Multi Faceted BK Question

[LadyInTheRed]

lloway21, while we try to keep threads to the original topic, if we see something in a post that causes concern, we point it out even if it does not answer the OP's question. Most people appreciate it when somebody points out an issue they hadn't even considered. You don't have to take advice you don't like and should independently confirm what you learn here before acting on it.

It is important to clear up contextual errors so that we can answer your question. Also, contextual errors that aren't corrected can lead other people who read the post to take that information and incorrectly apply it to their own situation.

The testy tone of your first response to HHM showed a lack of appreciation to somebody taking her time to help you. If you already recieved an acceptable answer from an attorney, why post the question to a bunch of strangers? It is you who seem to want to have a debate. HHM did not pick you apart. Her concern about the unauthorized practice of law is a valid one that should be taken seriously. Now that you have provided more information about the role you are playing in your fiance's case it appears there is nothing to worry about. But, in your first two posts, it did sound like you were preparing and filing documents for your fiance (or is it your husband? You've used both terms and it really is an important distinction in BK and maybe even in the issue of unauthorized practice of law). Your last post sounds like you didn't even read HHMs last post. Despite your earlier tone, she held out an olive branch and you refused to accept it. To tell her an issue that came up based on your posts is none of her business, is inconsistent with posting on a public forum.

To correct what I believe is inaccurate information above: The constitutional right to counsel under the 6th Amendment to the U.S. Constitution applies only to criminal cases and, even in criminal cases, does not allow non lawyers to provide legal services to others. State laws vary on the definition of the practice of law and exceptions to prohibitions on the practice of law by non attorneys (like in small claims court in some states). But, the general rule is that unless you know an exception applies in your state, if you are not a member of the state bar, you should not provide legal services, for free or otherwise. Don't take my word for it. Check your local state laws by googling "[name of your state] unauthorized practice of law." Look for state government or state bar websites and read the actual law rather than relying on summaries by sites like smallclaims.com.

Overall my question has been answered piece by piece by all of you.

I'm glad the collective knowlege of the members of this board could help you. That's what bkforum is all about.

[lloway21]

I came here seeking a little help & advice, and while I've gotten that from others all I've seemed to get from you is a debate on what I have and haven't done. Frankly it's off topic and none of your business what I have and haven't done to help my husband. As a moderator I would have assumed you would have had a better since of staying on topic and helping rather than picking a newbie apart over a few contextual errors. I guess I registered for the wrong reasons.

[HHM]

Okay. But in some of your posts, you reference, "when should "I" file." complaint etc. I get the sense that you have done more than ask questions on the web, e.g. helped prepare the petition etc and will eventually help prepare this AP.

I was just giving you a word of caution that you should not, independently, contact the trustee in the case.

In any event, no point in belaboring this issue, it is off point and immaterial to the debtor's issue.

I hope it works out, I hope you found my posts helpful in at least understanding the issues you face so you can overcome them as needed.

[lloway21]

Well I don't really consider myself to be "practicing law" b/c last time I checked asking a question constituted just that asking a question. This is what I meant by helping him to file...I've signed up for several websites to ask questions and show him the answers. That's all, nothing more, nothing less. I don't see how that would be considered "practicing law" at all. I filed a Chapter 7 no asset consumer bankruptcy myself so when he decided to file I simply did what I did for myself and offered him the same resources I myself used. Overall my question has been answered piece by piece by all of you. Thank you again.

[mlsj2009]

