Wednesday, January 28, 2009, 10:16 AM
Posted by Administrator
Clients are always looking for the good choice: The million dollar offer (on a case worth 20% of that); Don't pay bills but keep your credit rating; Write a threatening letter and she will send back the engagement ring along with a check for the $10,000 that you lent her to send to her brother in Brazil; He/She will agree to pay the $5,000 a month in trial, no risk, just ask and you get it. But, usually...almost this business there are no good choices and you've just got to pick the choice that is least bad: Run the risk of going to trial and getting nothing for the chance for the big money...or, take the offer; Sue your ex-fiance and go through the emotion of seeing and dealing with him/her again...or write off the ring and the loan; Forget about the alimony and move on with your life or go to trial and accept that the judge is going to hear that you were a coke addict for half of your marriage.

But, typically, clients can't decide because they are looking and looking and looking for the good choice. There must be a good choice. Right? You tell them the three choices, A,B & C and they keep looking for D. I truly and deeply wish there was a D. I would sleep better at night. I would not be laying I often do...looking for D. (I do note that sometimes there is a D and the client or I come up with it but, back to reality...) Usually there is not D.)

So, here is the story I tell to try and get clients to understand that there is no D and to pick A,B or C so that we can move on and make progress and resolve things:

About 8 years ago, I had to get a surgery on my nose for skin cancer (not melanoma and not basal cell, the other kind) and, after the surgery there was a deep ditch on the right side. Anticipating the deep ditch, the skin cancer surgeon was scheduled for the morning and, in the afternoon, it was off to the plastic surgeon.

Around 1:30PM, I sat in a barber type chair in the plastic surgeon's office and he said:
"You have three choices: I could take some skin from in back of your ear and graft it onto your nose; We could just leave the whole thing alone and it will heal...but there would be a deep depression where the cancer was; Or I could cut a piece of skin from above the surgery site leaving the bottom part of the skin attached and rotate it down to cover the hole."

The good thing about the last option, he said, was that it would leave some capillaries attached to the flapped skin and might heal faster and better on account of the uninterrupted blood flow.

I said "I know this one, I have three bad choices and I have to pick the one that is least bad." I picked the flap.

By the way, it didn't work as well as I'd hoped.

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Wednesday, January 28, 2009, 09:50 AM
Posted by Administrator
If you had to buy PMI on your mortgage (typically, because you put less than 20% down on the home purchase), you have the following additional problems as housing prices drop and trouble with paying the mortgage(s) increase:

I) The mortgage company is going to be made whole (or near to whole) by the PMI carrier when, after foreclosure, the house is sold for less than what is owed. If, at the time you financed, you were forced to buy PMI, you have been paying the insurance premium for this and now your mortgage company isn't going to want to negotiate with you because, in the long run, the PMI will pay for any loss (when the house sells at the foreclosure sale for less than you owe). So, PMI=no deals on modifications or short sales.

II) Though historically in Palm Beach County (and history is always subject to change), there have been few mortgage companies that get judgments against homeowners for a deficiency in what is owed after a foreclosure and sale, PMI companies obligated to pay mortagees the difference are going to sue homeowners for what they are out-of-pocket.

Bankruptcy (if you qualify) will solve the problem but remember to get the name and address of the PMI carrier and list it in the Bankruptcy Petition.
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Friday, January 23, 2009, 09:00 AM
Posted by Administrator
Filing bankruptcy (there are a few exceptions) results in an automatic stay aainst any creditors taking collection action against you, phoning you, harassing you, suing you, continiung with lawsuits already filed, garnishing your wages........without first going to court and getting the Bankruptcy Judge's permission. Except in the case of, for example, mortgage forecloses (on a house not being paid for) or the repossession of a car (that you aren't paying for), creditors don't even ask for permission to proceed against you, they just fold up their tent and go home.

But, before you file bankruptcy, those unpaid creditors do have people (both Americans and people working for outsourcing firms in third world countrys) phone up and ask why you haven't paid. Here is what to do:

1) Don't talk to them. If you talk to them, they may perceive that you feel guilty about not paying and that you are on the verge of borrowing from your mother, brother or home equity line of credit to pay them. This will encourage them to keep calling back until they guilt you into paying.
2) If you find yourself on the phone with a collection agent say:
"I have no money. I'm never going to pay you. Have a nice day" and hang up. If you show no fear of not paying, the collector will be more likely to spend time beating up people who do.
3) Never, ever, ever say that you are going to pay something....they will beat you up for more. Never, ever, ever say that you are going to take the $500 you have to pay your credit cards and divide the money up between all of your cards. If you say this, they will know that you have money and beat you up to try to get you to pay all of it to them.

Remember, collection agents don't get to keep what you pay. They just want to close your file and move on. They can close your file if:
A) You pay.
B) You file bankruptcy.
C) You die.
They will love you just the same whether they get to close your file for reason A, B or C...though try to avoid reason C.

Be fearless in the face of debt you are unable to pay (as Truman said "The only thing we have to fear is fear itself"). As long as you have food and a place to sleep and a few bucks in your pocket, you're good. Paying your credit cards (if you can't afford to) won't make your life any better. It isn't a moral issue. The credit card companies won't go out of business just because you don't pay. This is a capitalist society and, to make it work, sometimes people (and businesses) need a fresh start. Your creditors knew that some people weren't going to pay when they made their loans. That is why interest rates are as high as they are: they are insuring themselves against the losses they knew they would incur. You paid the high you paid for the creditor's insurance. There should be no guilt if you don't pay because you can't pay.

Remember though...don't pay back family members when you aren't paying back other creditors. This will cause problems down the line. You can pay them back later...just don't pay them back now...if you go bankrupt, they won't get to keep the money.

But, back to bill collectors: You didn't ask them to call; you have little in common with them; and you don't want them to call back, so, don't talk to them. Get rid of your answering maching and get a caller ID. You don't need an answering machine. You know your mother's number and you will see her number if she calls and call her back. You don't need to be listening to annoying messages from collectors.

