Monthly Archives: April 2015

Supreme Court Puts Limits on (Dog) Sniffing Around

In 2012 a Nebraska police officer pulled over a motorist for driving on the shoulder of a highway. The officer had his trained K-9 in tow. In the course of the stop, the officer spoke with both the driver and the passenger, took information from them, and ran warrant checks.

The officer was suspicious, but didn’t seem to have any objective indication that anything other than a traffic violation was in the air. He called for a second officer, then issued and explained a warning ticket to the driver.

After issuing the ticket (about 20 minutes into the encounter), the officer continued to detain the men. His colleague arrived on scene; the officer then walked his dog around the vehicle twice. This was about seven or eight minutes after he had issued the ticket.

The dog found drugs.

The U.S. Supreme Court considered these facts in a decision this month. The majority acknowledged that dog sniffs during lawful traffic stops are legal under the Fourth Amendment to the federal Constitution. But it explained that an officer needs reasonable suspicion to prolong a traffic stop for a dog sniff. (Rodriguez v. U.S., 575 U. S. ____ (2015).)

If the dog sniff occurs during “the time reasonably required to complete” the stop’s “mission,” then it’s okay. Checking the driver’s license, registration, and proof of insurance, and running a warrant check are part of a traffic-stop mission. But once the traffic-stop tasks are or should be complete, an officer can’t continue to hold a driver. Whether the dog sniff happens before or after the officer issues the ticket, the sniff is illegal if it adds time to the stop.

The Supreme Court explained this rule, then sent the Rodriguez case to a lower court for a determination of whether the officer had reasonable suspicion that would justify the extended detention—reasonable suspicion of something other than the traffic infraction. Without that suspicion, the drugs the dog unearthed would be inadmissible in court.

The bottom line: Officers can’t drag out your average roadside detention in order to get a dog to sniff around your vehicle.

Should I Vacate a Money Judgment, Settle the Judgment, or File for Bankruptcy?

Leon Bayer PhotoASK LEON 

Bankruptcy  expert  Leon Bayer answers  real-life questions.

Dear Leon, 

I have a credit card judgment against me for $20,000. I am trying to improve my credit and am wondering what to do. Should I try to vacate the judgment, settle with the judgment creditor, or file for Chapter 7 bankruptcy? 

Here are the facts. I did default on payments for the credit card that is the subject of the judgment.  However, I can prove that the judgment creditor did not properly serve me with the lawsuit. I also have lots of other old credit card debt, but the statute of limitations for suing has passed on those and they will fall off my credit report in a year. 

I spoke to Lawyer #1 who will charge me $2,000 to represent me in a motion to vacate the judgment based on the fact that I was never properly served with the lawsuit. He feels I have a good case for that to be granted.  

I spoke to the lawyer for the judgment creditor. The creditor will take $8,000 as a full settlement of the judgment. I have enough money to do that, but then the judgment (even though paid off) will remain on my credit record for many years to come. I’d like to avoid that. 

I spoke to Lawyer #2 who will charge me $2,000 to represent me in Chapter 7 bankruptcy. The bankruptcy will damage my credit, but save me $6,000. 

What’s the best course of action to improve my credit?  Vacate the judgment? Settle the judgment? File for Chapter 7 bankruptcy?  

Yours truly, 

Alfred

Dear Alfred,

Your best course of action might be to settle the judgment for $8,000 and get the judgment creditor to agree to try to vacate the judgment as part of the settlement (perhaps by kicking in a little more money). If you just vacate the judgment, you’ll eventually be back in the same boat you are in now – owing a judgment. And if you file for bankruptcy, that will remain on your credit report for ten years.

Below are details on each of these options.

Vacating the Judgment

Winning a motion to vacate the judgment doesn’t mean you’ve won the underlying lawsuit. It just means that you now have an opportunity to answer the lawsuit and fight it in court. But if you owe the money that is the subject of the lawsuit, it’s reasonable to assume that you will eventually lose the case and have a judgment entered against you. On top of that, you’ll be out an additional $2,000 for the fees you paid your lawyer. For this reason, vacating the judgment is probably not a good strategy.

