We Fight For You! screamed the on-line headline for a bankruptcy law firm.

While I applaud the firm’s energy and commitment, I question their focus.

Filing for bankruptcy shouldn’t result in a fight.

It’s a remedy, not a rumble.

If you’ve struggled with yourself about with the decision to file bankruptcy, actually doing it may seem mundane by comparison. No fights necessary.

So, I thought about what was wrong with the “bankruptcy as a fight” analogy.

Turns out, it was simple.

My motto:  We Analyze So There Won’t Be A Fight.

Kinda nerdy, isn’t it.  It lacks drama, and doesn’t suggest any vivid photos.

But it represents much better client service.

What a bankruptcy lawyer does for you

A skilled bankruptcy lawyer gathers more facts about you, your debts, your assets, your prospects, your marriage, your income and your dependents than you can imagine.

Having determined what brings you to consider bankruptcy, the lawyer assesses three big things:

1. Which chapter of bankruptcy furthers your goals
2. Is there anything that creditors or trustees could challenge to keep you from your goal
3. What things could make it easier to reach that goal.

Your lawyer should be looking for those issues which might provoke a fight, and figuring out how to keep you out of a tussle with any party in the bankruptcy system.

Tools for avoiding conflicts include better information, choice of timing and refining your goals.

A good bankruptcy attorney uses each tool to avoid the fight.

What fights arise in bankruptcy

The most common disputes in bankruptcy cases, Chapter 7’s and Chapter 13’s, revolve around

• Values of assets
• Means test income and deductions
• Transfers of assets made before filing

Careful collection of information and analysis of that information will tell a good bankruptcy lawyer where disputes might arise.

You and your lawyer need to discuss any points of possible conflict and find the best way around them.

Bankruptcy fights I love

The only kind of fight in bankruptcy that I relish is the fight that a creditor picks with my client.  The fight usually arises when the creditor does something the law doesn’t allow.  Often it involves failing to honor the automatic stay.

The stay requires each and every creditor to stop collection action against the person who has filed bankruptcy and against the person’s property.  In Chapter 13, it also protects guarantors and co signors on consumer debts.

Some creditors are too pig headed, ill organized, or simply spiteful to honor the stay.  I love a fight to get creditors to do what the law provides.  My clients are entitled to the peace the law contemplates.

Most bankruptcies are a snooze not a fight

A well thought out bankruptcy case is generally without conflict or dispute.

Carefully prepared schedules tell the whole story.  The trustee reads them, sees no issues, and moves on.

And that’s how it ought to be.  It’s not Fight Night.  It’s more like yoga.  You work hard, but you leave without bruises.

A bankruptcy lawyer friend says her motto is “Do it right, and avoid the fight”.  Suits me to a T.

Read more

How to find a good bankruptcy lawyer

What you have to do to file a bankruptcy case

What happens at the bankruptcy hearing

Image courtesy of Kate.Gardiner.

The problem even the best bankruptcy lawyer can’t fix is the one you hide.

Sometimes  it’s a problem you don’t want to face yourself, or a debt your spouse doesn’t know about.

Maybe it’s a claim you hope to bring after the bankruptcy.

You’re tempted just to say nothing to your bankruptcy lawyer.  Who will know?

Think again.

When the truth is threatening

You’ve probably heard lots of the myths about bankruptcy floating around.

Then there are the stories from people who knew someone whose friend’s cousin  filed bankruptcy some time back.

He didn’t tell everything and it worked out.

Maybe or maybe not.

People visiting a bankruptcy lawyer for the first time often are tempted to conceal debts, property, or transactions from their lawyer in the belief that if the lawyer had the facts, they would be barred from bankruptcy relief. That is seldom so.

Your lawyer can’t protect you from problems created by secrets you keep. With all the facts, your lawyer can provide meaningful advice that maximizes the relief available in bankruptcy.

Hide your secret from your bankruptcy lawyer and you may have a problem far bigger than the one you’re trying to hide.

Full disclosure is the price of relief

Bankruptcy is grounded in full disclosure to the court and creditors.  In exchange for transparency about your finances, you get a discharge of your dischargeable debts.

More importantly, your bankruptcy papers are signed under penalty of perjury.  Get caught in a deliberate lie and you may lose the opportunity for a discharge of all of your current debts.  One of the grounds for denial of discharge is “false oath”.

Perjury is a federal crime.  You could find yourself the guest of Uncle Sam for up to five years.

The time-worn saying in bankruptcy is that it’s the X’s that will get you:  the ex-spouse, the ex-partner, or the ex-friend.

Those folks may have a motive to call you out in court.

The trustee has a right to examine your tax returns, your bank statements, and your check register.

Secrets are hard to keep.

Get your money’s worth from your lawyer

Usually the things people hope to keep from me are penny-ante things.  When it is disclosed, I often find that what the client was worrying about  isn’t really a worry at all.

When the secret does present a complication, we can look for a work around:

• undoing the transfer,
• filing Chapter 13,
• waiting to file til the secret is no longer a problem.

But I can’t fix things I don’t know about.

Start by making full disclosure to your bankruptcy lawyer. Your lawyer is on your side.

Image courtesy of Sandilya Theuerkauf and Wikimedia.

I cringe when a client says that they’ve researched bankruptcy on the internet before making an appointment with me.

For every sound, balanced, nuanced article on consumers and their debts, there are bunches of sloppy, inaccurate sites, often trying to make bankruptcy so frightening that you’ll buy whatever they’re selling.

But when a group of bankruptcy lawyers, trying, I’d assume, to provide useful information on bankruptcy get it so wrong, I’m perplexed.

Bankruptcy Home, which identifies itself as a group advertising site for bankruptcy lawyers, has community property absolutely wrong.  At least California community property, which is all I’m licensed to deal with.

When one spouse in a community property state files bankruptcy, the site says, the debtor must include the value of one half of the community property.  Wrong, wrong, wrong!

I don’t know whether these lawyers haven’t read the bankruptcy code or haven’t read the site that they pay for.  Neither alternative is flattering to them.

All Community Property Comes In

Here’s what  section 541 of the bankruptcy code says:

 (a) The commencement of a case …creates an estate. Such estate is comprised of all the following property…

(2) All interests of the debtor and the debtor’s spouse in community property as of the commencement of the case that is—

 (A) under the sole, equal, or joint management and control of the debtor; or

(B) liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor’s spouse, to the extent that such interest is so liable.

I first wrote this piece in 2012.  I checked the Bankruptcy Home site before republishing this post. That site remains uncorrected.

Image courtesy of Tambako the Jaguar.

The do- it- yourself spirit seems especially strong in bankruptcy courts these days.

Only it often comes with a big price tag.

Nearly 45% of the Central District CA Chapter 7 cases were filed by individuals doing it themselves.  The national rules committee is drafting new bankruptcy forms with the unrepresented in mind.

Why do people take such a momentous step as filing bankruptcy without an attorney?

They go it alone, without a lawyer, for three reasons:

1. They assume they can’t afford a lawyer.
2. They assume that there are no consequences for doing it badly.
3. They assume it’s “just filing out forms”.

What bankruptcy filing entails

Southern California bankruptcy lawyer Jay Fleischman outlined the steps in a bankruptcy case.  Each of those decisions is one a pro per ( a person representing themselves in court) has to make  to file their own bankruptcy case.

It’s a pretty daunting list. [Read more…]