Yes, I know there will be a great temptation to assume that all collectors now are from India and to ask them whether they saw the movie Slumdog Millionaire and whether it is an accurate depiction of life there. But, not all collectors are from India...some are from Sri Lanka and what do they know about Mumbai?
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Wednesday, January 21, 2009, 12:08 PM
Posted by Administrator
Letters from lawyers solve problems and get results.........r a r e l y. But, sometimes. For the most part, letters from lawyers are thrown in the trash.

If you don't pay the money, move out of the apartment, stop competing with your former employer, stop calling your former employee bad names when new, prospective employers call you will get sued...the lawyer's letter says. But, will you?

I don't like writing letters because my name is on the line. I write that my client will sue you if you don't do/stop doing what I decree. There are bad things about this from my perspective:

1) It isn't nice to threaten. Lawyers sometimes can't be nice but we want to be nice and we want to be paid well when we have to be rude, abrasive or obnoxious. There isn't much money in writing the lawyer letter.

2) I have threatened that my client will sue you if you ignore the letter. But, what if the client changes his/her mind? What if they don't want to spend the money to sue? My threat will be an empty threat and you will tell all of your friends to ignore letters from lawyers and, especially, that guy Duhl. He is just full of hot air.

Sometimes, it is helpful to write a letter just to see if the other side wants to give you their version of the facts:

"I am writing for the purpose of investigating the facts surrounding an incident where you, from what I have heard, told my client's prospective employer that she stole from you. This statement may be slanderous but, before proceeding, I want to make sure that the facts I have are accurate. Please provide me with your knowledge of what happened during the conversation in question within ten days or I will be forced to conclude that what I have been told is accurate and we will proceed accordingly."

This may put a scare into the other side without the letter writing lawyer having to threaten the lawsuit that may not come to pass.

Sometimes, you can mention bigger trouble if the other side doesn't do what you want:

"As you are aware, the engagement ring that you received from my client was a gift with a condition subsequent. The condition subsequent was marriage. Since you broke off the engagement, the condition subsequent was not fulfilled, the ring is not your ring and it must be returned.

Florida law provides that retaining property that is not yours may be civil theft and that damages for civil theft are three times actual damages plus attorney's fees and costs.

Please contact this office immediately regarding return of the ring. If we do not hear from you in ten days, we will conclude that it is your intention to keep the ring and we will proceed accordingly."

Now, if you don't return the $5,000 ring, you may owe $15,000 plus your ex-fiance's attorney's fees. It is easy to say "no" if your choice is returning a $5,000 ring or being sued for $5,000. Wait until you are sued...maybe you won't be. It is a little harder to look at maybe having to pay $15,000+ and all you get is a piece of ancient rock from Zales.

Lawyers letters are maybe worth something if they can legitimately contain a big downside if you don't comply or if they solicit information....where providing the information may make you uncomfortable or have you thinking that you did something wrong and trouble is about to follow.

Otherwise, why not throw the letter in the garbage?

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Friday, December 26, 2008, 04:35 PM
Posted by Administrator
One day probably 20 years ago, I went with my (then) wife to the Palm Beach Mall (the one on Palm Beach Lakes Blvd. that looks now like it is due to shut down) and stood around while she bought shoes. There was a man with a pushcart outside the shoe store. On his cart were stacks of VCR tapes which, based on the cart's signage, were instructional videos on credit repair.

Having time on my hands, I walked over to the man with the cart and said, more or less: "I am a lawyer and I would like to know how people can repair credit but I do not want to pay money for your VCR tape." This is what he told me.

"You need to send a letter to each of the credit reporting agencies (note: that would be TRW, Equifax and Experion) detailing each entry you dispute and telling them that they need to remove it from your credit. They then have 30 days to verify the entry or they have to take it off your credit. If they verify the entry just send out another letter saying the same thing and, eventually, they won't get a response and they will take the bad entry off your credit."

I believe that many people have successfully used this method (I do not know if any of them bought the VCR...I do not know whether their letters to the credit agencies were truthful or just something like "This is wrong, I never made a payment late"). And, all of this could end up with having no credit entries at all....but I have not heard that complaint.

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Tuesday, December 9, 2008, 08:58 AM
Posted by Administrator
Lawyers are a pretty honest bunch, I think, and nobody wants to lose their ticket (their license to practice law). So, it is awkward when potential clients come in and ask (in a divorce case or a bankruptcy or after a money judgment gets entered---where the client's assets are an issue) "Can I just give my jewelry to my mother?" No, you can't. The jewelry will still be your jewelry because you don't really intend for your mother to own it (and there is another, similar, answer if you say you really do want your mother to own it). And, if you give the jewelry to your mother because you want to hide it from creditors, or your soon-to-be-ex spouse, or the other side of a case, you probably are not about to help your case much. Will the transfer to your mother lead you to lie under oath? Is the end result of "giving" the jewelry to your mother going to end up up being a crime? (Maybe the jewelry isn't worth as much as you think and the whole issue isn't worth agonizing about. Certainly, there is a different solution to the problem.)

I have written before about the difference between old crimes......committed before the client sees the lawyer (totally confidential) and new crimes......crimes the lawyer knows you are about to commit (most commonly, perjury...and totally not confidential).

New crimes....for example, when you tell the lawyer you have $100,000 in the bank but are about to swear that you have only $1...aren't covered by the priviledge. And it makes sense, the lawyer shouldn't be involved in the client's plan to defraud the court or the party on the other side. We aren't going to tell you how to hide your jewelry from creditors and we aren't going to help you put in place your plan to be a least not knowingly. The problem is usually easily solved, the client gets reminded that the lawyer can't participate, that he/she will get caught and sent to jail, and the client gives up the idea.

The bigger problem is that some clients tell lies or forget things and the lawyer finds out later. A few months ago, I went to a "341 Meeting in a Bankruptcy". One of the questions in the bankruptcy petition, under oath, is whether any property was transferred (bought, sold, traded) in the past year. My client's answer to the question was "no". At the Meeting, the Trustee asked whether my client had owned property in the past year. His answer was "yes", he had a hourse and he sold it. The Trustee looked at me.......I sank down in my chair. I should have caught this when we did the Petition...I should have sensed there was a house...I should have smelled the house. I have been doing this for 25 years and there is no excuse. I am supposed to catch this stuff.