Although I agree the young lady should be listening to the advice on this forum, I doubt she is in danger of practicing law. Sometimes you lawyers forget that even most state laws allow a person to represent themselves and many allow others to represent them if they are not charging a fee for the service. (ie Texas, New Hampshire etc)
Missouri law allows help in small claims courts: "In most states an individual who represents a party to a small claims court action must complete and sign an “Authorization to Appear on Behalf of Party”- a form typically provided by the clerk of the small claims court or often found on their website. The representative must state that he/she is authorized to represent the party, and he/she must describe the basis for authorization (usually a letter from the represented party will suffice.)"
The point is that there are legal issues galore in giving legal advice or being an advocate for another person. I doubt a judge is going to be to concerned about a fiancee helping her future husband defend himself against all the legal wolves of the world. I do agree and understand that the best route would be to hire an experienced attorney who is trained to do the job, but this is America.
The Constitution and much legal precedence (too numerous to argue over for me) supports the right to be represented in a court of law in the United States as the defendant sees fit. A particular judge may not allow such in his or her court, but it can and will eventually happen at the pleasure or displeasure of the defendant. Bankruptcy judges are like any other judges, I suspect. Some judges might tolerate a debtor who can convince them that justice will be served by allowing their fiancee to participate in the process. I don't pretend to know otherwise.
HHM, I do respect your expertise and enjoy what you have to say, but I am a "stickuler" when it comes to the Constitution and your individual freedom to speak.

Thank you, I knew I should have looked it up first. However, there is a caveat to 522(h), the debtor can only do so if the property would have been exempt. In a "normal, run of the mill" wage garnishment, where everyone is doing what they are supposed to be doing, e.g. taking the statutory amount out of the paycheck, the property is not exempt. As such, normally, the debtor has no basis to exempt a garnishment preference.

The issue turns on, are the funds "exempt?" What exemption are you actually claiming? If they withheld the proper amount from each paycheck, those funds are non-exempt. Missouri appears to have a wild card exemption $400 (or $1250 if head of household). I assume that is what you are trying to use? In any event, trustee is most likely to go after it. Whether you can get the funds will depend on how the BK courts and Missouri allow you to use that exemption in this context and whether you are required to have first, gone to start court to claim the exemption.

As for procedure, minimally, you would wait 10 days after the 341 before filing any AP to recover the funds. However, the "debtor" (not you) will need to discuss with trustee. You need to start keeping your head down, unless you are an guardian or power of attorney for the debtor, you are not able to talk to the trustee on the debtor's behalf and you are "practicing law without a license" right now, so hopefully you don't screw it up

[HHM]

Bankruptcy Code Section 522(h) allows a debtor to avoid a preference payment if the trustee does not.

ETA:


The trustee is not there to help the debtor and will only be interested in recovering the funds if there is enough left after applying exemptions to make it worth the trouble.

Thank you, I knew I should have looked it up first. However, there is a caveat to 522(h), the debtor can only do so if the property would have been exempt. In a "normal, run of the mill" wage garnishment, where everyone is doing what they are supposed to be doing, e.g. taking the statutory amount out of the paycheck, the property is not exempt. As such, normally, the debtor has no basis to exempt a garnishment preference.

The issue turns on, are the funds "exempt?" What exemption are you actually claiming? If they withheld the proper amount from each paycheck, those funds are non-exempt. Missouri appears to have a wild card exemption $400 (or $1250 if head of household). I assume that is what you are trying to use? In any event, trustee is most likely to go after it. Whether you can get the funds will depend on how the BK courts and Missouri allow you to use that exemption in this context and whether you are required to have first, gone to start court to claim the exemption.

As for procedure, minimally, you would wait 10 days after the 341 before filing any AP to recover the funds. However, the "debtor" (not you) will need to discuss with trustee. You need to start keeping your head down, unless you are an guardian or power of attorney for the debtor, you are not able to talk to the trustee on the debtor's behalf and you are "practicing law without a license" right now, so hopefully you don't screw it up

[LadyInTheRed]

Bankruptcy Code Section 522(h) allows a debtor to avoid a preference payment if the trustee does not.

ETA:

will the trustee have any interest in helping to recover those funds

The trustee is not there to help the debtor and will only be interested in recovering the funds if there is enough left after applying exemptions to make it worth the trouble.

[lloway21]

Here is the big problem, the funds don't go to you. If the trustee recovers the funds, he does so for the BK estate and distributes them to all creditors equally.

As for as your fiancee is concerned, that money is gone.

Also, a debtor, (I should probably double check this, but off the top of my head) the debtor has no standing to recover a preference. Only trustee can recover a preference for the benefit of the BK estate.

