The answer is: it depends.  On February 24, the US Supreme Court ruled in the case of  Maryland v. Shatzer, that a Miranda invocation has an expiration date.  In their opinion, a break of at least 14 days provides a sufficient time period for the police to wait before attempting to re-question a suspect who has previously asserted his right to remain silent under Miranda.  If Miranda rights are given and waived, that waiver will be good and any incriminating statements made will be admissible.  However, the 14-day waiting period is based on the facts that the suspect will be at liberty, or at least not in police custody, during that period. This even applies to a prisoner who is in general population during that time. This is an important fact to bear in mind.  Just because you asked for a lawyer once, doesn’t mean you do not have to “renew” it at a subsequent interrogation.  Be sure to speak up and be pro-active.  Say to the officers at the very first question: “I continue to stand on my rights under Miranda, and I want a lawyer.”

Under the bankruptcy code, a debtor with a secured debt must declare in the petition his or her intentions regarding the collateral: i.e. is he going to surrender it to the creditor, pay of the balance owed, or reaffirm the debt with monthly payments?  The first two are self-explanatory, but the third can come back to haunt you.  In a reaffirmation, you agree in writing that the bankruptcy will not discharge (wipe out) your personal obligation to pay the debt to the secured creditor and that you will make regular payments on the debt over a certain period of time.  If you make all the payments, great; but if you do not, the creditor has the right to repossess the collateral and hold you responsible for any shortfall on the balance due after sale.  With a car loan, this is very straightforward; with a lien held by outfits like Best Buy, it is more complicated.

Under New Jersey Law, a lien can only be perfected if there is a writing in which the borrower/debtor agrees to the lien (this is usually in the card agreement or application form) and the collateral is sufficiently described so as to be readily identifiable.  Under the bankruptcy code, the creditor is only secured as to the value of the collateral at the time the bankruptcy is filed, not the original purchase price.  In almost all circumstances, this means that not all of the balance due is secured.  If the collateral has no value, the creditor is not secured at all.

All of this makes it extremely important that claims of security by Raymour & Flanagan, Best Buy, Sears, and the like, be carefully reviewed.  There are important issues like:

• Do you still have the collateral?  If that Xbox game you bought at Best Buy was a Christmas present, then that comes off the list;
• Is the collateral of any value?  New Jersey health laws do not allow the resale of a mattress or a box spring, so if that bedroom furniture purchase included them, that comes off the list.  It might be an item of consumer electronics, where a newer version has come out, rendering the older one virtually valueless;
• Is the collateral still functional?  I had a client who bought a laptop that later crashed irretrievably and would no longer boot.  This left it with little or no value.
• Is the collateral goods at all?  Is the creditor trying to include, for example, what you paid for an extended warranty on that new flat screen TV?

It is for these reasons that I challenge every claim of security I get on these cards.  Many times the creditor will not be able to come up with all the necessary documentation to prove the lien, or the value of the goods they can identify is negligible.  If the collateral is still in your possession, functioning, and resell-able, the next question is determining current value.  The IRS has a depreciation table that can be useful in coming up with a value for used furniture, although it does not take into account condition.

Once the goods have been identified and given a reasonable, real world current value, you can then negotiate a payment plan if you want to keep the goods.  Oftentimes the creditor will agree to a payout over years with no interest.  Once a deal is in place, a reaffirmation agreement is drafted, which you must sign and get back to the creditor within 45 days of your meeting with the trustee.  This agreement must also identify the collateral with specificity.  More than one agreement I have received on furniture has described it as: “household furnishings.”  Does this mean that if you stop making the payments months down the road, they can repossess the contents of your home?  Most likely not, but it does muddy the waters a bit.

The bottom line here is that if you file bankruptcy and you owe money on a card such as this, you should let your attorney know, and any claims made by these creditors after you file should be looked at carefully.  In this way, you can make sure that, if you do have to reaffirm the debt, the amount is as small as possible to assure you the fresh start you need.

]]> http://blogs.richardsonlawoffices.com/2010/03/05/lien-on-couch-or-computer/feed/ http://blogs.richardsonlawoffices.com/2010/03/02/refund-anticipation-loans-always-bad-idea/ http://blogs.richardsonlawoffices.com/2010/03/02/refund-anticipation-loans-always-bad-idea/#comments Tue, 02 Mar 2010 21:20:10 +0000 Steven J. Richardson http://blogs.richardsonlawoffices.com/?p=211 Tax time always engenders a blizzard of TV ads about various tax preparation companies offering to do your return and all the different services they offer.  While it is often a good idea to have a professional do it, not all of the services they offer are ones you should use.  The Refund Anticipation Loan (or “RAL”) is one of them.

People in financial difficulty, or those who just can’t wait to buy that big flat screen TV, are often in a big hurry for money.  This is especially true at this time of year, when these TV ads hawk how quickly you can get it.  However patience, in addition to being a virtue, is a sound financial practice as well.  The IRS has 45 days from the date you file your return to process it and issue a refund check.  After that, they must pay interest.  Usually, the refund is paid in one to two weeks.  You can even check up on your refund status to see when you will get it.  The earlier you file your return, the earlier you can get your money.  Is getting that money so critical that you will take less than you are owed (remember, it is a loan, so the tax preparer gets its cut when the refund comes in) because you can’t wait up to a month and a half?  Here is an excellent video from consumeraffairs.com that summarizes the pitfalls of these loans.

Some companies, like H & R Block, offer to put it on a debit card, what they call the Emerald Card.  This is another bad idea for reasons more fully discussed in an excellent post over at the Bankruptcy Law Network.  The bottom line is: Be patient and “just say no” to the Refund Anticipation Loan; you will be better off in the long run.

The problem is, for New Jersey, the amounts are going down from their current numbers and not up. This could result in a debtor being above the median on the 15th, and below the median on the 14th.  Just take a look at the changes:

• Household of 1: $60,026 to $59,812
• Household of 2: $72,000 to $71,744
• Household of 3: $86,070 to $85,764
• Household of 4: $103,261 to $102,894

To most people, this would be minor; but for some that are on the borderline, it can be the difference between a simple case and a more involved one.  Also, if you are over the median now and were thinking you could wait until the numbers adjust up, think again.  In any event, if you are preparing to file a bankruptcy in New Jersey, you should consult with your attorney on how these changes may affect your case.

Many times, credit card companies will agree to compromise the balance, if it is paid off in one lump sum.  The problem comes in when they knock more than $600 off the bill.  In those cases, the banks are required to file a Form 1099C with the IRS declaring that discount as income.  That’s right, you may well have to pay taxes on the money you don’t have to pay the bank!  The IRS has a very informative publication on this.   Like any rule, however, there are exceptions.  In this case, there are three:

1. You are insolvent as the time the debt is written off. This is defined by the IRS.
2. You file bankruptcy before the debt is written off and the 1099C is issued.
3. You are a homeowner of residential real estate, where there was a sale or foreclosure that did not result in payment in full of the mortgage liens, and the debt was written off during 2007 to 2012.  This one comes to you courtesy of the Mortgage Forgiveness Act of 2007. The IRS’s website has examples to help you determine if you can qualify for this exception.

In essence, if you file bankruptcy prior to the issuance of the 1099C, or the forgiveness arose out of the sale of your residence between 2007 and 2012, there is no tax liability.

I advise my clients that if they are looking to make deals with all their creditors for a certain percentage of the overall debt, they should do so with the advice of an accountant to determine the tax implications of the deal.  If the total amount of money necessary to pay off the debt plus the taxes still makes financial sense to you, then go ahead.  At least the 1099C will not come as a surprise, and you will have the money ready to pay the IRS when you file your return.  If it is not, then bankruptcy may well be a better option, and you should consult with an attorney.

First of all, if your business is going through a rough patch, do not use the trust fund money to pay operating expenses. That money is not yours, it is payment on the tax debt of your employees, and must be preserved.  It must also be turned over to the taxing authorities within a particular period of time, so don’t even be late!  If your business goes under, let regular unsecured creditors go wanting.  If you do that to the IRS or the New Jersey State Department of Revenue, they will hold you personally responsible, and it will never go away.

Second of all, if it is not your business, you can still be held personally responsible for this unpaid tax debt (whether it is trust fund or unpaid business income tax) if you hold certain positions in the company, like bookkeeper, comptroller, or are an officer of the corporation (especially treasurer).  As the Bankruptcy Law Network Site pointed out in a recent post, some of the factors the courts look at include:

• did the employee serve as an officer or director of the company?
• did the employee control the company’s payroll?
• did the employee determine which of the company’s creditors to pay and when to pay them?
• did the employee participate in the corporations day to day management?
• did the employee have the ability to hire and fire employees?
• did the employee possess the power to write checks?

In this instance, you come first, and not the business; be sure that your employer understands that you cannot allow that tax to remain unpaid, as you could be made to pay it yourself.   Do not let a drowning man take you down with him.

The bottom line here is that if you are contemplating filing bankruptcy, and you think that you may have one of these problems, you need to bring this to the attention of your attorney, so he or she can be sure to deal with it properly.  Even better, heed the advice above and try to keep yourself from being in this position in the first place!