Thanks to this crappy market, the client's house had been sold without realizing one penny for him, so, no was obvious he had just forgotten and that he hadn't intended to lie or defraud anyone....except that I felt stupid. But, how about a client who said he had $1 in the bank but really had $100,000 and the lawyer finds out after the $1 had been sworn to? Here is what we have to do:

1) Tell the client that they have to advise the court of the mis-statement and
2) Advise the client that if he/she does not disclose the mis-statement that (as the lawyer from the Bar Ethics Hotline told me not too long ago) the lawyers obligation of honesty to the court "tumps" the client's priviledge.

In a civil case, the lawyer is obligated to rat out the client. And, if the lawyer doesn't rat out the client he/she is in violation of the ethical rules and, in addition, will probably be deemed to have joined up with the client's conspiracy to defraud the court and/or the other party. This would be criminal and the client and the lawyer can go off to jail together.

I wrote previously about how this applies to criminal cases. It is a little different. It is rare for a criminal defendant...especially in a serious admit to the lawyer that they did it. Criminals tend to be smarter than we think and they know that as long as they claim innocence, their lawyer will work day and night to make their charges go away. No innocent man or woman should have to spend one day in jail. For defense laywer, it is a moral issue.

On the other hand, once they admit they are guilty, human nature takes over and it is not the moral issue for their lawyer that is once was. The lawyer will still try real hard, but now there is something missing: innocence. I remember years ago (not my case)...a young man of about 18 was charged with stabbing his girlfriend to death and leaving her in her upstairs apartment lying in a pool of blood. He swore to his lawyers he was not guilty and they worked day and night to save him.

One day, he changed his story and admitted he stabbed her. They pled the case out within the week. Did it plead out so quickly because the lawyers lost their spark, because they no longer feared long, sleepless nights regretting that they didn't do all they could to get this guy out of jail? Who knows? Still, I understand why criminal defendants (almost) never admit their guilty (and, always keep in mind: MANY REALLY AGREN'T GUILTY).

Note: My only link to the murder case came one Saturday morning when I was at the Gun Club Road jail seeing clients. I wandered throug the court room at the jail to see what was a going on (Saturday morning first appearances...whoever was arrested the night before) and there was the murderer's other girlfriend. She had been arrested for slipping him marijuana during a visit at the jail. I told the judge that I knew her (which I did) and that she was a nice, local girl....and she got released from jail to await her trial...probably nothing to do with what I said.
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Friday, December 5, 2008, 10:08 PM
Posted by Administrator
There are generally three ways for lawyers to calculate fees:

1) Hourly. This recognizes that for many kinds of cases, litigation particularly, it is impossible to figure out in advance how much work will go into resolving the case. Will it go to trial? Will it settle at court ordered mediation? Or before? Is the other party and/or the lawyer reasonable and eager to resolve things or crazy-nut-interested mainly in making the other side's life a living hell. How much does the other side have to spend on fees? How interested in the other lawyer in resolving things vs. running up a big fee to make his or her next yacht payment?

2) Contingency. The lawyer gets a piece of the action if there is a recovery. If there isn't a recovery, the lawyer doesn't get any fee at all and probably doesn't get paid back for his or her out of pocket costs. Lawyers like contingency fee cases if:
a) The other side is clearly liable for damages to his/her client.
b) There is money to pay for the or a deep pocket on the other side.
Clients like contingency cases if:
a) The client doesn't have money to pay an hourly fee, or,
b) The client wants the lawyer to take the risk of losing the case.

Very few cases except for injury cases and big money collection cases are handled on a contingency basis. Almost all injury cases are handed on a contingency basis ("no recovery, no fee").

In Florida, there is a standard contract the Florida Bar requires that clients sign and a Statement Of Client's Rights that the Bar also requires. This says, among other things, that you have a few days to fire your lawyer without having to pay the lawyer anything (you have a right to fire your lawyer any time you want but they will probably be entitled to a fee for work they've done) and that you have right to negotiate the percentage of the recovery the lawyer will get as a fee (yes, you can try to negotiate the percentage of the lawyer's fee).

For lawyers, the perfect case is, for example, an auto accident cases with damages worth, say, $150,000 and policy limits (the most an insurance company is obligated to pay) of, say, $100,000. The insurance company will pay the $100,000 quickly and without trouble in exchange for a Release from the injured client to the insured. The lawyer will explain to the client that the smart thing to do is take the $100,000. The lawyer will get a fee of between $33,000 and $40,000 (depending primarily on whether a lawsuit was filed) for minimal work. On the other hand, if the lawyer isn't advertising on TV, the lawyer isn't getting these csaes.

Note that contingency fees are illegal in criminal cases and divorce cases...something about lawyers being tempted to cheat in these kinds of cases if their compensation is tied to the result (e.g. the lawyer only gets paid for a "not guilty" verdict).

3) Flat Fee. If the lawyer can make a reasonable guess on how many hours it is going to take to do the work, the lawyer may take the case for a flat fee. The fee won't change with the amount of work the lawyer does. Flat fees are common for Wills, Trusts, criminal cases, simple divorces (no property, no kids, short term marriage), name changes, and bankruptcies. But, you may be able to negotiate a flat fee for other types of cases. For example, if you are looking for a lawyer for a divorce case, your lawyer might know the other lawyer and might have had similar cases with the other lawyer. This makes it (somewhat) easier to figure with some certainty how much time your divorce will take. Multiply the time by the hourly rate...add in a fudge factor and there is the fee. Flat fees insulate you from the possibility of a huge bill if your case gets complicated. Flat fees are the rule in criminal cases where you are paying your lawyer as much for what he or she knows and who he or she knows as you are for the time the lawyer puts in. A lot of what lawyers do in criminal cases is spend their goodwill and goodwill does not come cheap.

IV) THE OTHER SIDE PAYS Okay, there are at least four ways that lawyers charge fees. There are some kinds of cases where the other side pays the fee most of the time.

Generally, in Florida, you pay your own fees, win or lose, BUT: If the other side makes a frivolous claim against you, they may end up having to pay your fees. If you are involved in a divorce case, your spouse may have to pay most or all of your fees if he or she has a much better ability to pay fees than you do. There are ways to make an offer in the course of a civil lawsuit that will result in getting a judgment for fees against the other side if, after a trial, they don't come close enough to matching your offer. Contracts usually provide for the defaulting party to pay the other side's fees. Credit card agreement provide that you have to pay the company's attorney's fees if you don't pay your bill. Same thing for mortgages and car loans.

