I’ve compared my role as a debtor’s attorney as similar to that of a boy scout. My job is to help my debtor client cross the road without getting hit by the bus. A big part of that job is done while preparing. In essence, I get behind the steering wheel of the bus and I ask myself “if I were trying to run over the debtor, what would I be looking for first?” Perhaps a better, and far less macabre way of looking at how I do my job is this: when preparing my client’s case, I pretend that I am trustee and I ask myself: what has my client told me or shown me that would send up a red flag. What could make my client’s life even more difficult than it already is?
Posts Tagged ‘attorneys’
If Only You Knew…
Wednesday, August 12th, 2009
Let’s assume that you work for a company and things are not going well. You start negotiating a severance. Does the employer have an obligation to share with you its intention to seek bankruptcy protection? Maybe. If you ask. But what if you don’t ask? What if they don’t tell? What if perhaps, you really should have assumed that bankruptcy was an option that might be considered even though it’s not mentioned at all during the negotiations? These issues were faced by the 7th Circuit in the case of Smith v. Duffy, decided on August 3. They answered the questions but rather than discuss them, I’ve posted the Court’s decision here.
I will share one thought. The case discusses, among other things, the duty of candor that parties owe each other – and uses the attorney-client relationship as an illustration of when that duty of candor not only arises, but is expected. But it also does so by reminding us when that duty of candor simply doesn’t exist.
The case of a special relationship, such as the lawyer’s fiduciary obligation to his client, is really just a special case of the general proposition that context can create a duty of candor. The lawyer’s specialized knowledge invites the client to repose trust in what the lawyer tells him, and the client’s expectation would be shattered if the lawyer could be uncandid with impunity, as is normal in arm’s length dealings between buyers and sellers.
I encourage you to read this case, and put yourself in the shoes of the now very disgruntled employee. Ask yourself – when entering into an arm’s length negotiation, are you equipped to handle the negotiations yourself? Or might you find a benefit by having someone by your side who has a legal duty to be candid with you. Perhaps better said – are you better off being told what you want to hear? Or are you better off hearing what you need to know?
Read the case and think about that the next time you think about buying a home, or refinancing or modifying your real estate mortgage. And most definitely think about it if your boss calls you into your office and wants to discuss your departure from the company.
A Discussion About “Professional Courtesy”
Tuesday, August 11th, 2009
A few months ago, I terminated representation of a particular client. There are many reasons representation ends – and from a factual standpoint, they are no one’s business except me and the client. The reasons for that are quite simple: I am duty bound to keep the confidences of my client. My fired client then went to another attorney who, after meeting with him, decided to call me.
“Why did you fire the client?” I was asked.
“You know that I cannot disclose the reasons why.” I replied.
“Oh, is that how you want to play?!” was the intemperate response. The conversation then got a tad ugly, and the new attorney insinuating all sorts of nice things. None of which were true – and none of which I could discuss.
And all I could do was sit there in silence. (more…)
Wondering What a Bankruptcy Attorney Really Does?
Sunday, June 21st, 2009
Thursday I was in Bankruptcy Court waiting for my client’s case to be called. Before the judge took the bench, a gentleman sat behind me and tapped me on the shoulder.
“You a bankruptcy lawyer?” he asked.
“I am.”
“How easy is it for me to convert my case from Chapter 13 to Chapter 7?”
I asked if he had an attorney, and he replied that he did not. He was representing himself (which is not a good idea in Chapter 13, by the way… I’ll talk about that another day).
I told him that the Bankruptcy Court had a Pro Se Law Clerk and that he should direct his questions to the law clerk, who can then either answer the question or direct him to a resource that can.
“Oh, I see,” he replied. “You want to get paid, huh?.”
Imagine if you were walking down the street and you saw a person who you knew to be a dentist. Would you go up to him or her, peel back your lips to show a molar and ask “excuse me, but do know how easy it would be to but a cap on this? Or a porcelain veneer?” No respectable dentist would give you an answer. In fact, some might flee. A disreputable dentist might say “it will be very easy, here’s my card, let’s make an appointment, and be sure to bring your insurance card or check book.”
As I said, while I sort of felt a bit insulted, that feeling was quickly quelled with the realization that this pro se debtor had no clue what it was I did, and why I could not answer his question. So I told him:
“Actually, the reason why I cannot answer your question is because I do not know anything about your case, or about your circumstances. I cannot begin to think about the your question and give you any answer you can rely on unless I do that. Right now, I cannot. The Pro Se Law Clerk however, can.”
The debtor thanked me, and left the courtroom. I do hope that he paid a visit to the Pro Se Law Clerk, and I do hope he got some better direction than I could have given him.
