Modern Family Matters

Timing Considerations When Filing a Bankruptcy with Property Concerns

August 31, 2023 with Pacific Cascade Legal Season 1 Episode 107
Modern Family Matters
Timing Considerations When Filing a Bankruptcy with Property Concerns
Show Notes Transcript

Join us as we sit down with Bankruptcy Attorney, Darin Wisehart, to discuss the best time to file a bankruptcy when it comes to your property. In this interview, Darin discusses strategies for the following situations:

  • If you have a big tax refund coming.
  • If you have an inheritance coming.
  • If you have high-value property or nonexempt assets. 
  • If you have a home with a mortgage or car you're still paying on.
  • If you want to sell property to spend on necessities.
  • If you are about to get married or divorced

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com.

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Intro:
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.

Steve Altishin  
Welcome, everyone. I'm Steve Altishin, Director of Client Partnerships at Pacific Cascade Legal, and today we have our bankruptcy attorney, Darin Wisehart, to talk about the timing of filing a bankruptcy when it comes to property issues. Hey, Darin, how you doing today?

Darin Wisehart  
I'm great. I'm great. Thanks for having me today.

Steve Altishin  
Oh, thanks for being here. Darin, you've been on this thing a lot. But for someone who hasn't seen you, can you just tell us a little bit about yourself?

Darin Wisehart  
Yep, my name is Darin Wisehart, and I've been practicing bankruptcy law for my entire career and run a firm in Oregon. We have offices in Washington and Oregon along the I5 corridor, in Bend, pretty much spanning the two states. So any of those two states would be areas that we can represent people at. And I really enjoy bankruptcy for the the opportunity of helping people get from the point that they come to me, which is almost always one of their worst years, and get them to a spot that they can get back to, you know, back to moving forward and back to feeling like their life is under control. And sometimes, you know, you deal with different issues. But bankruptcy really is enjoyable for that reason.

Steve Altishin  
I love it. And I love these these broadcasts we do because you really do give advice. And every time we talk, it's like, oh, gosh, I didn't know that. I'm glad I heard about it. So let's today talk about an issue that doesn't get talked about a lot, which is not how you file or what you filed, but when you file, you know, the timing of a filing, and especially surrounding property issues. And so let's just kind of start with the first one, which may be the major topic people think about, is what if you have property? You do not want to lose your tax refund maybe or non exempt assets, you know, what do you do with those things? How do you get that effect when you file?

Darin Wisehart  
It definitely affects the way you know, when you file and how you look at your case. And it really depends on what the asset is, what the you know, is it income that's coming in which maybe, you know, maybe it's gonna get garnished, and you need to file a bankruptcy prior to that getting garnished, or within a time period of getting garnished because a lot of people won't, you know, they'll know that if you file your bankruptcy before you get garnished, then you can usually keep a hold of that asset. And then depending on what you file, you know, that's, that's going to determine what happens with that asset after you file. But it also is a window of time after you get garnished that you might be able to get that money back. And so sometimes when we have assets, and we talk about timing, we want to be sure we keep our eye on when you know what asset we have, and how do we deal with what your goal is in relation to that asset. The big key takeaway on that one is talk with the attorney and start putting your ducks in a row to get filed sooner rather than later. And that's because those times when somebody garnish is that clock is ticking for when you can possibly call it back from that that creditor.

Steve Altishin  
Quick question on the taxes because we talked a little bit about this before starting this, if I may have a tax refund, but I don't know that I'm gonna have a tax refund. Do I have to wait till I file and there's actually a refund issued? Or what if I haven't filed yet, but it may be out there? How can I kind of figure out what I'm gonna get for a tax refund, and if I'm gonna be able to keep it? 