AND, there are some laws that are designed to encourage lawyers to file lawsuits by providing that the lawyers will get fees from the company they sue if the lawsuit succeeds. Lawyers can get their fees for suing for unpaid wages and, a big thing now, for suing companies that fail to pay workers time and a half for overtime. If your company has failed to pay you overtime, this could be worth pursuing. My friend Mark Cullen just got paid a truckload of money for attorney's fees for representing dozens of workers in an overtime case. I'm sure he would be willing to consider taking on similar cases.

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Tuesday, December 2, 2008, 11:46 AM
Posted by Administrator
In Florida, if you are involved in an accident and you are at fault and you don't have insurance or your insurance is not sufficient to cover the claims against you, your driver license will be suspended under the Financial Responsibility Act. You won't be able to get your license back until you pay what is owed; make arrangements to pay what is owed over time that are acceptable to the other side; or file bankruptcy.

But, if you've filed bankruptcy within the past several years, you probably won't be able to file again.


AND BANKRTUPCY WILL MAKE YOUR CAR INSURANCE RATES GO UP (SO DOES BAD CREDIT). So, this is a downside of bankruptcy (but, probably no worse then if you have bad credit and don't file bankruptcy)...increased insurance premiums and a need to buy a high limit policy so an accident doesn't result in the suspension of your driver license.

Be aware that while personal injury lawyers generally have no interest in cases against people with no insurance and will settle cheap if there is little insurance, INSURANCE COMPANIES WHICH PAY OUT TO THEIR INSURED FOR COLLISION DAMAGE OR UNDER THE UNINSURED MOTORIST PORTION OF THEIR POLICY WILL SUE TO GET THEIR MONEY BACK FROM THE AT FAULT DRIVER WITHOUT REGARD TO INSURANCE. THEY'VE GOT LAWYERS WHO WILL WORK CHEAP AND THEY WILL SUE YOU EVEN IF YOU'VE GOT NOTHING. THEY KNOW THAT YOUR DRIVER LICENSE WILL BE SUSPENDED IF YOU DON'T, you'll probably make arrangemtns to pay (how does $200 per month for 20 years sound?).

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Tuesday, December 2, 2008, 10:38 AM
Posted by Administrator
There are several bankruptcy "chapters".

-Chapter 7.....FOR PEOPLE....Bankruptcy for people whose household income is less than the median (for Florida) and some families that earn more but have, for example, a big mortgage they are paying on. Banktupcy for people who have cars with car loans (or who drive 2002 Buicks); whose homes are not extravagantly furnished; who maybe have an IRA or a 401K that they need for retirement.

-Chapter 7....FOR CORPORATIONS...that need to liquidate in an orderly fashion. For example, a furniture store full of furniture or a clothing store full of clothing. Probably not worth the trouble for an asset-less business that is shutting down but consider a personal Chapter 7 (or 13) in regard to personal liability for the owner.

-Chapter 12......FAMILY FARMERS...If you are a family farmer and are considering filing bankruptcy, call and I will tell you who to go to (here in Palm Beach County there the best of my or two lawyers who do this).

-Chapter 11.....REOGANIZATION FOR CORPORATIONS AND RICH PEOPLE...Again, I'll tell you who I like for this but I won't do it. Chapter 11 is, I think it is fair to say, costly.

-Chapter 13....PAYMENT PLAN BANKRUPTCY FOR MOST PEOPLE...who earn too much money to file a Chapter 7, have a lot of non-exempt assets they want to keep, and/or have a secured loan (e.g. mortgage) that they are behind on and need time to get current and/or have a 1st mortgage that eats up all of their home equity and a 2nd or 3rd mortgage on top of that. Chapter 13s require payments, usually for 60 months (though the payments are usually based more on income that what you owe). There are lawyers who enjoy this type of and I'll tell you who likes it best. I don't enjoy it.



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Monday, November 10, 2008, 10:43 PM
Posted by Administrator
The couple of times, so far, I have written about actual clients, I have changed names, dates, and places so that while I am able to illustrate my point there is no real chance that anybody would know who I am using to illustrate it. I don't think the client him or herself would know. If you think a client or a situation involving a client is recognizable in any way, let me know and I will delete the entry.

What I know from my clients, I am obigated to take to the grave, telling nobody (see entry below regarding lawyer/client priviledge for details). Mostly, this blog has nothing to do with clients, past or present. For example, in the following entry, I mention someone named Joe Trivisone. Joe never has been my client. I knew him 30 years ago. I always liked and respected Joe so I don't see why I should make up a name. I Emailed him before writing the entry and he did not object to my using his name.

So, to my clients, be assured that neither your name, your identity or your story will appear in this blog...unless you give me a good idea and I put it in and, with your permission, attribute the idea to you.
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Monday, November 10, 2008, 03:40 PM
Posted by Administrator
Lately, not surprisingly, I am seeing a lot of people about bankruptcy.

So, let me review the benefits of bankruptcy. Listing the benefits does not mean there isn't a downside....there is. Listing the benefits does not mean that everyone can file and enjoy the benefits....not everyone can. Still, here are some (possible/probable) benefits: (DISCLAIMER: THE BAR MAKES US TELL YOU THAT THERE ARE NO GUARANTEES, NO PROMISES, RESULTS DEPEND ON A VARIETY OF FACTORS AND WILL DIFFER FROM PERSON TO PERSON. The only way I know of to determine what you can expect is to see a lawyer and lay it all out.)

-Gets rid of credit card debt.
-Gets rid of medical and hospital bill debt.
-Gets rid of debt arising from deficiencies remaining after foreclosures and repossessions.
-Stops lawsuits, including foreclosures.
-Results in an immediate and continuing order that creditors not contact you, bother you or harass you in attempting to collect a debt.
-Eliminates the tax liability that arises, sometimes, from having creditors forgive debt...short sales of other than primary residence, write downs, etc.
-Is (relatively and most of the time) painless.
-Will help you sleep at night, relieve some anxiety and make life better.
-You can keep you house (if you are on time with payments and continue to pay).*
-Same with your car (if you have little or no equity).