Also, on a technical point, the case, right now, is neither asset or no asset. The Debtor filed the case as no asset, but the trustee, 10 days after the 341 files a preliminary determination of whether the case is an asset or no asset case. If indeed, this garnishment is a preference (which it is), the trustee will then designate the case an "asset case", recover the funds from this creditor, and then distribute them to all creditors.

Sorry, but the money is not coming back to the fiancee.

However, I am a little unclear on one fact, when was the garnishment issued to the payroll dept. and how was 90 days of money garnished.

If the payroll department made a mistake, and sent the creditor a check for 90 days worth of garnishment out of one paycheck, then maybe you have a an argument. The facts you describe are not entirely clear as to what exactly happened.

Well I was told when I consulted a bk lawyer that as long as he exempted the garnished wages properly that they will come back to him. So technically his case will still be a no asset case, plus I'm sure the trustee isn't going to be able to pay much with the amount of debt versus the amount of the wages garnished.

I was also instructed to file a adversary preceding to recover the funds if trustee doesn't or if he abandons or something like that. So the question still remains, when to file the complaint ??? Also, will we know if the trustee has any interest in recovering the money ??? This money is pretty important b/c he needs it jumpstart his savings for a new vehicle.

Lastly to clarify...the money in question is money that has been taken from each check over the past several months. (Of course we're only concerned with the last 90 days) His payroll department was holding the money until they had the entire balance to forward to the creditor. All the way up until we informed them and the creditor that we filed bk.

Initially his payroll said that they would add it to his next check until the creditor's attorney called and said send them the money which they just did. For the record we know for a fact that monies garnished within the 90 days before filing can be recovered b/c someone we know just received a check for the exact same thing. Thank you.

[HHM]

Here is the big problem, the funds don't go to you. If the trustee recovers the funds, he does so for the BK estate and distributes them to all creditors equally.

As for as your fiancee is concerned, that money is gone.

Also, a debtor, (I should probably double check this, but off the top of my head) the debtor has no standing to recover a preference. Only trustee can recover a preference for the benefit of the BK estate.

Also, on a technical point, the case, right now, is neither asset or no asset. The Debtor filed the case as no asset, but the trustee, 10 days after the 341 files a preliminary determination of whether the case is an asset or no asset case. If indeed, this garnishment is a preference (which it is), the trustee will then designate the case an "asset case", recover the funds from this creditor, and then distribute them to all creditors.

Sorry, but the money is not coming back to the fiancee.

However, I am a little unclear on one fact, when was the garnishment issued to the payroll dept. and how was 90 days of money garnished.

If the payroll department made a mistake, and sent the creditor a check for 90 days worth of garnishment out of one paycheck, then maybe you have a an argument. The facts you describe are not entirely clear as to what exactly happened.

[lloway21]

Thank you. So will the trustee recover the funds for me or will I have to file a complaint on my own ??? When should this be done ???

[tobee43]

first welcome to the forum.

i would argue that the atty is asking for his client to be treated as a preferential creditor which is against the bk code. there is another thread about this however i'm going to quote the posts made by keepmine:

You have a preference issue. From 537 of the bk code:

(b) Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property--

(1) to or for the benefit of a creditor;

(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;

(3) made while the debtor was insolvent;

(4) made--

(A) on or within 90 days before the date of the filing of the petition; or

(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider;

i think this atty is attempting to use A and saying this may not be an insider transfer. i would still ague this point as that would open the door to any creditor whom you made payments to prior to the 90 day period.

[lloway21]

Good evening, I'm new here so bear with me please. My question has several parts and is pretty long.

So here goes... I helped my fiancee file a Chapter 7, Consumer, No Asset Pro Se. He was being garnished and needed to file quickly. So we were able to get the garnishment stopped by contacting the payroll department and the creditor's attorney. However the creditor's attorney then called the payroll departmemt and convinced them to send them all monies garnished 90 days prior to him filling.

So my question is since this is a no asset case will the trustee have any interest in helping to recover those funds or will he have to file an adversary preceding on his own. If so should he file now or wait until after his 341 meeting next Monday ???

He needs to money garnished to purchase a decent car so he can surrender the car he is driving now. For the record the monies garnished were properly listed and exempted.

I know it's long winded but any input would help. Thanks !!!