Darin Wisehart  
Yeah, this is the tricky one because this is all the judging where that particular case is or where the client is. If you've if it's past January 1, then usually the refund from the previous year is owing. Right so even though taxes haven't been completed yet you don't have an idea what you know what the tax refund or owing is going to be. You're you're owed that money if there's money coming back because the IRS finished the tax year, the previous tax year is concluded. A lot of times I tell clients so too, we want to have an idea of how much your refund will be or what you will owe so that we can make sure that we can discuss if we can change our direction a little bit to get to the Dealing with that that particular asset or debt. And that's that. So usually what I'll tell clients is trying to get the taxes prepared as soon as you can. Because even if you don't file them right, then that gives us the idea of what they're going to look like when they get filed. And in bankruptcy, I say to clients all the time, we encourage bankruptcy attorneys do not like unknowns, we don't like mysteries, we want to know as many things as we can, and we're not going to know everything. That's just how it is, we know, bankruptcy, a lot of times, we're trying to do the best we can with what we have. And we're not going to have everything known, we're going to deal with some unexpected, but we want as little unexpected as we can possibly have. And part of that is understanding or knowing what your refund is what your taxes are going to say. 

Steve Altishin  
Yeah. Probably the biggest property for most people I would imagine, or a lot of people, is their house, their home. And if you've got a home mortgage, that has to affect when you want to file a bankruptcy, especially what if it's in arrears already?

Darin Wisehart  
Definitely one of the biggest ones, right. This is one of the ones that almost every client comes to me when they have a house, and they want to keep their house. And that's the goal of a lot of bankruptcies across the board. And so the goal then is how do we deal with whatever you are behind, or maybe their current, whatever it is, and how do we make sure that we keep everything so that they can stay in their house and continue to you know, live a normal life on the ground. That's, that's the timing of bankruptcy. When we deal with an arrearage. When we deal with people that are behind on their mortgage, maybe the you know, the mortgage company is not working with you, maybe you've tried a couple of different methods and you're just not getting anywhere, you just want to get into a bankruptcy and sometimes a chapter 13 is a very good idea to cure a arrears for your house. And that's, that's because what it'll do is it'll allow you to file and then they can't move forward on a foreclosure anymore. And so that's huge, because now you get a chance to breathe, you get a chance to put your feet under you and we can move forward, then whatever you owed up to that date, whatever you were behind, gets paid off over up to 60 months. And usually it's paid at 0% interest. And so instead of doing a loan mod, which is taking that chunk of money and put it on the tail end of your loan, we're going to put it into a 60 month payment as if you never missed any payments. And then you're going to make your mortgage payment moving forward starting the first of the next month. And it's going to be as if you never missed payments, no foreclosure, no loss of house. That's, that's a timing thing that you want to be sure. And a lot of times we get down to a three day window when we talk about foreclosures, because we want to file within this sweet spot of making sure that you've got the money set aside for the next mortgage payment because that has to be made moving forward. And you're ready to pay what we would call the trustee payment, which is the ketchup of the house plus whatever else the case entails.

Steve Altishin  
So that foreclosure is a real kind of fail whether, that's a red line and you don't want to cross it.

Darin Wisehart  
Yeah, no doubt. And that's why when a lot of times when we when we meet with a client we're going to be on and you know, any attorney that does this, they're going to be online to check where that case is where the foreclosure case is. And then any attorney to is probably going to ask you to bring the documents that you've received, maybe the knock on the door or you know what what you've got, because that'll have some some dates that will say the trustee for the foreclosure is going to sell the house on the courthouse steps at this time on this day. And of course, gigantic, bold letters, that's that's what goes up on the wall when you're meeting with that client, because you do not want to get past that date. Because you then you risk losing the house and the less risk the better.

Steve Altishin  
Let's talk about property that maybe I want to sell before the bankruptcy, maybe it's got really good market value. Now maybe I want to, you know, spend it on something, can I do that? Can I sell something and then spend it on other stuff and then file a bankruptcy?

Darin Wisehart  
You can, people do it. Yes. And what I say always, always is get someone in your boat that you're going to work with. Because once you start looking at that, that's what I always call wheeling and dealing, okay, you want to start wheeling and deal and you can do it with bankruptcy. And you can do it without flying in the face of the rules, you know, for a lot of different things depending on what the situation is. But you want to have somebody in your corner that you're working with because if you do something that maybe you make a ton of money and you sell something or you know sometimes people will sell it to their brother and they sell it for all this car. Here's my this my baby car. This is awesome. And it's worth 12 grand, and they sell it to their brother for 4000 and then they file a bankruptcy and then the trustee can Say, I don't like that transaction that wasn't fair, it wasn't a good one, I want the car back or I want the money or I want, you know, there becomes a lot of extra complexity into that. And those types of things aren't simple anyway, because what the trustees job is to look at what you have, and to figure out if you have any assets, or anything to pay in for the betterment of the creditors, right. And so that's the trade off. And because that's their job, they have that job, you know, the assignment to look over all the transactions that you did, leading up to the bankruptcy to see if maybe there was one that they can undo. And if they can undo it, they can go grab money, and then distribute it to the creditors and pay themselves for their work. And that's, that's how, you know, that's how bankruptcy will work. And so if you're looking at possibly liquidating something, or selling some item, or you know, trading something in or getting rid of something, you always want to have the attorney in your corner at that point, because they can tell you whether there's a giant red flag that just went up, or Yeah, go ahead and do that, and then put the money in the bank, and maybe use it on everyday expenses or something like that. Sometimes that happens, and it maybe even needs to happen. But at the same time, it's always best to have the planning going so that you don't have you have as few issues down the road as you can have. 

Steve Altishin  
Yeah. You said that the bankruptcy object, what the trustee wants to make sure of is that the creditors are being not screwed over, that they just can't go sell something to your mom real cheap, or your brother real cheap, and creditors out in the cold. But what if I want to sell something to one of my creditors because I maybe want like that creditor or want to get some favorable treatment out of them later, in between creditors can I kind of choose before I actually file who to pay? 

Darin Wisehart  
The answer to that is get someone in your corner, because that is this is the tricky one, this is one of those where we could talk about 10 100 different scenarios, and a lot of them will be different. And it'll depend a lot on what your the rest of your case looks like. Or maybe what your income is, where your assets are the other pieces, you really need to make sure and I could go through a lot of different, you know, different possible scenarios on on that fact pattern. And it might change in the vast majority of them. So you don't ever want to just be you know, trucking through the weeds just hoping everything works out. That's, you know, that's that's not the way bankruptcy, that I would advise to go through bankruptcy, especially if you're, you're only doing it once you don't want to get through and have it just blow up all over the place.

Steve Altishin  
Well, how about I want to get a little tricky, but don't let it find it kind of looked around and you know, read some stuff. And there's, you know, there's this thing out there called exempt property and non exempt property and I'm looking at my property and it doesn't look like it's exempt property. And before I come to you, I say well, hold on, hold on, I'm gonna sell this thing, and I'm gonna buy maybe a car or something, you know, that might be exempt and and that way I can kind of, you know, skin the cat twice? Yeah. Are there any issues if whether you can do it or not, or timing issues involved in buying a non or selling a non exempt property so you can buy an exempt property?