*As I have written in previous entries, the issue of keeping your "underwater", in arrears primary residence by having your mortgage re-written on more favorable terms is evolving day to day. If you have recently been served with a foreclosure lawsuit, hire a lawyer to defend it for you and be optimistic that a solution is around the corner.

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Saturday, November 8, 2008, 09:20 PM
Posted by Administrator
OK, so you've saved six months of paystubs (the lawyer needs to review all of your "payment advices" which, for self employed people means evidency of everything you've been for food at Publix with a debit card linked to your bank account, if that is where your business money goes, then that portion of your bank statement is probably a payment advice) and from the paystubs (and payment advices) your household income gets computed and that determines whether you can file a Chapter 7. Bored yet?

Oh, and pay stubs (payment advices) for the sixty days before you file bankruptcy have to be filed with the bankruptcy petition.

And, before you file, you've got to get a certificate evidencing completion of a pre-filing session in finance (my clients do this in 40 minutes over the phone with a company I hire for them and the certificate is Emailed to me). The certificate and a statement signed by you get filed with the Petition. Bored yet?

The Petition itself...about 30 pages...gets printed out and reviewed by you and signed but it never makes it out of the lawyer's file. Instead, the Petition, along with scanned in pay stubs, scanned in certificate, scanned in statement that you took the course, and scanned in certification that you know the Petition is being electronically filed is sent electronically to Bankruptcy Court. After it is sent over, the filing fee is paid by (the lawyer's) credit card. The paperwork is retained in the lawyer's file in case he or she is audited to make sure that you really did sign off on everything. Bored yet?

About 30 to 40 days after you file, you've got to go to a "Meeting of Creditors". As I have written previously, with few exceptions, creditors don't come. So, you and the lawyer and the court appointed Trustee sit in a room and the Trustee asks questions:

"Did you read the Petition your lawyer prepared before you signed it?"
"Did you list all of your creditors and all of your assets?"

And, then some questions specific to you:

"When did you buy your house?"
"How did you come up with the value for your boat?"
"What did you do with the money from the house you sold last year?"
"Why did you pay your mother back $750 last March?"

This is when the Trustee has a look at you and your Petition and decides whether you are being honest and forthcoming or whether you are hiding something. If you have a $100 haircut, you will get asked more questions. If you look like you had a $100 haircut but that you are trying to look like someone who spends $10 at Supercuts, you will get asked even more questions. If you live on a street with huge houses, the Trustee will want to send someone to visit your house if you claim to have just a couch and two TVs.

The Trustee does not want your furniture. The Trustee does not want your junk car from your backyard. But, if you have more assets than you are allowed to keep, the Meeting Of Creditors is a good time to start making arrangments to pay the Trustee some money in exchange for keeping what you've got.

The Trustees job is to gather up non-exempt assets, take them, pay what they can to your creditors on a pro-rata basis. As part of this, the Trustee can make some money. If there are no assets, the Truste is paid a minimal flat fee for each case.

Most people don't have more than Florida law allows them to keep. If you do, don't hide it and it will all work out.

Back when Bankruptcy Court was in the Federal Courthouse between Banyon and Clematis, I got on an elevator with Bob Adler, a Federal Public Defender who I knew from years before at the 15th Judicial Circuit (state) Public Defender's Office where we both used to work. He asked what I was doing there and I told him "Some bankruptcy thing." He told me that he had a lot of bankruptcy cases. Since he was in the criminal defense end of things, this meant that the FBI was arresting bankruptcy debtors and that he was landing up defending them. I told him that I was surprised there were a lot of cases. None of my clients have ever had a problem.

Then, we talked about this case that I had heard something about. Here goes: A man files bankruptcy (the "debtor") and neglects (I use the word "neglect" but I am confident it was more than that...that it was an intentional omission) to list his Rolex watch as an asset. Somehow, the Trustee found out about the watch (someone called and told him? I don't really know how....) and the debtor finds out that the Trustee knows and goes to his office and hands him the Rolex. They agree that there are no hard feelings and that is that. Except that when the Trustee initially found out about the Rolex, he called the U.S. Trustee's Office and the U.S. Trustee's Office notified the FBI. So, even though there were no hard feelings between the debtor and the Trustee, the debtor got arrested and prosecuted for bankruptcy fraud.

And I don't mention this story or make a big deal out of being honest because there is a great risk that nice people filing for bankruptcy are going to land up being investigated by the FBI...they won't be. But, don't come in and ask the lawyer how to hide your jewelry...don't think the lawyer isn't smart enough to know when you are trying to mislead him or her about your assets or your income...don't think that you and the lawyer are going to enter into some kind of conspiracy to cheat your creditors and fool the court. There are plenty of honest people out there who can file an honest bankruptcy petition and have no problems at all going through the process. We can make a living from them.

So, if you are a crook...and you know who you are...go away.
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Thursday, November 6, 2008, 08:27 PM
Posted by Administrator
The problem with an blog entry about bankruptcy is there is a lot of misinformation on the internet and I don't want to be part of the misinformation. I frequently see people who have visited the internet and research bankruptcy and seen a lot of untrue and misleading things.

Anyone considering filing bankruptcy should see a lawyer kidding...everybody's situation is different and just having general information won't do you much good unless you know who the Trustees are and what they are looking for and unless you have filed at least a few dozen petitions and seen what has happened from beginning to end (from filing to discharge).

Some commonly asked questions and (my) answers (all based on Florida and, particularly, Palm Beach County):

Will the Trustee (a woman or man...maybe a lawyer, maybe not... appointed by the Court by way of the US Trustee's Office which is part of the Department Of Justice) come to my house to see what I've got? Probably not. Still, you need to be careful in listing all of your furniture and other property and you've got to be honest when you are valuing it. The Trustees have been doing this for a while and they can all size people up pretty quickly and, if they are suspicious that you are hiding assets, they will send someone to your house.

Can I keep my house? ......Probably, as long as you are up to date in your mortgage payments. If you aren't up to date there are options ranging from a Chapter 13 payment plan type bankruptcy to holding on to see what the government and mortgage companies are now going to do. Whether or not to deal with a house mortgage issue in a bankruptcy is something you should talk to a lawyer about...the situation with mortgages is changing from moment to moment.

