any retirement funds so I don’t believe I can use the resulting cash to start a retirement fund. Can I? Would that be another possible conversion strategy?
The reason I am in this situation of BK is due to a $6 million real estate portfolio I had go south in 2007. Several partners took their money and ran. I was left holding the bag, stress and creditors. Poor decisions, poor choice of partners. I need to let go of all this and move on.

What is a realistic expectation of cost and time frame to discharge for this scenario?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Fritz replied 2 years ago.

Fritz :

Hi, I'd like to help you with your bankruptcy questions today.

Fritz :
Fritz :

Why were you unable to attend the Debtor's Exam in Maricopa County scheduled for 8/1/12?

Fritz :

You (or your attorney, if you have one) should call opposing counsel to ask to reschedule the Debtor's Examination as soon as possible. Most attorneys will be willing to do this. After the Debtor's Examination is over, it is important that the order for the arrest warrant be withdrawn. After the hearing, ask the judge or magistrate to issue an order to withdraw the warrant.


 

Fritz :

In the interim, there is a possibility that you would be arrested and brought to jail if you were stopped by the police for some reason (i.e. speeding).

Fritz :
Fritz :

The Debtor's Examination is essentially a recitation of your assets that may be seized by the judgment creditor. You MUST disclose all assets during this examination.


 

Fritz :

While you may be able to file bankruptcy immediately and stay the Debtor's Examination, it might make more practical sense as a risk-averse individual to participate in the Debtor's Examination and then file bankruptcy, as it's unlikely that a police officer hauling you off to jail for what looks like a valid warrant would understand bankruptcy law.


 

Fritz :

If all of your unsecured debts (including this default judgment) will be discharged in a Chapter 7 bankruptcy, there's really no reason to fear appearing at a Debtor's Examination unless you wait an extended period of time to file your bankruptcy.

Fritz :

I would recommend consulting a local attorney before liquidating any assets in anticipation of filing a Chapter 7 bankruptcy, as the Trustee might be able to recover sale proceeds (certainly on any major sales within 90 days of filing and possibly up to as long as 2 years prior to filing - you need to seek specific legal advice as to the character of your particular assets and to whom you plan to sell them).


 

Fritz :

Since you have a valid state court judgment entered against you and intend to file bankruptcy shortly, I would STRONGLY recommend consulting a local attorney before making ANY major financial decisions at this point (i.e. selling, refinancing, taking out a loan, home remodeling, incurring student loans, ANYTHING like this).


 

Fritz :

A lot of your "conversion strategies" may constitute bankruptcy fraud in the eyes of a trustee and/or bankruptcy judge, so I would again suggest that you consult with a local bankruptcy attorney to help you understand exactly what's allowed prior to filing


.

Fritz :

ROUGH ballpark estimates - $1,500 - $2,000 for the Chapter 7 (plus another $300 for the filing fee); a Chapter 7 case nationally averages about 4-6 months, your jurisdiction may differ slightly


 

Fritz :

Your individual bankruptcy may cost more or less than this figure, as the price will vary depending on the complexity of your case.


 

Fritz :

Good luck!


 

Customer: replied 2 years ago.
Thank you Fritz for your reply.

I followed your advice and called the opposing counsel. He said he would be willing to conduct the debtor's exam informally in his office and then file a motion with the court to quash the arrest warrant. Does this sound on the up and up? Can he do this?

Will cooperating with him on this matter cause problems for myself (or my attorney should I retain one) regarding the CH. 7 filing?

I have contacted one attorney but will have to wait until next week after the scheduled informal debtors exam to consult with her.

Should I let the opposing counsel know my intent to file Ch. 7 or should I keep that from him? Will divulging it cause any problems?
Expert:  Fritz replied 2 years ago.

I followed your advice and called the opposing counsel. He said he would be willing to conduct the debtor's exam informally in his office and then file a motion with the court to quash the arrest warrant. Does this sound on the up and up? Can he do this?

Yes, but it would be a good idea to get something in writing from him to the effect that he will, in fact, file a motion with the court to quash the arrest warrant once you appear for the Debtor's Examination.

Will cooperating with him on this matter cause problems for myself (or my attorney should I retain one) regarding the CH. 7 filing?

No, as long as you're honest in your disclosure of assets. If you attempt to hide (or fail to disclose) any assets during the Debtor's Examination and/or the subsequent Chapter 7 proceeding, all bets are off.



I have contacted one attorney but will have to wait until next week after the scheduled informal debtors exam to consult with her.

Should I let the opposing counsel know my intent to file Ch. 7 or should I keep that from him? Will divulging it cause any problems?

You probably wouldn't want to mention it unless he asks you point-blank whether you intend to file. I don't know that it would necessarily cause problems per se, but it might make opposing counsel ask more detailed questions about your assets than might typically be asked.

Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience: Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
Fritz and 4 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.
Thank you Fritz - Another follow up question. Will my disclosure of assets to the Debtor's Exam Attorney have any impact on my CH 7 filing. I have an ATV and trailer I would like to sell for payment of the BK attorney fees. If I disclose to him that I have these and then sell them in a week or so will that cause a problem since I have told him I own them today but not in a week or two. Should I sell them today or tomorrow and then tell him I do not own them. Of course I still have to disclose I sold them and received the money - so maybe I have answered my own question. This is all so frustrating. Thanks for your help.
Expert:  Fritz replied 2 years ago.

I would STRONGLY recommend you consult with a local bankruptcy attorney before selling ANY assets prior to filing your Chapter 7 bankruptcy. You should disclose these assets in the Debtor's Examination, as you are required to do so by law. You may be able to use bankruptcy exemptions to protect some or all of these assets in your bankruptcy, whereas if you sell them now, the likely outcome is that most or all of the cash you receive will be turned over to the bankruptcy trustee. Selling your assets now may not be illegal per se (so long as it's properly disclosed in the Debtor's Examination and Chapter 7 bankruptcy), but your bankruptcy filing WILL receive special scrutiny from the Chapter 7 trustee (it has "bad optics," so to speak).

Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience: Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
Fritz and 4 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.
Thanks Fritz - I will be retaining counsel for the BK - No one can talk to me until next week so I am just trying to make sure I don't screw anything up worse. Thanks again.

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Fritz
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Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases