There are a growing number of social networking sites out there on the world-wide-interwebs that people are latching onto. In fact, both the firm and I have latched onto Facebook (we just lauched our Fan page this week!). So I was intrigued after recently reading that a growing number of domestic relations attorneys were beginning to scour sites like Facebook in an effort to get information on opposing parties. At first, I found it merely interesting as I once practiced domestic relations law. But the subject gnawed on me for several days. Then, earlier this week, I read that collection agencies are trolling sites like Facebook looking for debtors. Then it dawned on me: if collectors are doing it, and divorce attorneys are doing it, there really is nothing stopping any party in any legal case from looking into Facebook or other social networking sites in an effort to gain a legal advantage of any opposing party. And this rings true in the world of bankruptcy.
Archive for the ‘Chapter 11’ Category
Social Networking Sites and Bankruptcy: The Intersection is Dead Ahead
Thinking About a Consult?
Today, as I found myself on the phone repeating myself – a lot. It then occurred to me that I could probably explain how our consult process works here on the website. In other words, how do you get from reading this website and digesting the information to getting some face-time with a lawyer (i.e., me).
Here’s how.
The Sunday News
A fellow bankruptcy attorney shared this article that appeared in last month’s New York Times Magazine. I see in it some of the same difficulties I see in clients. It also makes me question how “half-empty” the glass really is. Although in the interest of full disclosure, the writer has a book coming out. In other news…
ONE FLAG! Six Flags Amusement Parks files for Chapter 11 protection.
Nashua NH Telegraph: Welcome to the New Consumer Economy.
Boston Herald: Consumer spending may never be the same as it was.
South Coast: Home values could take years to recover. We also could be hitting bottom (I’m not being sarcastic, it says the market “could be a reading a valley”). I could also be a ledge (ok, that was sarcastic).
Nantucket foreclosures. I wonder if these homeowners claim their loan was predatory? I also have to question whether it was.
A bad apple is removed from the barrel: Brockton lawyer settles fraud suit with the Massachusetts Attorney General’s office.
Why Bankruptcy Lawyers Require Fees Before Filing
There really is a good reason. And to help prove my point, I turn to an October 2008 decision out of the US Bankruptcy Court for the Eastern District of Pennsylvania: In re Mansfield. In that case, the court was called upon to ask what it viewed as a “deceptively simple question:” may an attorney who charges a “flat fee” for services pursue the uncollected balance due?
In this case, the attorney charged a flat fee for preparing the necessary documents and schedules, but also for attending the first meeting of creditors (which occurs after the case is filed). The fee was paid in one large installment, with the remaining balance divided into smaller installments which were paid or due after the case was filed.
The US Trustee sought a review of the fee practice as well as disgorgement of the fees collected after the case was collected. The attorney claimed there was no authority supporting the relief sought by the US Trustee, and he was entitled to collect at least the value of the services he rendered.
The court did not agree. Under Section 727(b) of the Bankruptcy Code, a “debtor’s obligation under a fee agreement to pay a fixed or flat fee to his attorney for legal services rendered pre- and postpetition in a Chapter 7 case, regardless of how the fee is scheduled to be paid, is a prepetition debt that is dischargeable. The attorney avoided having to return the fees paid because there is a difference of opinion among Bankruptcy Courts throughout the country as to whether the practice of collecting fees post-petition is permissible….and if permissible, the circumstances they are permissible.
In flat fee cases (and it is fair to say most, if not all consumer Chapter 7 cases are flat fee), the court found that the “division of a flat fee arrangement into prepetition and postpetition parts to be conceptually inconsistent and therefore untenable. The Court therefore joins those other courts which hold what when a flat or fixed prepetition agreement is at issue, the fee must be paid in full prior to the commencement of the debtor’s case or the fee is discharged under Section 727(b).”
So in reality, when an attorney requires fees and costs prior to the filing of the petition, it’s because they need to get paid…unlike creditors in a Chapter 7 who in many cases do not get paid at all. There’s case law all over the country that supports it, and other case law that suggests that it can be done. While the current code and the case law leave room for creative argument, debtor’s attorneys can be expected to be wise and take the path of least resistance: earn the fee and serve the client. Certainly, there are bigger battles for debtor’s attorneys to engage in for their clients other than fighting for a fee for postpetition services.
In re Mansfield, US Bankruptcy Court, Eastern District of Pennsylvania, No. 08-11648 SR (Ocobter 2, 2008)
The Easy Life of a Consumer Bankruptcy Attorney
Every now and then, I get a call from someone who already has a bankruptcy case pending. Sometimes, they do not like how things are going with their attorney. Other times, they don’t have one at all and find that they are in over their head. And sometimes, by the time they are calling me, they find themselves in what can best be described as a world of hurt. Today, I received such a call.
The debtor’s chapter 13 case was filed almost two months ago. There is still no plan filed. No post-petition mortgage payments have been made. The debtor just got served with a summons and complaint because not all creditors were properly listed on the schedules (and I’m not sure the matrix was done right). The IRS has filed a notice that prepetition tax returns have not been filed. There are motions for relief from stay from secured creditors, and from the tone of them, they seem frustrated. No plan payments have been made, and the creditors meeting is soon. I am also assuming that no tax returns or payments advices have been sent over the chapter 13 trustee. In addition, by looking over the schedules, it appears that the debt is too high for chapter 13 eligibility. After I got all that from reviewing PACER, I decided to ask an easy question first:
House Passes Bill, Filing Fees Increasing
On December 28 I let readers know that Congress was set to vote on a bill that would, among other things, increase filing fees.
Yesterday, by a vote of 216-214, the House passed the Budget Reconciliation Act (S. 1932). The President is expected to sign the bill within the next week or so.
The filing fee increases are set out in my December 28 blog entry, with apparently one change. Congress intended to raise Chapter 11 fees from $1,039 to $2,789. However, it appears that the Chapter 11 increases will apply only to railroad cases.
The Elephant in the Room: Married Same-Sex Debtors
The decision to seek bankruptcy protection is never easy, and when two people are involved, it is not necessarily easier. Married opposite-sex debtors have the option of seeking bankruptcy protection jointly in one case. But as a growing handful of states recognize same-sex marriages or its legal equivalent (“unions”), and as the legitimacy and constitutionality of the Defense of Marriage Act (or DOMA) continues to be litigated in courts across the country, same-sex debtors seeking bankruptcy relief face even tougher decisions.
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Tags: Commentary - Legal, Consumer Rights, Defense of Marriage Act (DOMA), Joint Debtors
Posted in Bankruptcy, Chapter 11, Chapter 13, Chapter 7, Consumer Rights | No Comments »