Until this past summer, there has been very little case law defining the concept of “quasi-public area.”  In August of last year, however, the New Jersey Appellate Court ruled, in State v. Bertrand, that a private parking garage with sufficient room for 300 spaces constituted a quasi-public area sufficient to trigger the requirement that the intoxicated defendant (who was a trespasser there) submit to providing samples of his breath.  Although this does help in defining the language of a particular statute, the ultimate outcome also provides an ironic lesson.

In that case, the Defendant was found passed out on a bench in the garage a distance from his vehicle, which had car keys in the ignition.  He was belligerent with the police officers, showing clear signs of intoxication, so he was asked to submit to a field sobriety test.  He refused to without consulting with an attorney first.  He was then arrested and asked to submit breath samples; he refused.  As a result, he was charged with both drunk driving and refusal to submit to a breathalyzer test.   Because the state could not prove he was operating the vehicle while intoxicated, the court dismissed the charge.  However, he was ultimately convicted on the refusal.  If he had simply given the breath sample, he would have been cleared!  Instead, he must suffer the same penalty as a drunk driving charge, and also, possibly, have that conviction interpreted as a prior offense if he does get convicted and sentenced for DUI in the future (even though he was never proved to have been guilty in the prior instance)!  Again I say, if you are stopped for DUI and asked to give a breath sample, comply.  Not doing so will simply land you in trouble no matter what!

As was recently observed on an excellent bankruptcy site, the Bankruptcy Law Network, “cosigning is not a character reference , [nor is it] . . . a vote of confidence that you think your friend has the ability to pay the debt.”  Far from it; you are agreeing to pay the debt if they do not. This should give you very serious pause before you sign on the dotted line.  What do you know of this person?  Is he/she in good financial shape?  Is he/she, a mature, responsible person?  They had better be, because you are putting your own wallet (and credit rating) on the line if they are not.  Asking you to cosign on a loan or other type of debt is asking a lot.  If you have the slightest doubt, don’t do it. It goes back to the old adage about saving a drowning man; don’t try it if you are just going to be dragged down with him.  Sometimes it is better to lose a friend than to risk losing your financial future.

This stop, however, could lead to bigger trouble.  In a case this past summer, the New Jersey Appellate Court ruled in State v. Barrow that a pair of tiny boxing gloves, measuring 3 ½ inches by 3 ½ inches that were hanging from the defendant’s rear-view mirror, provided a police officer with sufficient reasonable suspicion to stop of the defendant’s car. This stop ultimately resulted in the discovery of drugs in the defendant’s possession. The irony of the case is that the court commented that the tiny gloves may not have been large enough to support a conviction under NJSA 39:3-74; they just provided enough probable cause to support the stop and the discovery of the drugs!  Two things to bear in mind here: 1) be sure that your rear view mirror is clear of items that may obstruct your view; and 2) Once the police have justification to stop you for one offense, said stop may well lead to other, bigger, problems for you!

On January 7, 2010, the consequences became even more serious.  New Jersey’s Appellate Division reversed a long-standing precedent, ruling that a prior conviction for refusal will now count as a prior DWI conviction for purposes of sentence enhancement.  Under New Jersey law, a second offense carries a two (2) year license suspension, while a third offense carries a ten (10) year suspension and mandatory jail time.  This ruling becomes important in cases where, because of a lack of evidence as to impairment, the DWI is dismissed, but the refusal still stands.  I had this happen to a client a few months ago, where the field sobriety test was not enough to prove impairment, but was enough to show probable cause to arrest and obtain a breath sample.  The DWI was dismissed, but he plead to the refusal.

There is another impact to the ruling as well.  Under New Jersey law, if there is more than a ten (10) year period between a first and a second offense DWI, the second is treated like a first for sentencing purposes.  In the case before the Court, the defendant had a 1979 DWI conviction and a 2006 Refusal Conviction. The defendant argued that she should be considered a first offender since the only prior DWI case was more than 10-years old and the refusal does not enhance the DWI sentence. The Appellate Division ruled that she should be treated as a third offender as the refusal conviction must now be regarded as a DWI conviction for sentencing purposes.  Ouch!  All of this simply reinforces what I tell my clients: blow into the tube and take your chances.  Maybe your reading will be too low (below .08), the machine won’t be working properly that day, or the police may not follow proper procedures or be properly trained.  In other words, if you comply, you have possible defenses and a fighting chance; if you refuse, you are dead in the water, absent an issue of probable cause to arrest.