Can I keep my car? ...... It depends on what it is worth. If you owe more than it is worth and are current in payments, you can keep it. If you own a paid for Rolls Royce, you probably can't. There is no rule that says everyone gets to keep one car...even if they need it to get to work. If your car isn't worth much, you can keep it even if it is paid for.

Do I qualify? ..........Have you filed for bankruptcy before? You may be able to file again but, it depends on when your last filing was and how it turned out. How much is your yearly gross income? There are income limits now for filing a Chapter 7 bankruptcy. Have you consistently filed tax returns? Are they honest and accurate? How much do you owe and to what kinds of creditors?

Can I get tax debt discharged? ....Maybe.

Can I get student loans discharged? ....No.

What is the worst thing that is going to happen if I file bankruptcy? ....For many people, the worst thing is a bad credit rating. A lot of people have bad credit already so for them there may not be a big downside to a bankruptcy.

When will I be able to get credit again? ....With what is going on with credit now, who knows? But, if things go back to more or less the way they were (and lenders need to lend to make money, so probably credit availability will normalize soon), then I will be ready to give the answer I gave until a year or so ago. Here it is: "Lenders and mortgage people I have spoken with have told me that two years or so after bankruptcy they will be willing to lend provided you have decent income. You probably will need a 20% downpayment if you want to buy a house and get a reasonable interest rate, so save the money that (before your bankruptcy) you were spending to pay your debt. The bankruptcy is going to be reported by credit companies for ten years but, on the other hand, companies that loan you money after the bankruptcy know that they will be first in line to collect what you owe. Anyone who loans you money now would be last in line. So, after you file bankruptcy, your credit worthiness will likely immediately and drastically improve."

When will I be able to get credit again if I am living on Social Security or have minimal or no income? ....Never.

I will do an entry on the process.........from electronic filing to "Meeting Of Creditors" (creditors rarely come and credit card companies never send anyone)...soon.

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Friday, October 31, 2008, 05:15 PM
Posted by Administrator
(Note: This morning, I did this entry. It disappeared. If it disappears this time, I will figure it is related to the subject...and not just coincidence).

In the late sixties and on into the 70's, my father owned a discount clothing store on Long Island. His idea was a factory outlet store before there were big strip shopping centers and malls like the Sawgrass Mall in Sunrise (South Florida's #1 tourist destination) centered around the factory outlet store. He had bought boy's clothes for years, first for a clothing only department store called Orbachs and later for an Eastern seaboard chain of clothing stores (I remember he once even went to one of their stores in Delaware...I had never known anyone before this who had gone to Delaware.).

Friends of his in the clothes manufacturing business were going to consign clothing to him and he would sell the clothing at discounted prices and this is how he would make our family's fortune. But, it didn't work. Around 1975, sadly, he closed up shop....and he died a few days later.

To supplement the revenue from clothing, he had begun to sell candy and cigarettes. He bought the candy and cigarettes from a
wholesaler not too far from our house. After he died, everything he had went automatically to my mother. The business was only in his name so the business debts died with him and all of the creditors went away....except for the cigarette wholesaler.

Every couple of weeks after my father's death, a big man with a deep voice, nicely dressed, would come and knock on my mother's door. She would open the door and the man knocking would say, more or less "I'm from the wholesaler and your husband owes us money." "But", she would say, "he is dead and there is no money." "Okay," the man would say "but whether or not he is dead he still owes us money and I will be back to collect it." And, after a while, he would come back.

I don't think my mother, all 4'11" of her, was particularly scared of this guy but she did find it annoying. So, she hatched a plan to get rid of him.

For years, she taught 4th grade down the block from where we my elementary school...and her kids really liked her. Once a year was parent/teacher conference day.

She knew that one of the girls in her class lived in an unusually large Tudor type house, newly built, that stood on a street dotted with much smaller houses. The girl's father was a garbage man. My mother put 2 and 2 together.

When, the girl's parents came to school for parent/teacher conference day (and, after assuring the parents that their daughter was doing great in school) my mother turned to the father and told him the story about the cigarette wholesaler. "What should I do?", she asked. He said he would take care of it.

Now, when I tell this story I often get the impression that the person I am telling it to believes that the garbage man with the big house sent his thugs down to the cigarette wholesaler and beat him up. Of course not. The garbage man with the big house got on the phone and called up the cigarette wholesale...they probably knew each other or, if not, they knew someone in common...and, he said, more or less "My daughter really likes her 4th grade teacher and could you do me a favor and not send your guy over to her house about the money?" And, the cigarette wholesaler no doubt said "Sure." Because he would rather have the garbage man's friendship or have the garbage man owe him a favor than make a big stink about a few dollars.

Of course, the man never came back.

My family has had other run ins with the mafia over the years. When I worked selling cars (of course not at the Bayside Volkswagen dealer, it was that other place), the sales manager's brother, Carmine, would come in every Saturday with a giant tureen of lasagna or stuffed shells...lunch for everyone. Carmine brought his friend Joe and, though I knew both of them for quite a while, it was pretty clear least in the conventional sense...they did not work for a living. They were both free all week and stopped by the dealership from time to time...never in any rush at all; they drove very big (American) cars; they never said a word about work; and Frank, the sales manager, never did mention what either one of them did for a living.

Frank, sold Chevrolets for years and years before he moved to Volkwagen (car salesmen and managers, then and now, move from job to job all of the time). He had never sold a foreign car before the stint at Volkswagen and he made it clear that he really didn't like the whole idea. He was a Chevy guy.

Frank had people who had bought Chevys from him for years. But, when he started selling Volkswagens, they started buying Volkswagens. Now, Frank was a very nice buy but, nice as he was, there had to be some other reason the former Chevy buyers bought whatever Frank was selling. And now only did they buy Volkswagens from Frank, they bought fully loaded cars with every option at the highest price Frank could say with a straight face and they didn't bargain. Frank was a good salesman but he wasn't that good.

