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Will You Help Me Lie to the Bankruptcy Court for the District of Arizona?

By Joseph McDaniel, Esq.

My guys on the phones aren't lawyers; they work hard, and currently they confirm representation when a creditor calls in about our bankruptcy debtor clients.

They also take the hot grounders when a panic-stricken potential client calls; people sometimes awaken from their depressive trance when they are served with lawsuits, or when the trustee's sale sign gets pounded into their front yard.

And when people are under stress, they tend to do whatever their primary coping mechanisms suggest: some become more likable, and try to make friends with their oppressing creditors (sort of a debtor version of "Stockholm Syndrome")!

Doesn't work very well, of course.

Other debtors become aggressive on the phones to their creditors, and they want to fight about the amounts or the behavior of the creditors in granting the credit in the first place; and while that makes some sense, it seldom gets a good result from a creditor.

Some retreat further into depression, until they get enough sun exposure or electro-convulsive shock treatment or Prozac to snap 'em out of it (here in Arizona, there's a lot of sun; my guess is that debtor-depressives in Minnesota get really depressed).

Some become extremely efficient, and do a qualification and credential search for the best bankruptcy lawyer in Arizona that they can find, using some combination of the State Bar of Arizona site, and the AVVO, Martindale, and Findlaw websites. And some become extremely serious in their "finding the best qualified, most experienced, best credentialed, peer reviewed, and board-certified bankruptcy lawyer in Phoenix, Scottsdale, Chandler, Mesa, or Tempe" search.

Some go to the first guys they see advertising on a bus stop bench, and God love 'em and protect 'em! 

One nice guy who was kicking bankruptcy lawyer tires recently had been to visit with six different bankruptcy lawyers. He said that I'd won his personal Pepsi Challenge(tm) for bankruptcy lawyers, and that made me happy, but I was impressed that he'd put that much effort into finding the right bankruptcy lawyer.

Some...get downright funky.

One of them called one of my phone guys recently.

The potential debtor explained that he owned an interest in a plastic poo manufacturing business, and that he'd just last week put the corporation in his mother's name, and that mom was paying him under the table, and he wanted to file a bankruptcy and get rid of his debt but not involve the business at all.

He didn't want to list any ownership interest in the business, he didn't want to show any income from the business, and he had not sold the biz to mom for money; it was a simple fraudulent transfer.

And my guys, even though they aren't lawyers, have been doing this for a while, so they've picked up some bankruptcy law just by osmosis.

So my guy said, kinda laughing, "Now, you don't mean that you want us to help you lie to the Bankruptcy Court, do you?"

And the guy on the other end of the phone said, "Yes. That's exactly what I want you to help you do! I want you to tell me how to lie to the Bankruptcy Court!"

My phone guy explained that we weren't smart enough to help him with that, because it was a crime, and halfway through the sentence, the habitual liar hung up the phone in his ear.

Some people have a strangely distorted idea of what a bankruptcy lawyer in Arizona is going to do to help them, I guess.

Lying to the Bankruptcy Court is simply not on the menu.

None of my clients have worn those cute pajamas and gone to Green Bologna Heaven, and I don't want any future clients to go there.

That brings us back to the topic of how much detail you list on your bankruptcy schedules.

And that's a surprisingly difficult question, and I've talked about it at length in this bankruptcy blog.

But I'm going to go out on the edge here, and say No, You don't have to list your two-year old, broken Bic Pen!

And yes, you do have to list your Mont Blanc Meisterstuck, with the crystal inkwell!

And no, it wasn't really a plastic poo manufacturing plant, and he didn't really put it in Mom's name.

But it was a business, and he did put it in somebody else's name.

And that's just dumb.

Because it ain't the First Rodeo for an Arizona Bankruptcy Trustee, you know?

Now, there are perfectly good ways to list your interest in a business (which you must do, if you have one on the date of filing; if you sold it for fair market value prior to filing, you must show that on your schedules as well) and keep it in your bankruptcy case.

And that's a post-graduate sort of topic, so I'll write about it at length sometime soon.

Note: as a very smart Arizona Bankruptcy Trustee says at his first meetings, there are a lot of instant bankruptcy experts out there, and they tell lots of stories about the best ways to finesse a bankruptcy, because they're bankruptcy experts! And they'll talk about hiding assets, or transfers for no consideration, or gifting a car to your sister or daughter.

Those are just bad ideas.

Sorry.

There are perfectly good ways to get a decent (note: not fun, not easy) result out of bankruptcy case in Arizona.

Those are not among them.


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Full post as published by Arizona Bankruptcy Attorney Blog on October 07, 2010 (boomark / email).