This all got me thinking: there are some people who believe that you don’t need a bankruptcy lawyer to get through the process. There are also some people who believe that lawyers are only out to get paid, and don’t do anything but fill out forms and, on occasion, dress nicely. There’s an assumption that I am a walking fount of information, and the only thing preventing me from sharing it is getting paid.
All of those assumptions make me feel dirty.
All of those assumptions are also completely unfounded.
There’s no way I could have answered this debtor’s question accurately. I could have said “when the judge takes the bench, ask her to convert your case.” That answer would have been the equivalent of the dentist saying “sure, make sure you use good glue and don’t drink hot liquids for 24 hours.”
But I had not reviewed the petition and schedules. I don’t know what the exemptions are, and what issues might arise in a 7 that might not otherwise arise in 13. I don’t know why the debtor is changing course and whether that might open up a whole host of issues. I also don’t know whether the judge – who I bet knows the history of the case and why it’s on the docket that day – doesn’t have some assumptions or questions about the case. In other words, I don’t know a lot. I do know the law.
Yet merely knowing the law is not enough for me to do my job. A good lawyer takes the facts of the client’s case, applies it to the law, and then proceeds while mindful of the client’s goals. A good lawyer is not merely a resource of legal information available to answer questions at the drop of a hat knowing that people will rely on those answer and make important decisions with significant legal consequences. My job requires thought and analysis.
And on a good day, that actually is what I get paid for. Keep this in mind if you’re thinking about filing bankruptcy with or without a bankruptcy attorney.
The Importance of an Informed Decision
Tuesday, June 16th, 2009
I recently met with clients who got some very bad advice from probably well-meaning but – to be perfectly blunt – clueless friends and family who thought they knew what was best. What happened to them is undoubtedly a lesson for others.
The married debtors have a large and unmanageable amount of credit card debt. A few years ago, one of the debtors was actively employed and making a good living until a work injury changed all that. Now, one of them is in chronic pain, has no income and is currently seeking disability benefits from the Social Security. The injured debtor had a workers compensation claim which was resolved through a $30,000 settlement about 9 months ago. There are children, and there are domestic support obligations.
Because this two-income family had been struggling as a one-income family for a few years, the debtors have been “robbing Peter to pay Paul.” Retirement accounts had been depleted or had loans against them. Credit cards were maxed out. Collectors are calling, and lawsuits have been filed. Before the settlement even arrived, they were thinking about the possibility of having to file bankruptcy.
The Decision-Making
Family and friends urged them not to file bankruptcy. Having not met the family and friends, I assume that they had good intentions and were ultimately well-meaning. None of the family and friends were bankruptcy attorneys. I didn’t ask if the friends and family were aware of this blog.
The debtors have vehicles and only own personal property. The current sole bread winner makes a respectable, but nevertheless modest income in light of their expenses. None of their expenses are extraordinary or raise a specter of bad faith. They seemingly qualify for chapter 7, and since they have no real estate, they could consider electing the federal exemption schemes. Had the debtors elected to file bankruptcy when they received the settlement, the federal exemption scheme would enable them to keep most if not all of the proceeds of the settlement and discharge their remaining credit card obligations. That’s not what happened.
Instead, they took the $30,000 and paid down the credit card debt. It did not get paid off. The credit cards and credit lines did not get closed. The debt was merely lowered. The credit card companies got some of that money. However, had they filed bankruptcy before opting to pay them, the credit card companies would have received nothing – or close to nothing.
I asked them “why didn’t you file bankruptcy back then when you were thinking about it?”
They told me that their friends and family were telling them that they should not file bankruptcy and that they emphasized it: “oh, you don’t want to file bankruptcy!” Apparently they were concerned about stigma and were concerned about being “one of those bankruptcy debtors that doesn’t pay their bills.”
Yet here they were. In my office. Not happy being there. And I’m willing to bet, sick to their stomach because of it (actually, one of them expressed that sentiment). Why? The simple answer is that they now thought of themselves as “one of those bankruptcy debtors who doesn’t pay their bills.” But I do think there maybe another reason.
After the cash was done, many of the credit lines were still open. So if they looked ahead to through the end of the month and saw that they were a few hundred dollars short, they knew where to get it.
And with the settlement, they were able to pay their debts and feel good about paying their debts – which is presumably what their friends and family had in mind when they conveyed their likely less-than-helpful advice. It’s good to pay debts. After all, no one wants to file bankruptcy. No one wakes up one morning thinking “hey…here’s something I haven’t done yet.” But life does not always work out the way we want, hope, expect, and in some cases need it to.