Did all of these buyers owe Frank's brother Carmine a favor? And Carmine was just looking out for Frank? Yes, I think.
(Though I don't know whether the cigarette wholesaler, the garbage man with a big house, or the man who came and knocked on my mother's door drove Chevys...or Volkswagens. Okay, all of these guys drove Linconln Continentals or Cadillac Sedan Devilles.)

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Wednesday, October 29, 2008, 07:05 PM
Posted by Administrator
I just read a piece on MSN (a crappy search engine that refuses to acknowledge my existence but a good place for news and current events) about traffic tickets. As it says in the piece, here in Florida there are some law firms that only do tickets so they charge very reasonable rates because they are in traffic court with stacks of tickets every day. I don't go to traffic court much but if you need a traffic lawyer, call me or shoot me an email and I'll give you the names of who I like (here in Palm Beach County...I know someone in Hendry...I think Doug Leifert has people in Broward).

When I do go to traffic court...because a family member or close friend who I owe a favor got a ticket...after I get the file from the clerk, I walk over to whatever traffic ticket lawyer is staking out the counsel table and ask them to have a look. The traffic tickets lawyers know the statutes and know what to look for much better than I do.

If there is a mistake with the state statute the officer wrote down (the speeding statute for a state road when it happened on a
county road or a ticket written for turning onto a state road from a highway as opposed to turning from a county road from a state road, for example, and, yes, there are different statutes when you wouldn't think there would be) or some other obvious deficiency with the ticket, the Traffic Magistrate (lawyers who are trained, sworn in and paid a few dollars to judge non-accident, non-criminal tickets) will usually dismiss the ticket. The ticket will also get dismissed if the police officer doesn't show up (unless the court is made aware that the officer has a medical or personal problem and that he or she really wants the case continued). Dismissals for both of the above reasons are very common. Police officers can also dismiss tickets on their own. Here in Florida the police prosecuted the tickets and if the officer doesn't want to prosecute the ticket, it gets dismissed.

When you are stopped, here (in my opinion) is what to do and not to do.

1) Open the driver's window. Turn to your left and grab the top of the car door and wait for the officer to come over. I think that putting your hands in view relaxes the officer and makes it easier for him or her to be nice to you. Cops are afraid of getting shot. There could be a gun in your car and you could be reaching for it. A lot of cops are killed in traffic stops. You don't want to put your hands in the air but, if you make it obvious to the cop walking up to your car that your hands are empty and that you mean him or her no harm, it is bound to help. Don't look for your license until the cop gets to the car, otherwise, what he or she will see is you rooting around looking for something...a gun...or are you just hiding drugs? (I recently ran a stop sign and cut off a Deputy Sheriff at a 2 way stop sign. I stopped when he turned around. I had my hands on the window and when he walked up and I shrugged my shoulders (trying to say with my body language "that was stupid of me"). "Sorry about that Deputy", I said. He laughed, shook his head, walked back to his car and drove away.

2) Call the cop who stops you what he or she is. Call the police "officer"; the Highway Patrol "trooper"; and a deputy sheriff "deputy". They are what they are. A deputy is not an officer (and a trooper certainly isn't) and doesn't appreciate it if you don't know that. Look at their name tag (reading the name tag pretty much assures that the cop who stopped you won't think you are drunk). "Could I just get a warning, Trooper Smith?"

3) Ask for a warning. You are more likely to get it if you ask for it.

4) Be old. Okay, you have no control over this but I have noticed that the older I get, the fewer tickets I get. I still get stopped but when the cops see how old I am they figure I'm just not a threat to anyone, so, why bother writing me a ticket.

5) If you are going to drop names, drop them. I don't do this but, if you are going to, do it RIGHT FROM THE START AND BEFORE the ticket starts getting written. I think the way to go is this:
a) As the cop approaches the car start thinking who you know from his or her department.
b) Say the following (substituting the name(s) you are going to use): "Sgt. Dalingberg would be real happy if you just gave me a warning." Better than this: "My uncle, Capt. Warner, just mentioned you at the BBQ the other day...could you maybe give me a warning, please." Or, "Angela Black, Al Smith, Charlie Davie, and Dick Reeves are all good friends of mine. Could you do me a favor on this one?"
You should, of course, actually know the people whose name you are using. The cop will probably check you out with the people whose names you are dropping. A few years ago, I asked for and got a warning from a local Deputy Sheriff. As he was leaving, I said "do you know if Gary Smith is working today?" I knew Gary was on his unit. I really did want to know if he was working. Even though he didn't know that I knew Gary until after he decided to only give me a warning, he still called Gary to check me out. Gary called me later that day "Yeah" Gary said "I told him you were my lawyer." (Which, I am.)

6) I don't know if it matters that much if you admit that you know why the cop stopped you. Yes, it is an admission that can be used against you in court but if you are doing 90MPH in a 60MPH zone, you are going to look like a shmuck if you claim you have no idea whey you are parked on the side of the highway with red and blue lights flashing in your rear view mirror. How about anwering "Do you know why I stopped you?" with "Sorry about that Deputy." It's not really an admission and the cop won't hate you for being a liar. And, you are sorry. You would have hoped that the cop had better things to do than stop you. I guess you don't have to speak at all but you are almost certain to get a ticket if you give the cop the silent treatment (unless he or she sees your license and you are, for instance, Tom Cruise or Jennifer Aniston).

7) I have seen my wife get out of a ticket for 90MPH in a 70MPH zone. "I'm sorry", she said. (My wife has corrected me, she says that what she told the Trooper was: "I am very sorry."

8) Do hot women get stopped because they are hot? Yes. And while you shouldn't make a date with the cop who stopped you, you should at least be polite and avoid the ticket rather than act nasty (though you do have a right to be nasty, he has abused his power)and land up with a ticket. Life is unfair...don't make it worse.

Have you been to traffic school?
Do you have a bad driving record that is going to be held against you if you hire a ticket lawyer to take care of things for you?

You will pay higher insurance rates if you get points on your license....avoid points if there is any way you can.