Settling the Judgment

I agree with your credit concerns about settling the judgment for $8,000. The judgment will stay on your credit report for ten years. Even if your credit report shows that you paid it, the damage is done. (Learn how long negative information will remain on your credit report.)

Filing for Chapter 7 Bankruptcy

Chapter 7 bankruptcy is cheaper than settling, since you’ll pay just $2,000 to your lawyer rather than $8,000 to the judgment creditor. However, bankruptcy, like a judgment, will stay on your credit report for ten years.

How long ago was the judgment entered against you?  If it was entered some time ago, then it will fall off your report sooner than will a bankruptcy. (For example, if the judgment was entered five years ago, it’ll come off your report in five years. If you file for bankruptcy today, it’ll come off your report in ten years.)  If that’s the case, the bankruptcy will damage your credit for a longer period of time than will the judgment.

A Fourth Option: Get the Creditor to Vacate the Judgment as Part of the Settlement

Here’s another idea to try. Tell the plaintiff’s lawyer that you’ll settle the judgment for $8,000 but that as part of this settlement the creditor must:

  • make a good faith effort to vacate the judgment, and
  • if successful, dismiss the lawsuit.

If it all works out, the debt will be resolved and you won’t have a judgment on your credit report.

The creditor’s lawyer will be reluctant to agree, because this route will require extra work. So be ready to sweeten the deal and make it worth the lawyer’s time. Offer more money, say $1,000, to cover the creditor’s expenses incurred in making the motion to vacate the judgment and dismissing the lawsuit. If successful, the extra money you pay will be a drop in the bucket compared to the benefit you’ll get for your improved credit report.

Other Considerations When Settling a Debt

Here are a few other things to think about when settling the judgment.

Bon voyage on your quest for good credit!

– Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

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What Is Curb Appeal, Anyway?

butterflySpring is officially here, and the real estate market is responding just as it’s supposed to. Home prices are up across the United States, even reaching new highs in some areas. (Go, Colorado!)

Home sellers who’ve decided that now is the time to sell are, among other tasks, sprucing up their front yards in search of that elusive selling factor known as “curb appeal.”

What exactly is “curb appeal,” and how important is it in selling your home? The late, great real estate journalist Broderick Perkins called it “the first impression your home conveys to prospective buyers,” which “should arouse shoppers’ desire to own the home and entice them to cross the threshold.”

Crossing the threshold is a big deal, apparently. As Washington real estate agent Patricia Wangsness told me, “If the home doesn’t look good from the outside, buyers don’t want to get out of the car.” Many real estate agents have described the same experience.

That raises the question of what goes into making a house look “good.” A Coldwell Banker checklist of ways to improve curb appeal breaks it down into such categories as:

  • paint and siding
  • other parts of the home exterior, such as gutters, front door, and windows
  • flower beds, and
  • lawn.

In other words, it’s not just one thing, like landscaping, but a combo platter. Folks who like to measure things, and ask questions like, “What financial difference will it make if I invest in making my home’s exterior look better?” should not expect easy answers.

For instance, while a study by Clemson University reportedly found that upgrading landscaping from “good” to “excellent” could add 6% to 7% to a home’s value, a home with great landscaping could still have lousy curb appeal if the shingles and gutters were falling off.

Texas real estate agent Greg Nino confirms, “A home’s overall value can be raised, lowered, or destroyed depending on curb appeal” and related factors, but the exact difference is “impossible to quantify by percentage.”

Perhaps it would help to think of it as a combination of maintenance and aesthetics. The latter lures buyers in, while the former assures them that they’re not taking on a fixer-upper. Massachusetts real estate agent Nancy Atwood explains that curb appeal can be critical to home buyers who “feel that folks who take care of the outside of their home are more apt to do critical updates on the inside. So when they do drive by’s on homes, if the outside looks messy, unkempt or neglected, they tend to avoid those homes.”