In their case, the credit has run dry. The retirement accounts are empty. And now the settlement is gone. And before me were two people who – like many others – had to struggle with an unexpected change in income, and who tried to do what they thought, and what their friends and family thought, was the right thing to do. But they should have elected to get bankruptcy advice from a bankruptcy attorney rather than bankruptcy advice from well-meaning friends and family more than 9 months ago.
What advice would I have given to them if they saw me 9 months ago? I would have advised them to take the time to explore their personal spending. I would have advised them that with one income earner disabled, they had to adjust their budget…or adjust their income. I would have determined that their credit card debt could be discharged in a 7, and depending on the amount of the settlement, and the value of their other personal property, the settlement proceeds would likely be exempt. I would have told them to stop using credit, to start using cash, and to view the cash as what it was: finite.
Instead, they now know that their personal spending must be adjusted, that very tough decisions need to be made, and some very difficult discussions with friends and family members might be in the foreseeable future. And the most important thing that has changed since they listened to their friends and family: there is no more cash they can tap into when they need that extra few hundred bucks to get them through the month.
For these good people, I think it could played out differently. And I am willing to bet that this realization is what is contributing to that awful feeling in their stomach.
Another Good Reason to Stay Close to Home
Wednesday, May 20th, 2009
One of the best things about summer is the local produce you’re likely to find not just in the supermarket, but on road side stands. While I admit I’m a bit biased, when I was a kid, there was no better place to get tomatoes and sweet corn than the small farms on Aquidneck Island. That’s probably going to tick-off the good folks in Little Compton, but hey, I know what I know. I am sure that I can find a place online that would ship them to me, but it’s not the same as pulling over to the side of the road, smelling the air, and reaching into your pocket for a few bills to get some good stuff. Law firms advertise online, as do credit counselors and so-called debt settlement and consolidation firms…and there are hundreds if not thousands of companies and firms offering assistance to people struggling with debt. Is it a good idea for Massachusetts consumers stay “local” when they are looking for resources to help them deal with their debt? This very question came up today when I was talking with a prospective client.
For a variety of reasons, the family is in a lot of debt and exploring options. There’s bankruptcy (and I can help them with that), and there’s credit counseling (which I can offer a recommendation). There’s also debt consolidation and debt settlement, but ironically, there do not seem to be too many local companies that offer such services. Perhaps it is because those services are usually little more than a scam. Perhaps it’ because it’s been tried
The clients were considering the “Consumer Law Group, PA” located in Florida. I like Florida – I have not been there in years – but it’s a pleasant place to be. And while I like oranges, I don’t feel the need to go to Florida to get them.
Fortunately, the client did some research on this outfit on their own. They learned that the “Consumer Law Group, PA” had only been around since November 2007. They found websites where people had some very unfavorable things to say. More than one person, actually. They also learned that in less than two years period, they earned an exceptionally low BBB rating. That was their wake up call. It dawned on them: “why are we not dealing with a local business who can help us?”
While this is arguably yet another reason to stay clear from any outfit claiming to offer debt consolidation or debt settlement services (which again, are a scam), I think it is also important to consider going with someone local. It doesn’t matter if it is an attorney, a credit counselor or a lender who may be trying to help you refinance…. why go with an out of state outfit state? After all, we are talking about your money, your life, your family and your future.
For those reasons, it’s important to get good help from someone who knows what they are doing. And frankly, if these issues are important enough for you and your family, then you should be able to look that professional square in the eye. That’s hard to do when they are a few states away.
Clean Up
Thursday, April 23rd, 2009
No one likes cleaning up a mess that someone else made, especially lawyers. I’ve coined the term “clean up” to describe a particular type of case – whether it be debtor or creditor. In most cases however, it’s a debtor’s case that was handled by an attorney who is no longer returning phone calls, or has informed the debtor that they can no longer handle the case. The debtor is extremely concerned, and is usually in a very difficult position. And unfortunately, I’m seeing these types of cases with greater frequency.
There are many reasons why a debtor’s case may not be progressing the way they expected. But in many cases I am seeing, when a debtor is contacting me to either get a second opinion, or to get a new attorney it’s because something in the case is going dreadfully wrong. It could be an improperly completed form, or a complete lack of understanding of how bankruptcy works. It could also be a little of both.
The economy is drying up legal work in other areas and this may be pushing attorneys who do not know bankruptcy law into the practice in an effort to their own ends meet. However, attorneys who do this with an assumption that bankruptcy is “easy” or is just about filling forms will soon realize that this is not the case.
Filing Bankruptcy Without an Attorney
Friday, April 10th, 2009
According to a New York Times article, more and more people are representing themselves in court. I have had much experience counseling debtors who have initially elected to seek bankruptcy protection without the benefit of counsel. There are many reasons for this: the lack of money to hire an attorney being one of them, if not the biggest. Another, and perhaps more troubling reason is that pro see filers have a belief that a judge will help them through the process.