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The Lawyer/Client Priviledge---Hunter Mountain, NY 1983? 
Sunday, October 26, 2008, 04:29 PM
Posted by Administrator
Hunter Mountain is about 100 miles north of New York City...the closest there is. It is an unusual ski area in that there are chair lifts everwhere. Most ski areas...looking up from the bottom...have narrow slopes with a lift here and there. Hunter Mountain is laid bare, top to bottom, except for the occaisional stand of trees. There are chair lifts everywhere you look...from top to bottom...from middle to top...from bottom to middle...sideways from right to left...from left to right...anywhere they could fit one. All of this to maximize the number of skiers from Manhattan able to buy a lift ticket and have a reasonable chance of making a few runs (after standing on a lift line for half an hour) on a below zero, windy Sunday in January.

One of the great things about Hunter though is the ice. Go to Vail, for instance, and all you get is mile after mile of thick snow cover. It is almost blissful to ski in the Rockies...back and forth and back and forth...about as much challenge (unless you head for the bumps) as sitting in a Jacuzzi. But Hunter's got patches of ice all over...lose your concentration for a few seconds and you are down hard on your ass.

But, I digress...the subject is the lawyer/client priviledge and one day, about 20 years ago, I was visiting New York and riding up on a chairlift at Hunter with my friend Bob Jones. Bob had graduated from the Culinary Institute of America (down the valley and to the left), the best cooking school in America, a few years before. He had been working in Manhattan cooking for executives. He had found some people with money who wanted to buy a restaurant with him.

So, we rode up on the chairlift and Bob started talking about the deal and he told me "Steve, they even showed me both sets of book." So, okay, I was admitted to the Bar (but it was the Florida Bar and we were in New York) and everything you tell a lawyer is a secret, so, it was okay to tell me that he was buying a business from tax cheats. Was it?

Prospective clients frequently come to see me about a bankruptcy or a divorce and I need to find out about their assets. "Do you own jewelry?", I frequently ask...(really, I'll ask "What kind of jewelry have you got?"...yes/no answers usually don't reveal much and I can usually tell who has jewelry or valuable assets, generally, by looking at their haircut and their clothing and shoes). "Well", the answer goes "nobody knows about it." Okay, but now I know about it.

Here is the priviledge.......
1) Everything you tell me is a secret. If you committed murder last week, that is a secret. I will take it with me to my grave. I will not tell my wife. I will not tell your wife. I will not tell my mother. I will not tell the cops.

2) But, if you tell me (for example) that you have jewelry and you are about to sign a sworn statement in which you say you don't have jewelry (or you don't list the jewelry that you told me you have) there is no priviledge. By lying under oath...and not disclosing the are committing perjury. And I know you are committing perjury so, if I let you sign the sworn statement...or testify in court that you don't own jewelry...or make any sworn statement at all that I know isn't true then there is no priviledge at all. I've got to try to get you to tell the truth..I can't represent you if I know you are lying...and I may have to tell the court that you are lying if you do it in front of me. (Note that the rule for criminal cases is a little different.) BUT, FOR CIVIL AND CRIMINAL CASES THERE IS NO PRIVILEDGE FOR FUTURE CRIMES. You tell me you are going to go kill someone tomorrow and I am calling the cops.

Here is an example... I had an injury client a few years ago who owned a Greek restaurant. He had a helper working for him who was an illegal alien. The Defendant's lawyer took his deposition. One of his claims was that he couldn't work at the restaurant like he used to because of his injuries.

At the deposition, the Defendant's lawyer asked: "Do you have anyone helping you at the restaurant." "No", he said.

I told the other lawyer I needed to take my client outside the deposition room and talk to him. Now, this is a very tacky thing to do in my opinion. I have seen lawyers advise their clients at the beginning of their deposition that if they have questions about how to answer a question that I ask they should just tell their lawyer and we will all just stop the deposition and so they can go outside and talk about it. Why? So the lawyer can make up the answer?

I wouldn't do this with my clients. We'll take a break if you need to use the bathroom but you need to answer the questions you are asked truthfully and I'll be paying attention ready to object if the other lawyer asked something that is out of line. On the extremely rare occaision I have had a witness who I am deposing wanting to go outside and talk to their lawyer before answering my question (I really can't stop them from leaving) first, I ask the witness on the record ("on the record" means a court reporter...sometimes just a tape recorder... is taking down what is said) "So, just to make it perfectly clear on the record, you are unable to answer my last question without going outside and talking to your lawyer about it, right?" I think this gets the point across.

Anyway, the other lawyer had no idea why I wanted to take my client outside and figured it was so that I could coach him. And it was to coach him.... to coach him to tell the truth because the ethical rules say that I can't sit there and let a client lie. So, I took him into the hall and told him that he had to tell the other lawyer about his illegal alien employee. I told him to answer the question and not add anything to his answer unless he was asked. Yes, he had an employee...this is what the employee did. I told him nobody cared if the employee was illegal, nobody would call the INS.

We went back inside. The deposition continued. "Do you have anyone helping you at the restaurant?" "No", my client said. Off we went back into the hallway. The other lawyer was getting angry. "I have to do this", I said.

Now, remember, I told my client to answer the question and leave it at that unless he was asked a follow up question. "Do you have anyone helping you?" "Yes", he said. "What does he do for you?" A few (unrelated) questions later it happened. "My employee, he is illegal...please, please, please do not get him deported." My client started to cry.

After the deposition was over, I asked the other lawyer "Were you going to ask if the guy was here legally?" "No", she said "I really don't care."

Okay, here is the rule for criminal cases: If your client tells you that he or she is going to lie on the witness stand you can't help him lie by asking questions directed to helping your client get the story out ("So, what happened next?" "Did you go to the car or did you stay?" "Where was Johnny while this was going on?" can't ask questions like this...your client is own his own). All you are allowed to do is sit your client on the witness stand and say, more or less "So, tell the jury what happened." I have never seen this happen at any criminal trial. I have never heard of a lawyer just sitting his or her client on the stand and having them tell their story. So, I am convinced that either criminals never lie or, at least, they are smart enough not to tell their lawyers they are going to lie.

If you have things to hide, you need to consider whether a lawyer is going to risk his or her license to help you lie. (I have had prospective clients ask me to help them lie...give them advise on hiding assets, for instance... for a $1,000 fee...are these people crazy ? Or, are they just contemptous of lawyers?)

Sometimes it is a good idea to keep your mouth shut.

Lawyers (at least the ones I know) are generally honest.

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