Their efforts to claim exemptions under the bankruptcy code were particularly aggravated by the fact that they claimed stupidity (on issues like the definition of asset) that was implausible given their education. "Mr. and Mrs. Warren are both certified public accountants. He was licenced in 1985 and has 11 years’ experience with Big Five accounting firms. She was licensed in 1989." As the trial court explained:
The Debtors testified that Mr. Warren met numerous times with their attorney and that Mrs. Warren made multiple calls to discuss the Schedules with their attorney, so they cannot argue they did not understand what information to include in the [Schedule of Assets] and the Schedules. The Warrens have technical training as accountants and as such, admit that they understand that prepaid insurance is an asset. . . . Unlike a debtor who is inexperienced with financial affairs or one who relies on incorrect advice or information in preparing his statements and schedules, the Warrens are sophisticated debtors—each with degrees in accounting and significant finance experience.
The Warrens keep meticulous records including detailed paper and computer records of their financial affairs that should have provided the answers necessary to accurately complete their bankruptcy documents. . . . The evidence indicates the information was available to assist the Warrens in compiling their papers. They prepared a list of creditors which amounts to four and a quarter inches thick stack of paper so that all possible contingent debt would be included in their discharge. The Debtors knew how to be inclusive and were quite accurate when it suited them.
The Court also noted some outrageous valuations of personal property. Among them:
Warrens claimed as exempt 14 computers, which they valued at $200 in total despite having paid $31,000 for the used computers seven months earlier. Section 78-23-8(1)(d) provides a $500 exemption for “heirlooms or other items of particular sentimental value.” Under this exemption they claimed “wedding rings” valued at $10, a pearl necklace valued at $2.00, a gold ring valued at $3.00, a chair from Spain valued at $0.00, and five paintings valued at a total of $10.00. Section 78-23-8(1)(a) provides a $500 exemption for “sofas, chairs, and related furnishings reasonably necessary for one household.” Under this exemption the Warrens claimed over 30 items, including 6 TVs valued at $50 total, china valued at $1.00, crystal valued at $1.00, a stereo valued at $5.00, and a treadmill and stairmaster valued at $20.00 total.
Shady transactions selling a coin collection at a massive loss to an undisclosed buyer sealed the deal.
The opinion was gentle towards bankruptcy counsel, who fortunately were involved prior to 2005 bankrutcy code reforms that give counsel greater responsibility to determine the accuracy of client filings, but accepting the client valuations in this case on forms they no doubt prepared was, at least, aggressive advice that didn't pay off in the end.