From the article:
Judges complain that people miss deadlines, fail to bring the right documents or evidence and are simply unprepared for legal proceedings. Such mistakes make it more likely they will fare poorly – no matter the merit of their cases.
This applies in any courtroom, and in any legal proceeding. If you want to represent yourself, you have to be prepared. That means, you have to know what the legal issues are (not what you think the legal issues are or should be) and have your ducks and documents all lined up. It also helps if you know the law.
But relying on the judge to help your is tantamount to ignoring that the role of the judge actually is. As the Times discusses:
Overseeing a proceeding where one or both sides lack lawyers puts a judge in a difficult position: The judge is supposed to be neutral but also has an interest in moving things along.
“If you see a person making a terrible mistake, you can’t always jump in and save them,” said Judge Borbely, the circuit court judge in Vermilion County, Ill. “You cannot take the role of an advocate.”
To ensure fair outcomes, courts must do more to help people navigate the courts, said John T. Broderick, the chief justice of New Hampshire. “If you and I went to the hospital and they said, ‘Do you have insurance?’ and we don’t, and they said, ‘There are some textbooks over there with some really good illustrations,’ ” Judge Broderick said, “we would think that was immoral.”
At the same time however, while courts can and do offer navigation assistance (such as the Pro Se Clerk at the US Bankruptcy Court), they cannot offer legal advice and the judges cannot be your advocate.
Sometimes Lawyers Need a Good Laugh
Sunday, March 8th, 2009
As the economy continues its descent, bankruptcy attorneys are forced to respond to increasingly difficult legal and factual issues. Chapter 13 case law is evolving…and at times, I feel like it’s a moving target. What Congress said they were going to do last week, is not (as we have learned) not what they may do this week. With all that’s going on, it can be tough to find time to do the simple things: like laugh. So I was pleased as punch to come across Bankruptcy Bill.
Fortunately, Bankruptcy Bill is not another piece of legislation I need to mire through, but rather is a cartoon character created by Gideon Kendall and Steven Horowitz. But the website has not only Bill and his hilarious adventures through the world of bankruptcy, but also Haiku specifically tailored to the issues we bankruptcy attorneys have to face – very often. Here’s a sample:
Commencement of case
Served all creditors but
Surely I missed one.
How many of my colleagues have awoken in a cold sweat in the middle of the night uttering those words? How many of my colleagues have had that concern at least once? I’m willing to bet all.
Steven tells me that he would like to write more about the issues consumer practioners face…so if you have any ideas, I encourage you to share them with him. And please put Bankruptcy Bill in your favorites and tell your colleagues (you will also find Bankruptcy Bill on Facebook and Linked In). There are few sites that have content specifically designed to tickle the funny bone of bankruptcy attorneys. And during these interesting times, a tickle now and then may be just the thing we need.
[Thanks to Bankruptcy Bill for posting the McLeod Law Blog's RSS Feed.]
Reactive vs. Proactive
I’ve mentioned that sometimes it’s better to proactive than reactive. Being proactive is calling a bankruptcy attorney when you sense that the barn out back may be a fire hazard. Being reactive is calling a bankruptcy attorney when the barn is burning, you can’t remember where you put the garden hose while you wonder if water bill has been paid.
When clients do nothing until faced with a foreclosure notice, they are being reactive… which unfortunately places me in a reactive posture. After years of doing both, I’m certain that being reactive makes an otherwise average case more difficult and more expensive, because but for a scheduled auction some people would just hope that the finances will get better. But it’s that auction that pushes some people into finally getting their ‘house in order’, albeit quickly… and hopefully not too late. And for one of my clients, getting his house in order was what he wanted me to help them with.
After being retained by a reactive client, one of the first things I did was send a letter off to an attorney representing a lender. I let them know that I was representing the client for a bankruptcy case, and I asked that he please send copies of notices to me so that I may ensure everyone is properly listed on the petition and creditor matrix. A few weeks later, I received a copy of a notice of scheduled auction which I sent off to my client with note reminding him that his petition needed to be filed before the scheduled auction. The letter also reminded my client of the documents and information I needed to ensure that the paperwork was properly completed when filed.
About 10 days later, and about 2 weeks before the auction, the lender’s attorney calls me and leaves me a message. He wants to know if I still plan on filing a petition, since he has to hire an auctioneer, and go through the costs of publishing. He tells me he wants to avoid all of those costs if my client is going to file bankruptcy. defih8q45j
That put me into a bit of a predicament. (more…)
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