Darin Wisehart  
There, there are definitely plenty of scenarios that, you know, that's that's what attorneys will refer to as bankruptcy planning. And adequate bankruptcy planning just leads to figuring out what assets are there, what are non exempt? What are exempt exactly what you said, just kind of finding a way to protect what you can and stay within the rules. And that's, you know, that's that's part of being a savvy bankruptcy attorney. Some attorneys like to do that a little more than other attorneys. There are certain attorneys around around my state and around the couple of states that I see all the time, that will not do that at all. They won't touch that because there's the risk that you're trying to manipulate the system and in bankruptcy. Good Faith is a really, really, that's the place you want to be. You want to always be in good faith. You want to be acting in good faith, you want to be functioning in that lane. You don't ever want to get out of that lane so that you are in the gray or in a bad faith area where people can come at you and say your bankruptcy is you know, we want to we want to pull the discharge because you were acting in bad faith when you did this transaction or this other thing. That's one of those where, you know some attorneys they don't mind the risk. They don't mind taking that bankruptcy planning. In pass, and then other attorneys will avoid that like the plague. And, you know, you just want to be sure that you've got an attorney in your corner that likes the path that you want to take, and is going to help you achieve the goals that you would like to see. Because, of course, my goal is always to keep the money in my clients pockets. If I can, I want to, I want to get them through as smoothly as I can, with the least amount of stress. And I want to keep as much of their assets in their hands so that their life stays as similar as it is right now on the ground as the bankruptcy goes through, and it's not always easy to do, but that's the goal. So part of that stress aspect of it, though, is once you start playing in the gray area, and you start doing things that can be considered bad faith, now you're asking creditors, you're almost demanding creditors to create stress for your process. And that's something that you always want to balance. And some people deal with it better than others. And of course, you know, we, we have wheelers, and dealers that come in that they want to do this, or they want to do that. And it depends on how creative your attorney wants to be or how much stress you want to have through the process. But you want to have an attorney that sees eye to eye with where you are. And that's part of getting the relationship with the attorney that you know, you're going to work with. Yeah.

Steve Altishin  
What about your marital status? Does that? Because, obviously, obviously, divorces include the distribution of property. So is that become an issue a timing issue? should I file bankruptcy before I get divorced? Or after I get divorced? And, or doesn't matter what I own? And what how it's gonna be, like, kind of get brought into this whole subject to?

Darin Wisehart  
It definitely does. Because we're timing, we're timing, do you file alone? Or do you file together? Do you have an opportunity to file a Chapter Seven as a household right now, that's an existing household, that may not be an existing household in six months or a year, you have all those different issues that come in, maybe you're not married yet, and you're going to get married, or you want to get married, and you have a lot of debt on your side, but you don't want the debt to ever interfere with your future spouse. And so sometimes you say, hey, we need to get filed right now while you're not married. Because right now, you know, you guys have a combination where you have half your budget split 5050. And so we can, we can do some things, we got a lot of extra creativity that you can have when you talk about when to time your filing a bankruptcy, and balance that to what the goals are dealing with what family size, you have, what your household looks like right now. And maybe what it's going to look like in another month or six months, or, you know, the down the road. Those are, those are certainly going to come into play for sure you want to make sure that you have those looked at.

Steve Altishin  
We're almost out of time. But I do want to kind of turn around and hit one last thing. And that is you've talked about all the different scenarios, all the different permutations, all the different things that can happen in a bankruptcy, and why you need to talk to an attorney and not just go off on your own. And that part of that is that is that even today, you get great answers. But those answers, you know, may or may not be bright in a person situation, this is legal advice, you know, and you really need legal advice. So can you talk about that just for a second about what what you see and what you hear versus getting legal advice.

Darin Wisehart  
Yeah, and that's, I mean, this, these types of things are designed for the broad picture. And for the the idea of this is where you can go and this is what we see as as the flags pop up. And you want to make sure that you have an exact on what your case looks like. Because when I set up a, you know, when I'm meeting with a client, I set up a worksheet to say, let's go through all the different pieces, there's a lot of balancing, and there might be a piece in there that you don't see a video for or that you don't see a write up for. And it might play in bigger, it might be a gorilla in the room, you know, the certain things that you just you might not know about that somebody who does this for a living will say, Wait a second, now we need to look at this thing, and balance that on these other two or three big goals that you have. And that that will help. I mean, the legal advice in something like this, we don't want to do legal advice, because we don't know your particular position. And we want to make sure we get all that data before we make a direction on where you're gonna go.

Steve Altishin  
Well, and that's that is so important. So, Darin, thank you so much today for sitting down to talk with us about filing bankruptcies when it comes to property. Again, super informative. People don't think about this kind of stuff, you bring it to their attention and get them to see a wire. So thank you so much. Yeah, no problem. Thanks. And everyone. Thank you for joining us today. If anyone of course has a further question. We can get you connected with Darren and until next time, stay safe, stay happy and be well.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Pacific Cascade Legal, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at pacificcascadelegal.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.