Hiring the Right Attorney for Bankruptcy

The new bankruptcy laws which went into effect October 17, 2005 are so complex that even bankruptcy attorney specialists have a difficult time meeting all the requirements and understanding the nuances of the law.   Thus, it is virtually impossible for a non-bankruptcy attorney, or a person who is not an attorney, to  properly prepare a case, assess the options and potential problems, comply with all the rules and regulations, and successfully navigate the case to a successful conclusion.  You will, quite simply, need an attorney who specializes in bankruptcy law to handle your case.

What makes one bankruptcy attorney better than another?

There are a lot of attorneys out there.  Many are good, some are not.  After practicing exclusively bankruptcy law since 1991, the things I've noticed about the good attorneys are things that the clients themselves will never know about.  In other words, hiring a good attorney is about the problems that DON'T arise.   The little pieces of advice that the client will think is commonplace, but that only a really experienced--and connected--attorney would know about.   There are numerous examples of this, but one that just popped into my head is that, at the present time, when a bankruptcy case is filed, Wells Fargo Bank will temporarily freeze the funds in their accounts that exist on the date the case is filed.  A good, well connected, bankruptcy attorney will advise their clients (as I do) to keep as little money as possible in their Wells Fargo accounts on the date the bankruptcy case is filed.   Do they teach you this in law school?  No.  This only comes with experience.   Another example is knowing which vehicle creditors will repossess your car even if you stay current with payments.

Now, of course, a good bankruptcy attorney also has other advantages over not-as-good attorneys via their knowledge of the nuances and depths of the bankruptcy laws, understanding how to use the system ethically to your advantage--much in the same way that a good, ethical accountant can get more for you from your tax return. 

Be careful when choosing an attorney.  Make sure you get a written retainer agreement that fully explains the services to be rendered.  Make sure your attorney is licensed in your State.  Make sure he or she is associated with professional bankruptcy groups that enable them to keep abreast of current topics, changes and important nuances.   See more information on Mark J. Markus.

Hiring Bankruptcy Law Attorney vs. Paralegal Services

Some paralegal services charge a minimal fee to prepare and file the necessary paperwork to file a bankruptcy. While in some "extremely simple" cases this may not be a major problem, it has been my personal experience that the risk is simply not worth it and, quite frankly, there is not such thing as a simple bankruptcy case anymore.

Part of what goes into the bankruptcy petition comes from insightful and probing questioning from a qualified bankruptcy attorney.  Paralegals and other "bankruptcy petition preparers" are strictly prohibited from practicing law and, therefore, they cannot give legal advice or ask the necessary questions to make sure you are completing your paperwork fully and completely. (This doesn't seem to stop them, however, from illegally doing so and giving improper and inaccurate advice--see the case below).  They cannot give you advice on how to take the proper exemptions to protect the assets you have, which could result in you losing those assets in a bankruptcy case. Even if they were legally allowed to do so, they are not able to adequately assess the laws surrounding exemptions and to determine what your best options are. For example, you may assume there is no problem with listing a particular asset, or reaffirming a particular debt, only to find out months or even years from now, that because you filed the bankruptcy or didn't take appropriate steps, that you did not get rid of that debt, or that you may lose an asset, or any number of other problems.

Perhaps more importantly, paralegals cannot represent you in court if the need should arise (and it often does when paralegals handle things) nor are they liable to you if they screw up. Moreover, if you list things incorrectly in your petition, or omit necessary items, it is YOUR problem, not the paralegal's. You sign all your bankruptcy papers under penalty of perjury. Many times I have watched a bankruptcy debtor in front of a judge, facing the complete denial of their discharge, pleading with the judge to help them because they didn't have an attorney representing them. Ultimately, the debtor may have to spend several thousand dollars to attempt to remedy a situation that could have been prevented, or at least planned for, at the beginning.

A PRIME EXAMPLE:

I just got a call today from a lady who had filed a Chapter 7 through a paralegal. After the Trustee reviewed her papers he noticed that her automobile had some $10,000 of equity available which she had failed to exempt. Therefore, he is seeking to sell the car. She then had the paralegal prepare some sort of Motion to Dismiss the case (which I can almost assure will NOT be granted) so that the debtor can keep her car and work out payment arrangements with her creditors. My advice was that she should have filed a Chapter 13 to begin with (considering all her assets and other relevant factors) but unfortunately, in an effort to make the Chapter 7 look better, the paralegal had her artificially increase her expenses to show that she has no disposable income, which made it impossible to fund a Chapter 13 plan (see information on Chapter 13). She told me they had not even discussed that option nor did she understand she had the ability to do that. Thus, in order to succeed in a Chapter 13 and make payments, she would basically have to admit to perjury on her original schedules filed with her bankruptcy. The bottom line is that she is likely going to lose her car. There are, I'm sure, other problems in her case that haven't even surfaced yet, but this is a prime example of the problems I hear about almost daily with people that don't do things correctly at the beginning. And now, it's simply too late; there was nothing I could do for her at this point. The horribly bad advice and pre-planning done by the paralegal has left her with no viable options. So she saved a few hundred dollars by using the paralegal and now risks losing a car worth $19,000 or perhaps worse, losing her whole bankruptcy discharge (meaning the creditors who were garnishing her wages before she filed will be able to reinstate the garnishment).

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A Recent Court Decision:

Click here for a recent court decision highlighting the problems people face when using a paralegal or bankruptcy petition preparer service.

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Enough said?

Bankruptcy is a very important decision. It is basically the first step towards your entire financial future. The entire bankruptcy system is designed so that attorneys represent all parties involved. That is what we are trained to do. Do you want to trust this future to an unlicensed non-professional?

This is the time that you should do things correctly. Don't skimp and save at this point. Hire the most competent attorney that you can afford and take the first step towards your fresh start.