Minnesota Bankruptcy Lawyer David Kelly discusses Filing Bankruptcy in Minnesota
I've been practicing law in the western suburbs of Minneapolis for over 37 years. Sometimes that seems like a long time, and other days I feel as if I just started. These days my practice is devoted entirely to counseling folks concerning their financial problems and representing them in Chapter 7 and Chapter 13 bankruptcy.
One thing I don't do is credit repair. When asked about matters concerning credit scores, I like to say "I'm a very good source of unreliable information about that." What I mean is that I hear a lot about it from my clients who often report back to me how they are doing after their bankruptcy is completed, sometimes even years later; but having heard some stories from a few people doesn't qualify me to give any advice.
I spend a lot of time with my clients. I want to be sure we get it right. There are civil and criminal penalties for concealing or providing incorrect information in a bankruptcy care, and my goal is to keep myself and my clients as far away from problems like that as possible.
You can find me in MInnetonka near I-394 and Hopkins crossroad. It's ten or fifteen minutes from downtown Minneapolis. You can see parts of Plymouth, Minnesota, Golden Valley, Minnesota and St. Louis Park, Minnesota from the high ground in front of my building. If you take a look at the map, you can see that most of St. Louis Park is closer to my office than many parts of Minnetonka.
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.
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.
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.
Update December 4, 2014: I’ve removed the video referred to here from my Youtube channel because the info is so outdated. The sad fact is that those audits of Chapter 7 cases are in full swing again, and any body who files a Chapter 7 bankruptcy has to think in terms of being ready to respond to an audit. These audits are conducted by a New York accounting firm – you’d think they were tallying the votes for American Idol. They’re very picky.
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:
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.
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.
I’ve been asked if my office would be open today. The answer to that is yes. I’ve been invited to a corn beef and cabbage lunch, but I have not been able to make it. My office phone, which I had forwarded to my cell phone, started ringing at about 7 am this morning. One caller after another described various scenarios involving being arrested for DWI over this past weekend. I wrote earlier about how a reporter from New Brighton had tipped me off that the police would be out in force this past weekend and today. I guess she got that right. This morning I had so much trouble getting off the phone that I almost missed my first appointment at the office.
So I’m wearing a bright green tie today, but that might be about as far as I take the St. Patrick’s Day thing; except to warn you all that tonight is not the time to take any chances with drinking and driving. No night is, but lots of extra officers will be on duty this evening. What I believe I have learned over the years about nights like this is that some of those officers would rather be partying themselves, or they may be missing an event that they were invited to. A bit of resentment about that can lead them to want to be harsher than they might ordinarily be on an ordinary night. Definitely think in terms of a cab or designated driver.
Based upon how my own phone calls seem to indicate that the party has already started, and considering the snowy weather forecast for the Twin Cities, I fear that by tomorrow morning I will be looking at a local news report of at least one fatal, alcohol-related accident. Let’s pray that no such event takes place.
About Thursday of last week I received a call from a reporter for a weekly newspaper out of New Brighton, MN. I didn’t make a note of the name of the newspaper; and now when I run a Google to find it, I find that there seem to be two of them. The reporter said she was working on an article that they were going to publish in their St. Patrick’s Day edition on the subject of the cost of having a DWI. The topic was coming up because the local police in that area were letting it be known that they would be out in full force over St. Patrick’s Day (Monday, March 17th) and the weekend leading up to it.
The reporter wanted me to run through with her a list of the expenses that a drunk driver can expect to pay as a result of being arrested. What that would come to depends on quite a variety of factors. I said the easiest place to start would be with the case of a first time offender who we presume has a relatively low breath test reading. The reporter indicated that she thought she would limit her article to the first offense, and not even get into what might happen on subsequent offenses.
I indicated that the arrested party could expect, among other things, expenses for the following:
getting the car out of impound,
reinstating the driver’s license,
an alcohol assessment interview,
a meeting of Mother’s Against Drunk Driving,
a fine with surcharge,
perhaps a probation fee,
and of course an attorney’s fee.
When added up, using about the lowest and most optimistic numbers possible, the total came to about $3,000. That number does not include all sorts of additional items one might run in to, such as increased automobile insurance cost. I told the reporter that in my experience, a surprisingly large number of my first time offender clients report to me that their insurance did not go up. The reason for that is apparently that the insurance company never noticed it; or by the time they noticed it, the DWI was really old news.
