Beware of Bankruptcy Counsel Bankrupt in Bankruptcy

Bankruptcy law is a highly specialized area of law. It has its own code and courts. If an attorney does not practice bankruptcy law, then it is unlikely that that attorney has been before a bankruptcy judge or is familiar with the Bankruptcy Code. We bankruptcy attorneys may find the Bankruptcy Code an intriguing beach read, but I would bet that non-bankruptcy practitioners do not share in our excitement. Because bankruptcy is so specialized, I am a firm believer that clients seeking bankruptcy advice should consult a knowledgeable bankruptcy practitioner. I have been in the bankruptcy field for over twenty-five years and I have seen many clients suffer at the hands of inadequate counsel. A successful bankruptcy proceeding is all about pre-petition planning. When a client is seeking debt relief advice, some of the initial decisions that will be made include the type of bankruptcy relief that is appropriate, what scheme of exemptions to claim, what debts may be discharged and potential issues that may arise. The early decisions that are made before the filing will affect how the case progresses and the outcome of the case, In my early years of practicing, I learned from my mentor how to formulate a strategy before the case is filed and plot out my course of action. This puts you on the offense and not the defense. Many bankruptcy filings fail because the attorney neglects to thoroughly analyze the case before the filing. This puts the attorney and the client in a reactive or defensive position. Unfortunately, I have witnessed clients lose assets to a chapter 7 trustee because the attorney did not claim the proper set of exemptions. In one instance, a husband and wife filed a chapter 7 and did not own their residence but owned a small vacation home. Their attorney improperly claimed a homestead exemption in connection with the vacation home rather than the “wild card” exemption available under the federal scheme of exemptions. Other instances where I have seen inexperience counsel falter are situations where a bankruptcy filing does not trigger the automatic stay. In one case, the debtor filed to stop an eviction after a judgment of possession was entered in favor of the landlord. Practitioners familiar with the exceptions to the automatic stay would have counseled this client that the filing of the petition alone would not stop the eviction. In another case, a debtor retained counsel to file his third petition within one year to stop a foreclosure sale. The attorney filed the petition for the debtor on the eve of the sale without also filing an order to show cause to impose the stay. The client and the attorney soon learned that the Bankruptcy Code contains certain “creditor protections” and a debtor that has filed multiple petitions within a one-year period will need to seek a court order to impose the stay. A filing by a “serial” filer will not trigger the automatic stay. The Bankruptcy Code is riddled with many nuances that an experienced bankruptcy practitioner is familiar with but those not familiar with bankruptcy may not even know exist. Therefore, it is so important and vital to the bankruptcy case to retain experienced bankruptcy counsel. How do you know if your counsel is experienced? You will be able to decipher how seasoned the attorney is during the initial consultation. Did the attorney explain the available bankruptcy options to you? Did the attorney explain the process to you? Were you advised of what your duties are as a debtor in bankruptcy? You should understand the process and your responsibilities when you leave that initial meeting. If you do not, then this should be a warning. So, whether you are seeking bankruptcy advice for yourself or if you are an attorney who has a client in need of debt assistance, please recommend a seasoned bankruptcy attorney. This may be the most important decision you make in your bankruptcy case. In sum, look out for the bankruptcy counsel that is bankrupt in bankruptcy!

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Kimberly Berson is an attorney that has been practicing for over 25 years. Her practice is focused on bankruptcy law and related litigation. She served as an assistant adjunct professor of legal studies and an instructor of paralegal courses. She provides debt relief for individuals and businesses. Please visit her website at kbbankruptcylaw.com. You may contact her at 516-847-5122 or kbersonlaw@gmail.com

For more on bankruptcy counsel, please see Kimberly Berson's website where she discusses the Trendy Bankruptcy Counsel