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.
I’m am on my way to Hollywood. That’s where the National Association of Consumer Bankruptcy Attorneys is having a big three day seminar. I’ll be gone between May 15th and May 20th. I’ll be back in the office on the morning of Wednesday May 21st.
I wish I could say I was going to be on American Idol, but that’s not it. There are things I can learn at this seminar that would be hard to find anywhere else. What it comes down to is that I can’t afford to not go. The law of bankruptcy has been in a hard to track state of flux since the new legislation became effective in late 2005. It seems that every few days a judicial decision turns up that changes the landscape. I need all the help I can get in keeping up with this stuff.
Of course, I am planning on seeing a few sights as well. I’m allowing one day in the trip just for that. Right now I would say that the beach could be a priority.
So email me or leave me a message. I will probably be checking my email. I no longer travel without my laptop. The wireless Internet for the hotel where I’ll be did get a poor review, but I expect I’ll figure it out. I’ll be returning my calls on Wednesday, May 21st.
My email today brought me a notice that the U.S. Trustee’s office is resuming debtor audits as of today. They stopped in January because Congress didn’t fund it.
An audit in this context involves the U.S. Trustee’s office hiring an outside accounting firm to go over the debtor’s records. Previously the policy was that one in 250 cases would randomly be audited. Now the policy is one in a thousand will be audited. That’s a 400% improvement, but I’m still sad to see this stuff starting again.
Since the passage of the “new law” in October of 2005, there have been rules based on level of income about who can file a Chapter 7 Bankruptcy. Unless you are at or below the median income for the State of Minnesota based upon your family size, you can only file a Chapter 7 if you pass the so-called means test. The means test is a whole other topic, which I will have to deal with some other time. For now, however, here’s a video I posted recently on Youtube where I discuss the median income levels for Minnesota by household size.
The numbers are subject to change every few months, but I have them posted on my site on my Chapter 7 page under the subheading of “Qualifying for Chapter 7 in Minnesota.”
Yesterday I got a call from my office-mate and friend Emanuel Serstock. He’s a former Minneapolis Assistant City Attorney, a former Ramsey County Assistant County Attorney, and a former Assistant Hennepin County Public Defender. We call him “Em.”
Em knows that I try to go for a good long walk most days, and that I have my favorite places to do this. In particular, he knows that I like to go to the Westwood Hills Nature Center, which is only about a half mile from our office. After an apparent heart attack last fall, he is under doctor’s orders to walk at least three times a week. When he called, he wanted to know if I would be walking that day and where would I be going. I said that I had been thinking in terms of a swim at my health club, but that I would be honored to walk with him if he was up for it.
An hour later he was at the office in his walking shoes, and we jumped in my Toyota Highlander. I drove the half mile or so to a back door entrance to the Westwood Hills Nature Center. After deciding whether we would take the track in a clockwise or counter-clockwise direction, we were heading down the trail. I had anticipated that he would have trouble keeping up with me, but the reverse was true. He’s a bit taller than me, so his legs are longer. I had been a bit worried about his health, but I’m not anymore. He was robust, vigorous and hard to keep up with.
We found that the ice is finally out and the water is open on the lake. We saw a loon, who was obviously migrating to somewhere further north. We also saw a colorful adult male turkey, which Em said reminded him of certain people he knows.
Em has been a good resource and mentor, helping me with many of my criminal defense cases. Compared to how much help he has given me, I have felt for some time that I owe him something. Going on this walk was an opportunity for me to show him something he had not known about, which I hope to some extent was a down payment on my repayment of my indebtedness to him.
This morning I received an email which purported to come from the federal court in San Diego. It appeared to be a subpoena requiring that I appear in federal court May 9th in San Diego before a grand jury.
It also contained a link which I assume would have downloaded a virus onto my computer.
I called the court in San Diego and they confirmed that it’s a hoax. I have also spoken with a lawyer a the law office that is mentioned on the false document. He tells me all they have done there all morning is sit on the phone answering questions about the email. I lost a little time on it, but it’s really messing them up. So in case you get it, now you know.
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.
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.