I usually recommend that my client try to go at least three years without doing a thing that might attract the attention of his or her automobile insurance company. That can be difficult or impossible for many people. I say don’t sell or buy a car, don’t be late on paying the premiums, don’t have an accident or any claims, and don’t change insurance companies. Besides that, it would be good to not move and not add or subtract any drivers.
The most obvious problem with just putting a number, any number, on the cost of a DWI is that this is an item that will be on the person’s record for the rest of their life. How does one put a value on that? So looking back on that phone conversation I wish I had been more careful and said something like: The benefit of not having this on your record is really priceless, and the exact cost is impossible to calculate.
I’m sitting here looking at an email I have received from the National Association of Consumer Bankruptcy Lawyers, of which I am a member. The Association has been pushing for legislation which would allow a bankruptcy court to order modifications in mortgage loans, something which would currently be entirely off limits. The bill is S. 2636, and the section of the bill with the mortgage modification provisions is Title IV. There is fear that before the bill is passed that this section will be removed. Now would be a good time to call or write your US Senator if you would like to see them do something about the current mortgage foreclosure crisis.
You can find the text of the bill here. I’m not sure I fully understand all the language, but it looks as if it would give the bankruptcy court authority to lower interest rates and extend the term of the loan to 30 years. I just met today with a gentleman whose mortgage balloons in less than two years. At that time he may have to just walk away from the house. If the term could be extended under the terms of this bill, the effect would be to save this guy’s house. Links to both of Minnesota’s senators can be found here, including info on how to contact them.
The Minnesota Court of Appeals seems to have moved in the direction of common sense in its January 29th decision in the case of Snyder v. Commissioner of Public Safety. Please understand that in order to be charged with DWI and have your license taken away for that, you don’t have to have been driving. You don’t have to have been anywhere near a road. You only have to have been in “physical control” of a motor vehicle “in the State of Minnesota.”
At one time the “in the State” clause went on to say that you had to be on a roadway or public right of way, but that was deleted years ago. So now you can be in your own driveway, in a field, out on a frozen lake, or stuck in a ditch – it seems to make no difference. But the question of the “where” isn’t what I meant to be blogging about today. I mean here to focus on the “in physical control” part. Previous decisions said that each and every one of the following circumstances counted as being in physical control:
Being able to initiate any movement of the vehicle and being in close proximity to the controls.
Being drunk and found in a parked vehicle where the car might be started again “without too much difficulty.”
Standing at the rear of a car with a flat tire while the motor was running and the key was in the ignition.
Driver completely passed out, slumped over the wheel, by side of the road with the keys in the ignition.
So now we have this new case out of Wright County. It started out with a wedding reception where a fight broke out and someone called the police. When the police arrived they found people in the parking lot walking toward a car. One guy took out his keys, unlocked the door on the driver’s side, opened the door and put his foot inside the car. Then he noticed the fact that he was being approached by a police officer, turned toward the officer, started walking toward the officer and tossed the keys to his wife.
Based on the law as it stood prior to last week, if this guy had called me I would have told him he was out of luck. He had his keys in his hand and his foot in the car. If standing behind the car while it’s running is enough, this must be too. The Wright County judge ruled that yes he was in physical control. To my surprise, and probably the surprise of everybody who has been watching this, the Court of Appeals ruled that he was not in physical control.
The Court of Appeals opinion says that to be in physical control you need more than just the fact that this person could start the car “without too much difficulty.” In addition the Court says that they will require that the person “has or is about to take some action that makes the motor vehicle a source of danger to themselves, to tohers, or to property.” Factors that the court considered were:
Keys were not in the ignition.
Person did not get in the driver’s seat.
Did not start engine.
Did not touch the steering wheel or the gear shift.
While the Court of Appeals is not admitting that they have made some new law here, it seems fairly clear to me that they have. I’m sitting here thinking about a call I received a few months ago from a gentleman who told me that he received a DWI for standing by the side of the road while a tow truck operator was pulling his car out of the ditch. I told him that yes I thought they could legally do that. If I received a call like that this morning, my answer would be quite different.