When you come right down to it, the concept of curb appeal has a lot in common with that of judging a book by its cover—in both cases, the insides may be better than buyers expect, but that first impression is hard to shake. It may end up being the only impression.

 

JUNE 15 BECOMES NEXT DEADLINE FOR SOME

U.S. citizens and resident aliens who have lived or worked abroad during some or all of 2014 may have a U.S. tax liability and filing requirement this year.

A filing requirement generally applies even if a taxpayer qualifies for tax benefits such as the foreign earned income exclusion or the foreign tax credit which nonetheless may reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return, the filing deadline for which is June 15, 2015 for U.S. citizens and resident aliens whose tax home and abode are outside the United States on the regular due date of their tax return.

To use this automatic two month extension, taxpayers must attach a statement to their return explaining their situation.

Check out IRS Publication 54 (“Tax Guide for U.S. Citizens and Resident Aliens Abroad”) for more info.

Jointly Owned Homes in Bankruptcy: What Happens?

housedividedA house divided against itself cannot stand.  

— Abraham Lincoln (assassinated 150 years ago yesterday)

ASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

My sister and I are joint owners of a home left to us by our parents. I live in the home and pay for the taxes and upkeep. There is no mortgage. My sister recently filed for Chapter 7 bankruptcy.  She and I are barely on speaking terms. 

Here’s the problem. I got a letter from the bankruptcy trustee telling me that if I want to keep the home, I have to buy my sister’s share of the home. If I don’t, the trustee will sell the house. The home is worth $200,000, and I don’t have $100,000 to fork over to the trustee. 

Can the trustee do this?  

Yours truly, 

Jim

Dear Jim,

Most likely the bankruptcy trustee will be able to sell your home if you can’t come up with the money. But once the home is sold, the trustee will turn over half of the proceeds to you.

(I am assuming that your parents did not create a legally binding directive permitting you to remain on the property. If they did, you should immediately get a lawyer to respond to the trustee.)

What Happens to Property in Bankruptcy

Your sister’s Chapter 7 bankruptcy filing automatically created a bankruptcy estate composed of all her assets. A bankruptcy trustee was appointed to administer the assets in her case. Like everyone filing for bankruptcy, she can keep certain property if it is “exempt.” However, homes in which you don’t live are usually not exempt. (Learn more about how Chapter 7 bankruptcy works and why the trustee sells property.)

If an item of property is not exempt, the trustee can sell it and use the proceeds to repay creditors. Even though your sister owns only half of the property, the equity in her half is a nice chunk of money that could go to her creditors.

When Can a Trustee Sell Co-Owned Property?

A trustee can sell a piece of property even if the debtor (your sister) doesn’t own the whole thing. But in order to do so, the trustee must meet the following criteria:

  • It’s not practical to divide up the property. A large tract of land might be subdivided to sell just the debtor’s share, but a single house and lot can’t be sawed in half to do that.
  • Selling the debtor’s undivided interest would bring in less money than selling the entire parcel. In your situation, it is unlikely that anyone else would buy your sister’s half of the property for what it is really worth, because the buyer would still have to deal with you.
  • The benefit to the bankruptcy estate from a sale of the entire property outweighs the detriment that will be faced by the other owners.
  • The property is not used for the production of energy.

In your situation, it’s extremely likely that the trustee will be able to sell the home. But keep in mind, once the trustee does so, he or she will have to give you half of the proceeds from the sale. So, if the sale nets $200,000, you will get $100,000 and the bankruptcy estate will get the other $100,000 (which will then be used to pay your sister’s creditors).

Coming Up With Money for the Home

If you have decent credit and you can afford to make payments on a $100,000 mortgage, consider getting a home loan and using the money to buy your sister’s share from the bankruptcy estate. In that way, you’ll become a 100% owner of the home.

–Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer. 

Find Leon on Google+